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Venezuela ranks first in BTC exchange volume in Latin America on LocalBitcoins (LBC), a globally used platform for the face to face exchange of Bitcoin. Venezuela is fourth globally following only behind the United States, Russia, and the United Kingdom. Worldwide, more than $6 billion has been exchanged, and Venezuela alone is responsible for more than 13%.
This past week, more than 675 BTC has been exchanged in Venezuela, translating to a little more than 4 million USD at the current market price.
The country is going through an economic crisis, with a significant level of hyperinflation. Google search keywords and software downloads seem to indicate that these volumes are due to Bitcoin’s history of its ability to be a safety net as the purchasing power of the Venezuelan fiat currency declines.
Downloads, Searches & Exchange Volume For Bitcoin Increase
The Venezuelan government, recognizing the country’s economic flaws, has decided to anchor its new currency and part of its economy to petro (PTR), a supposed cryptomoney created in December last year. The interest of Venezuelans in this instrument has been reflected in a high volume of online searches and an increased interest in Bitcoin (BTC).
According to Google Trends, after the announcement of President Nicolás Maduro, the searches associated with “petro” increased significantly on August 12. The anchoring of the new currency to certain items such as salaries left citizens with questions. However, not only has the PTR increased traffic but so has Bitcoin.
Through Reddit, the Bitcoin Monitor application team reported that more than 46% of the downloads of the app in the last seven days originated in Venezuela. Although the interest in a single app cannot be considered as a definitive factor, the figure is noteworthy. The app allows real-time monitoring of cryptocurrencies.
David Pertiller, a developer of the app, assured the media that it is a tool that seeks to help users better understand the real-time price. Although he did not give more details on the percentage of downloads, he affirmed that he shared this data because he knows what is happening in the country, understanding that this increased traffic is a possible reflection of their economic situation.
Considering that the LocalBitcoins exchange volume and increase in Bitcoin searches and downloads have grown, even though January’s Bear Market – this is an indication of the relationship between fiat and Bitcoin.
The first week of 2018 started with 157 BTC exchange volume and has been rising steadily since then according to Coin Dance.
On Their New Crypto Active
On August 22, the prices of 25 food products expressed in the Official Gazette of Venezuela were published by the new unit: the petro (PTR).
According to the Official Gazette, the prices of the 25 products included were agreed by the National Executive in a meeting held with 35 companies linked to the production, distribution and commercialization sectors of the agro-industry, were mentioned in another list.
The prices, expressed in both sovereign bolivars and petros, must be displayed in all commercial establishments in the country, where they must be marked and sold, per current legislation. Failure to comply with the amounts agreed upon will result in a penalty in accordance with Venezuelan law.
With this publication, the government of Venezuela formalizes the measures taken on August 13 and 17, when President Nicolás Maduro announced that the still unissued petro would be converted into a new unit of account, through which the prices of goods and services would be fixed as well as salaries, pensions, and exchange rates.
The measures include a monetary reconversion that came into effect on August 20 which eliminated 5 zeros to the currency, creating a new monetary cone under the denomination of sovereign bolivar. All part of a “program of recovery, growth and economic prosperity” created by the government to recover the Venezuelan economy, which has been in deep crisis for several years.
To this end, with this anchoring of the economy to the crypto active future, the government established a new exchange parity according to which the petro is equivalent to 3,600 sovereign bolivars. On this basis, the new minimum wage for Venezuelans was also set at 1,800 sovereign bolivars.
The Questioning of Petro
The new measures put in place by the Venezuelan government have been subject to a series of questions, most of which comes from the lack of official information about the petro.
The PTR is said to be released on the NEM blockchain (not on the Ethereum blockchain as previously believed). As shown in the latest version of its white paper, the name of the corresponding space in this block chain is called ‘VEN,’ so it is speculated that this will be the blockchain platform used. If true, the pre-sale carried out on 20 of February only managed to sell PTR 13,123,734 of the 38.4 million PTR goal. The other 44 million petros of the public offering, scheduled to begin on March 20, have not yet been mobilized.
Several economists have expressed skepticism about the project because of the lack of official information. The opinions bring to light many doubts and unknowns, which remind us that there is no place to exchange petros for bolívares or other currency and that it is not internationally recognized.
The Venezuelan government’s established price is reportedly based on the value of the barrel of oil (about $60) and the support of the oil reserves of the Orinoco Belt in Venezuela.
On this anchor, economist Giorgio Cunto states that for a nominal anchor to be successful, it must be linked to the credibility of a currency or external asset to whom it is anchored, which is not the case with the petro/bolivar parity. The Venezuelan government is anchoring to a currency in hyperinflation, “both of which are managed discretionally by the same authorities.”
According to some businessmen of the ecosystem, such as the CEO of the Venezuelan startup Cryptobuyer, the problem also lies in the fact that the Venezuelan oil company, PDVSA, has debts of $45 billion. In addition, it reiterates that petro does not exist at all. “We haven’t seen a single petro in circulation, not even their smart contracts, not even their token rules, let alone their blockchain.”