Cryptocurrencies and altcoins in Venezuela, A lifeline for all.

A few days ago I saw an excellent post by our friend @jondoe (here I leave the link: https://steemit.com/hive-148441/@jondoe/a-perfect-example-of-why-bitcoin-matters), which made me reflect on the role that cryptocurrencies and altcoins play in our society, and specifically in countries with economies with high inflation rates.

I live in a country with a high inflation rate, so I wanted to share a bit of my experience and what atlcoins and cryptocurrencies have meant in my life recently.

Venezuelan society today has been marked by decades of financial instability and crisis. More and more Venezuelans have adopted cryptocurrencies as an alternative to the national currency as an investment instrument or to transfer funds without the need of a bank. Today, given the success of cryptocurrencies in global markets, the implications for the economy could be enormous.

_{Cryptocurrencies and altcoins as lifelines, Source: https://www.howtogeek.com/341972/what-are-altcoins-and-why-do-they-exist/}

In my country we suffer currency devaluation literally on a daily basis, to be more precise: twice a day. Since it has become customary that unofficially the market throughout the country is controlled by the price of the parallel dollar, to be more specific through various portals or pages that suggest dollar prices at the exchange rate of the border. The government has had no control over the price of the dollar for several years now.

These portals are updated twice a day, the first at 9:00 am and the second at approximately 1:00 pm. In addition to this, during the last week this problem has worsened, since for almost a month the dollar price remained almost unchanged at around 1800000 VEB per dollar. However, in less than a week we have experienced an inflation that has raised the price to more than 2100000 VEB.

_{Evolution of the price of the Venezuelan bolivar (VEB) against the USD in recent days. Photo edited by me, taken from the Source: @enparalelovzla page.}

This instability has led people to look for alternatives, for example in cryptocurrencies. In my case, I recognize that years ago I would have been super stressed by these inflation processes, since this means in a few words that as the days go by the monetary value decreases and less and less things can be bought with the same amount of money.

However, thanks to the knowledge of blockchain and cryptocurrencies, I am living a phase where I can be calm because my purchasing power remains stable, thanks to the relative stability of cryptocurrencies.

As we know a cryptocurrency is a digital asset that can be exchanged securely through a secret language or cryptography. Its existence is made possible by a sophisticated digital technology called blockchain, which functions as a kind of ledger that records every transaction. Cryptocurrencies do not have a central bank that issues or backs them.

However, for me and my fellow countrymen, cryptocurrencies are more than a fashionable investment: they are an alternative to fiat currency, i.e. the currency issued by the central bank. By the way, in my country as it must happen in other countries with high inflation rates we have many reasons not to trust central banks.

In the specific case of Venezuela we have seen hyperinflation, debts and dramatic devaluations. Our financial history is a series of failed decisions by governments (present and past). The lack of trust is such that the government has had to limit the amount of US dollars allowed, when that was not enough, it placed restrictions on the purchase of foreign currency, the use of cards abroad and other operations.

_{Just a small sample of the relative value of our currency against the dollar. Source: https://elcomercio.pe/economia/mercados/precio-dolar-today-dolar-monitor-venezuela-hoy-23-mayo-2019-usd-bolivares-venezolanos-interbanex-dolar-today-dolar-monitor-noticia-nndc-637949-noticia/}

Buying foreign currency to preserve the value of money is something Venezuelans have always done due to the weakness of the local currency, however, in view of the restrictions many people are turning to bitcoin, other cryptocurrencies and even stablecoins whose value is tied to other assets, such as precious metals, for example.

There is a second factor that could explain the appeal of cryptocurrencies: many people are unable to obtain bank accounts, which is another factor driving the adoption of cryptocurrencies. Without easy banking access, many young people turn to cryptocurrencies as a means to store value. The popularity of stablecoins points to the importance of stable currencies for Venezuelans looking to protect their savings.

The perception of cryptocurrencies has changed from being a currency used by organized crime or arms traders, to being a legitimate investment option. The simplest explanation, probably, is the acceptance by investors and institutions, something we have seen a lot of in recent years.

In conclusion

It is clear that in our countries there is no training or adoption in the digital economy comparable to that of European or Asian investors. What is clear from recent trends is that emerging regions are looking for new ways to support their fragile economies.

Finally, one piece of advice I have personally applied is that the key for cryptocurrency investors wherever you are is education and research.

Instead of getting carried away by a fashion, a person or a movement, we must do our homework and we ourselves make the decisions about which altcoins or cryptocurrencies to invest in, because at the end of the day cryptocurrencies have been a lifeline.