Venezuela Is Now More Than 50% Dollarized, Study Finds

[Twentyonepaylots]

I don't think more than 50%, But if it was true, still lot of of people don’t have USD accounts and getting dollars in cash. Some stores started to accept PayPal, but they got tired of accounts being blocked or limited by the company pretty quickly. Cryptocurrencies are accepted in some places, but they are unstable makes them not practical for everyone. So, I think stores might be forced in the near future to accept online transfers from places like uphold, payeer, perfectmoney, etc. because is easier to get digital dollars from somebody abroad using these services and there are places where people can actually buy dollars this way without an international bank account.

This will be the logical take on this, with bitcoin not being stable enough to be accepted as a currency and a couple more issues, they will slowly but surely dollarize themselves. They wouldn't be able to use bitcoin anyway even if it's not volatile as Venezuela has a power issue. If in any case they are able to solve this one way or another. Bitcoin might thrive in their country.

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[abhiseshakana]

Yes, an interesting situation. The Venezuelan government, represented by President Maduro, has launched an economic war with the United States and its dollars, and now they recognize that dollars are good for the country. Moreover, neither the national cryptocurrency Petro nor the transition to the payment of pensions and other payments in bitcoins saved the Venezuelan economy. Cryptocurrency did not help here, probably due to inept management of the economy.
The problem of introducing high technologies is also raised here. Practice shows that you should not fully rely on them, along with them should be back-up options for conventional technologies. Therefore, do not give up cash.

Venezuela adopted bitcoin/crypto because of TINA (there is no alternative). The case that occurred in the Venezuelan government had to adopt cryptocurrency due to a total economic embargo from the United States. There is no eternal friend and foe that is of eternal importance to Maduro. The policy taken is more political aimed at perpetuating its power amid the shock of the coup from its opposition rather than aiming at improving the country's economic conditions.

One reason why the role of cryptocurrency in Venezuela is displaced by the dollar is inseparable from the reduced economic support of China for Venezuela. As China's growth declines and crude oil becomes abundant after the fall of 2014 oil prices, China has little to gain from relations with Venezuela.

In addition, China is concerned about the Maduro government regime which is not recognized as a legitimate government by many countries in the World. In addition, China is also concerned about the allocation of aid use from China not in accordance with the China strategy (OBOR) as China worries about economic mismanagement and corruption under Maduro's leadership. The intensity of relations between China and Venezuela diminished when the opposition took control of the legislature and America gave full support to the opposition.

Venezuela is now undergoing a strategic partnership with Russia and continues to use the dollar as its currency exchange currency. Trump also began to be careful in dealing with Venezuela because Russia's involvement was very thick, with Russia's largest world oil company Rosneft marketing almost half of Russia's oil production. Rosneft is a large company and has a wide reach, too frontal with Russia could risk unwanted damage to the interests of America and its allies.

So when facing economic problems, crypto is only used as a tool or an alternative currency. When the world does not compactly adopt crypto, how can Venezuela minimize the use of dollars? Means the international world more trust in the dollar than crypto. This trust was formed not only because of the superiority of the American economy but also because of world reserves of 58% in dollars. so the use of dollars is considered an effective and fast solution to cure disease.

[davinchi]

Lack of electricity is a problem that will be solved in the near future when electricity is free for all in every household. As in everyone will have solar panels, even smaller wind turbines are getting famous nowadays but mainly solar panels of course, specially in places like venezuela that gets so much sun, electricity will not be a problem in the long term (meaning 10+ years of course but still gonna happen).

Crypto will be more common in those places when that happens, this is an extraordinary situation where a country gets so poor that many people die of starvation and food is scarce, so I think crypto can't be help for THAT harsh situations, there was a small period where you couldn't buy food even if you had money because there was no food, crypto can't solve that issue.

[Febo]

Venezuela Is Now More Than 50% Dollarized

That is totally normal. Any country wit high inflation become such. Venezuelan currency is used as cash to pay things and USD is kept as store of value. Not need to be long store of value, but even for few weeks or even days.

[iram3130]

I have this worry about cryptocurrencies from all the time. If there is a situation in a country then the first thing they stop is either Internet or electricity, it will be harder to use a crypto in that moment. Was there any solution for this in crypto.? Has anyone thought of something to solve this issue..?

No. The assumption behind crypto is that electricity will always be there and the internet will always be there.

The internet is pretty robust in that it's designed to work even if some nodes are down. You would have to take down the entire world's internet cables to stop it.

Electricity is more vulnerable. Most electric grids are centralised and can be hacked by hostile countries. And they usually need fuel to power them, so if a country runs out of access to coal or gas, then they're stuffed. Solar panels only work when the sun shines and wind turbines only work when the wind blows, and battery technology is still in it's infancy so power can't be stored.

