Venezuela: A Crypto Case Study
An interview with a Venezuelan Cryptohopper user.
This isn’t the first time, and neither will it be the last time that Venezuela is associated with an economy in which crypto can play a very relevant role.
After the failure of its national currency and the difficulties to get American dollars, cryptocurrencies have seen a huge increase in popularity in the Venezuelan society since they are now considered a popular payment method and feasible way to store the value of their wealth.
The Venezuelan society has taken a step forward in spreading the word and adopting cryptocurrencies in their daily routines. Associations like Asonacrip (Cryptocurrencies National Association) are constantly putting all their efforts in trying to legalize and promote the use of blockchain at a Latin American level.
Dash is one of the cryptocurrencies that is gaining more adopters amongst the Venezuelan population. Lately, it has been accepted as a payment method in one of the largest department store chains in the country, Traki. To put things into perspective, they are often described as the Venezuelan Wal-Mart. Along with Dash, other cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum and Litecoin have also been adopted to be used in everyday commerces
Dash is currently being accepted in more than 2300 commerces throughout the country and this number is rapidly increasing. This increase in the use of Dash, to a certain extent, acts as a sentiment indicator of crypto and blockchain in the south American country.
Cryptocurrencies are acting as a substitute product for the national currency, but why? The answer is very simple: Inflation. Inflation acts through two main channels: price instability and wealth devaluation.
On one side, wealth devaluation means that Venezuelan citizens that have their lifetime savings in Venezuelan Bolivars have seen the value of their wealth being reduced by more than 95%. On the other hand, a high degree of price instability, fostered by high inflation, will distort commerce and trade, driving the economy into a vicious circle for which is difficult to get out.
Even though cryptocurrencies are known by its volatility, they seem to be a much better option than the Venezuelan Bolivar. Especially during the last 6 months, in which the volatility levels have decreased in comparison to 2017 and 2018, while the Venezuelan currency didn’t find a bottom yet.
Q & A with a Cryptohopper user
In order to get first-hand insight on the impact of cryptocurrencies in the Venezuelan society, we have had the chance to interview a Venezuelan Cryptohopper user to share his experience with us:
Are you a working professional? Can you tell me a bit about what you do?
Yes, I am. Currently, I am a PHP programmer. I also work with databases MySQL and diagramming webpages - CSS.
How does inflation affect your daily life? Like salary, food, transport and other such daily necessities?
This is a tough question, every single price of each good increases daily. This is something we sometimes tell to people living outside of the country and they don’t believe. For instance, a simple box of eggs increased its price by 100% between 20th December 2018 (2000 Venezuelan bolivars) and 7th January 2019 (4000 Venezuelan bolivars).
When did you start using cryptocurrencies? Do you hold most of your money in cryptocurrencies?
I started making use of cryptocurrencies in March 2018. Currently, I don’t hold a lot of money in crypto since in Venezuela it is quite hard to get US dollars and the low purchasing power.
Are cryptocurrencies popular in Venezuela?
Yes, they are very popular. In fact, there is a DASH foundation which has achieved that more than 1500 shops are carrying out their local commerce with this cryptocurrency. Apart from that, Venezuela is in the first positions of countries buying and selling BTC in the bitcoin webpage.
What do you like about automated crypto-trading platforms?
I like everything. For instance, Cryptohopper is a very easy to use and complete trading platform. You only need to devote a bit of time to study all its tools or just the ones you would like to use. In this way, you will be able to make profitable the money invested to be able to use the platform.
How has automated trading helped you so far?
Cryptohopper has helped me in several aspects. It has helped and is helping me to learn how to implement technical analysis to the different cryptocurrencies and allows me to backtest all the strategies I was creating. It perfectly follows my instructions and configurations when it comes to open and close positions. However, what I consider the most important feature of Cryptohopper is that it allows me to save time and devote it to more important things since I don’t need to be in front of the screen to open new trades or watch the open ones.
Developed countries can be characterized by having more resilient and advanced payment systems, and therefore, cryptocurrencies have a lower degree of substitutability and will have to undertake a longer process in order to play an important role there. However, countries that are going through tough economic and political situations or are governed by under developed institutions are more likely to be potential use cases for cryptocurrencies and blockchain.
To read our previous blog on 'Type of Trader vs Type of Settings' click here!