How are cryptocurrencies helping Venezuela, the country with the worst economic crisis in South America

Crypto, a word that has become more and more popular every day over the last decade and can no longer be ignored. We see it on social media, the press, in establishments, among others. Even if you are not interested in the subject, it is something that you can’t avoid, Crypto is the future!  

I am Andrea Mongé, Social Mass Communication Graduate, proud Venezuelan, and now working in the Decentralized Finance, Fintech and Crypto Industry. I have only been in this world for a few months, but it has been enough for me to realize from day one that this would change my life. And it did. 

Today I will explain how cryptocurrencies have positively influenced my country. But first, we must understand a little about the economic path that Venezuela has crossed in these 20 years.  

Since the arrival of the government of Hugo Chávez and its continuation with Nicolás Maduro, Venezuelans have faced the most severe economic challenges that no other Latin American country has been able to experience in modern history. “It’s really hard to think of a human tragedy of this scale outside civil war,” said Kenneth Rogoff, an economics professor at Harvard University. It is also interesting that Venezuela became a growing economic power in the 1950s, ranking number 4 in the ranking of the richest countries in the world. 

According to 50’s GDP, this country, once considered “the South American dream”, also called “Saudi Venezuela”, was twice as rich as Chile, four times as rich as Japan and 12 times as rich as China. Unbelievable! 

Venezuela is well known as one of the main oil producers in the world, in 1922 a large oil reserve was discovered. At the time of its discovery, it released 100,000 barrels of oil per day, an impressive amount considering that most of the existing oil wells produced no more than 250 barrels per day.  

In 1928 Venezuela produced the second most amount of oil worldwide, from that moment Venezuela went from being an agricultural country to the king of “black gold”, and by the year 1948 Venezuela was the first country to export oil in the world, its production was so great that it equalled the sum of everything produced by the countries of the Middle East. The Venezuelan government increased the public spending, improving the entire infrastructure of the country, making it as the most modern country in Latin America (1948-1958). 

An important fact is that in 1974 the minimum wage in Venezuela was $100 per month, which today would be $628, placing it as the highest minimum wage in the region. 

Venezuela was in those days a prosperous world power but then Hugo Chávez became president in 1998-1999, turning what was once the promised land of Latin America to a country where people flee from the sad reality that surrounds them. In the 2000-2020 period, the minimum wage went from $400 to $5 per month. 

All this was caused by bad political and economic decisions. Since 2018, Venezuela has taken refuge in the dollar as the currency of exchange in the country, which meant a small relief for the economy and trade. It is crazy to imagine how in 2016 there was no bread in the bakeries. 

But the problem lies in a country that adopted the dollar completely as the currency of exchange but is not dollarized. Buying anything in Venezuela with high-denomination bills represents a problem due to the lack of exchange that exists in the country, as I mentioned earlier, since there are no ATMs where citizens can normally withdraw cash, this is where cryptocurrencies and virtual wallets have played a significant role in the Venezuelan economy, allowing the population to refuge in stablecoins such as USDT, USDC, etc. Avoiding concerns about the low existence of cash in the market. Nowadays, many commercial establishments accept cryptocurrencies, even buying a house or a car with crypto is possible. 

The DeFi technology evolution has helped my country to get rid of some of the bad financial actions of the government, which always affect the less favored populations. An analysis by Chainalysis in 2021 indicated that Venezuela ranked 7th globally in cryptocurrency usage. This indicates that blockchain technology is one of the small escape ways that have helped Venezuela alleviate the economic crisis. 

But like any industry, it also has its down days. You must have a strong mental balance and understand that money should not control our mood, less in a market as volatile as this one. We would drive ourselves crazy.  

I seek to create awareness through my true story, to encourage those who read this that we are certainly in a revolutionary era of money and that, in my opinion, this is the best time to take risks, to innovate, to immerse ourselves in this trend and bring new positive ideas to the community, be transparent and helpful. All this is possible thanks to those who decided one day to ride this roller coaster, and I tell you a secret? EVERY day is an up and down of emotions, as well as an up and down of prices, candles, etc. It sounds obvious (what goes up must come down, as they explained to us in high school. Guess what, I wasn’t that good at physics), but it’s not that easy to handle. 

Let us keep building, let us keep innovating, let us keep working together to make crypto a safer place for everyone. 

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