Its really a serious problem if you ask me, because there are too many unrests in many countries and this is what they do. If we tell someone that crypto is better than fiat but wont be able to use when it is needed the most..? 

The closest thing I've heard of is kong cash based cryptocurrency.

https://kong.cash/

But even that is electronic, if to a lesser degree. Based on smart contracts if I'm remembering correctly.

Electricity will be the main issue again. It may work with NFC enabled mobiles but that too has too many restrictions. 

[jostorres]

I am not sure about the idea of them making use of cryptocurrency, if it’s up to me to decide I would say that them adopting a stable currency is a pretty good idea.

Cryptocurrencies, especially Bitcoin, are highly volatile and imagine they save their money in a cryptocurrency wallet and adding that there is a black out makes everything worse as they are likely to lose their money due to the price fluctuation. So, I don’t see the idea of making use of dollars bad, it is good at least in short term perspective. Anything possible for them to get themselves out from that bad situation they should keep doing that and help themselves.

[alexsandria]

Yeah, they need a stable currency. What could be better than USD as a medium of exchange? Bitcoin surely was not ready to be used as cash to purchase daily needs. However, it doesn't mean that Bitcoin is useless. We know that Bitcoin is more difficult to confiscate so that it can be used as a store of value. This is important for the people who live in an authoritarian government.

They can store some of their wealth in Bitcoin and cash out when they need to buy stuff.

Agree beside they did adopted bitcoin in a quick manner. As it don't have any measures on what will be the possible effect in the long run. So, may be, the most stable way is to use USD rather than bitcoin but that doesn't mean that it is not necessary at all. Like what you said, mister, store their money in bitcoin or other alts then spend it using fiats.

[Linkkoin]

I am not sure about the idea of them making use of cryptocurrency, if it’s up to me to decide I would say that them adopting a stable currency is a pretty good idea.

Cryptocurrencies, especially Bitcoin, are highly volatile and imagine they save their money in a cryptocurrency wallet and adding that there is a black out makes everything worse as they are likely to lose their money due to the price fluctuation. So, I don’t see the idea of making use of dollars bad, it is good at least in short term perspective. Anything possible for them to get themselves out from that bad situation they should keep doing that and help themselves.

It is pretty easy to seize fiat on your account. Or get a police/military raid your house looking for gold or banknotes. It had been happening for decades already.

With cryptocurrencies in quite many cases it is almost impossible to get your crypto seized. In the case of hardware wallets, you still have a chance to get access to its content if it is stolen. If you are smart enough, you can keep your cold wallets in plain sight and basically no one will notice it - even on family photos.

The only threat would be for you as an owner of a cryptocurrency to get tortured in order to give all the access to your wallet, including passwords etc.

[NavI_027]

A year ago, some of us were hoping that Venezuelans would have adopted bitcoin as their currency (or an alt). But the rolling electricity blackouts not only mean you can't use credit cards, but you can't use cryptocurrency. So they've gone with old fashioned US dollars in cash.

*Sigh This is the biggest opening for crypto to get massively adopted and yet it still failed. How unfortunate for us and the crypto community as a whole to get beaten by its rival — paper money. Well I guess that's the perks of fiat, it can be used without any further requirements unlike btc which requires constant supply of electricity and internet connection . This only manifests that our world is not yet ready to fully acquired this technology. It seems that we're still so far to the futuristic era .

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

Oops, it still depends to a particular country of course. Even how rich a country is, it will be pointless if they look at crypto as a threat but I'm hoping this kind of mindset will be totally erased on the mind of every nation.

[alyssa85]

Its really a serious problem if you ask me, because there are too many unrests in many countries and this is what they do. If we tell someone that crypto is better than fiat but wont be able to use when it is needed the most..? 

One solution is to lobby governments to decentralise electricity.

Lots of governments are sympathetic to the idea because they know how vulnerable their centralised grids are to hackers. But it costs money to decentralise, so they'll only do it if the voters are agitating for it.

[Captain Corporate]

 If a nation can use another nations money that way, what stops all other nations to do it as well? It would be too much centralized in every single nation to be ruled by USA, sure venezuela is a small sample size and USA won't even care but if you for example make %50 of people in Europe to start using dollars instead of Euro, that would be a demise of all european union and all nations withing since USA would basically control them. So it doesn't look all that bothersome to people since its venezuela and they might actually take advantage of this situation yet I still think we should try to stop and eleminate this idea before it spreads to all other nations in trouble, that would make it very difficult to reverse.

[alyssa85]

If a nation can use another nations money that way, what stops all other nations to do it as well? It would be too much centralized in every single nation to be ruled by USA, sure venezuela is a small sample size and USA won't even care but if you for example make %50 of people in Europe to start using dollars instead of Euro, that would be a demise of all european union and all nations withing since USA would basically control them. So it doesn't look all that bothersome to people since its venezuela and they might actually take advantage of this situation yet I still think we should try to stop and eleminate this idea before it spreads to all other nations in trouble, that would make it very difficult to reverse.

