Anybody who believes that central banks are essential pillars of economic stability that deserve the untrammeled authority to issue currencies, which they presently enjoy, should take a close look at what’s happening in Venezuela.
Central bankers have tended to dismiss the notion of private currencies as an idea embraced only by techno-libertarian wingnuts (they have invariably described bitcoin as a “store of value†that’s “not yet big enough to threaten the economy.”
But in Venezuela, the collapse of the bolivar has forced locals to turn to alternatives like bitcoin and local community-issued currencies with fixed exchange rates. The rapid erosion of the bolivar’s value made everyday transactions like buying groceries and paying cabbies untenable – customers had to pay with large, cumbersome stacks of bolivars that were difficult to transport.
Patricia Laya, a Venezuela-based reporter, tweeted a photo of the 5,000 bolivars – the maximum amount – she was able to withdraw from an ATM in Caracas. They’re worth around $0.05. Laya stated that she had waited 20 minutes in line to obtain $0.05 in hyperinflated currency worth little to no value, according to CCN.
Even though bitcoin transactions can take hours – even days – to settle, local merchants have readily embraced the digital currency.
Spent around 20 minutes in line at the ATM this morning to get a max of 5,000 Bolivars. That’s about $0.05 pic.twitter.com/F1SxEruhcj
— Patricia Laya (@PattyLaya) December 7, 2017
A Venezuelan student named John Villar said he uses bitcoin more than bolivars because it’s literally the only viable option.
“This is not a matter of politics. This is a matter of survival,â€Â said Villar.
Villar said he has bought two plane tickets to Colombia, his wife’s medication, and paid his employees with bitcoin in the past month. Villar emphasized that he intends to continue utilizing bitcoin like the majority of Venezuelans, according to CCN.
