The worse the political, social, and economic conditions in Venezuela get, the more that residents suffering under the Maduro regime pile into Bitcoin.
According to Coin Dance, more than 47 billion Venezuela bolivars were traded against Bitcoin in the first week of July. This broke a previous record that had been set in mid-June.
While the rising amounts of bolivars being spent on buying Bitcoin could be attributed to the fact that the Venezuelan currency is perpetually weakening, it also coincides with the price of the flagship cryptocurrency appreciating considerably in the last couple of weeks.
About that 50,000 bolivar note…
As of April, the inflation rate in Venezuela was estimated to have hit 1,300,000 percent. Mid last month, the South American country announced a 50,000 bolivar bill designed to ease business transactions.
— Swiss America (@Swiss_America) June 13, 2019
Still, Venezuela ranks among the top 30 countries whose national currencies are the most traded for Bitcoin, according to Coinhills.
The new record for BTC/VES volumes coincides with the global legal watchdog, the International Commission of Jurists, warning that the rule of law in Venezuela has crumbled. According to the ICJ, the powers of the legislature and the judiciary in the South American country have been usurped by President Nicolas Maduro’s government.
Breakdown of the rule of law in Venezuela
After the 2015 elections, during which the opposition won a majority of the seats, the National Assembly was stripped most of its powers. These powers were transferred to the Constituent Assembly, which was created two years ago and is controlled by Maduro’s party. Consequently, the ICJ places the blame on the breakdown of the rule of law on the Venezuelan government:
"The focus of this report is on the usurpation of the authority of the legislative by the government in Venezuela. This comes after the judiciary was taken over. It seems quite clear that in response to the loss of direct support in the legislative assembly, the government decided to completely trample on the principle of the rule of law really and separation of powers."
Efforts to find a solution to the Venezuela crisis have recently seen both the government and the opposition agree to resume talks in Barbados. The two sides had held preliminary talks two months ago in Norway, but they ended without a deal.
What's next for Bitcoin in Venezuela?
While BTC/VES volumes have been on a steady increase since the beginning of 2018, Venezuela now has a national cryptocurrency, the Petro, which is competing for attention with Bitcoin.
The Maduro regime has been actively promoting the Petro, and last week CCN reported that Venezuela’s president ordered the country’s largest bank, Banco de Venezuela, to make the Petro more accessible around the country.
Maduro had also previously disclosed a plan to introduce cryptocurrencies to the country’s youth by creating awareness and offering loaded crypto wallets. With Venezuelans already witnesses to how government-issued money can quickly lose its purchasing power in the face of hyperinflation, this move will only be beneficial to Bitcoin.
Yes, the Maduro regime may be force-feeding the Petro on the people, but that will likely just serve as a gateway drug to Bitcoin.