Nothing apart from the government banning the use of foreign currency.

China bans use of anything other than yuan, and in addition imposes capital controls so people can't easily convert yuan to dollars and take the money out of the country.

Many other countries have capital controls too.

Places like the UK don't have any bans in place nor capital controls, so in theory a retailer is free to accept any currency they want  - but Brits use their own currency as they have a deep attachment to it (as it has served them well for coming up to 1000 years).

[Images21]

If a nation can use another nations money that way, what stops all other nations to do it as well? It would be too much centralized in every single nation to be ruled by USA, sure venezuela is a small sample size and USA won't even care but if you for example make %50 of people in Europe to start using dollars instead of Euro, that would be a demise of all european union and all nations withing since USA would basically control them. So it doesn't look all that bothersome to people since its venezuela and they might actually take advantage of this situation yet I still think we should try to stop and eleminate this idea before it spreads to all other nations in trouble, that would make it very difficult to reverse.

Nothing apart from the government banning the use of foreign currency.

China bans use of anything other than yuan, and in addition imposes capital controls so people can't easily convert yuan to dollars and take the money out of the country.

Many other countries have capital controls too.

Places like the UK don't have any bans in place nor capital controls, so in theory a retailer is free to accept any currency they want  - but Brits use their own currency as they have a deep attachment to it (as it has served them well for coming up to 1000 years).

However, each and every country has a black market. And the black market plays a very vital role not only in terms of the country's economy but also in terms of the people's access to whatever is declared illegal by the current government. Foreign currencies are always offered in the black market. This would solve any government's ban on specific foreign currencies.

[alyssa85]

However, each and every country has a black market. And the black market plays a very vital role not only in terms of the country's economy but also in terms of the people's access to whatever is declared illegal by the current government. Foreign currencies are always offered in the black market. This would solve any government's ban on specific foreign currencies.

Not all countries have a black market denominated in a foreign currency. I doubt the Americans, Swiss, British or eurozone countries bother with foreign currencies at all. You would only trade in a foreign currency if your own currency was inflationary and retailers were reluctant to accept it as a result.

[criza]

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

But, we could not rule out the possibility for the country's innovation, it is still possible for them to cope up and improve their society in the future rendering a solution for the black outs in the country. With the said dollarization, the chance for economic growth is great solving their problem with electricity. Crypto currency in Venezuela would be possible in the future.

[bohr]

https://www.bloomberg.com/news/articles/2019-11-05/venezuela-is-now-more-than-50-dollarized-study-finds

Venezuela’s economy is increasingly dollarized, with more than half of retail transactions now being carried out in U.S. currency, a study found.

An estimated 54% of all sales in Venezuela last month were in dollars, according to a survey by Econoalitica, a Caracas-based research firm.

In Maracaibo, the country’s second-largest city, about 86% of all transactions took place in dollars, according to the study. The city has been one of the worst hit by blackouts, which has rendered credit card readers useless for days on end.

As Venezuela has become dollarized, inflation has come down. Even their idiot president Maduro admits the dollarization (which was done by citizens spontaneously ignoring their govt's ban on dollars) is a good thing.

A year ago, some of us were hoping that Venezuelans would have adopted bitcoin as their currency (or an alt). But the rolling electricity blackouts not only mean you can't use credit cards, but you can't use cryptocurrency. So they've gone with old fashioned US dollars in cash.

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

I think that what this proves is that the dollar is still the main currency of the world and the one people will use to protect themselves when something goes wrong, but when the dollar  begins to fail then what people are going to use then? And I really think we are going to see a combination of gold and bitcoin saving the day in that instance, however unlike many which have been predicting the demise of the dollar for decades I do not see that day coming anytime soon.

[Baoo]

In my opinion, it too difficult to make Bitcoin  a main coin in any country even the poorest despite the king of crypto has a lot of characteristics but there is a problem of stability for all the digital currencies including Bitcoin. So this volatility may negatively affect on  economy of countries, that's is the issue. Also, the governments prefer  controlling of all the people especially in the financial field and due to Bitcoin is so secure, so they can't track any transaction and that is the second problem. Hopefully, everything may change in the near future.

[andamarina]

Interesting, i think maybe they will have new currency if new authorities will want to create or will stay with usd until economy recovers.

[FanatMonet]

The lack of electricity and the Internet are two main problems for the development of cryptocurrencies in poor countries, if smartphones and computers can still be found there, then an uninterrupted supply of electricity is a serious problem.

[omone1]

Their government need to resign and allow a new breed to find a solution to the political and economic problem of Valenzuela. Their petrodollar stable coin seems to have failed and using a foreign currency is never the solution to the existing financial instability, it will cost more harm in the long term.