Dire economic conditions and annual inflation of an astonishing 4,000% are prompting Venezuelans to seek salvation in cryptocurrencies. They spent the record bolivar equivalent of $1 million buying Bitcoins on Tuesday and converted them into dollars or other foreign currencies to bypass currency controls, Bloomberg reported, citing data from local cryptocurrency market tracker VeneBloc.
The government of the South American country imposed restrictions on forex trades in 2003, but many companies continue to accept only dollars as payment for goods and services, and the shadow turnover continues to grow. With the bolivar depreciating by the day, demand for cryptocurrencies is climbing steadily. Bitcoin against dollar trades are on the rise again.
The country recently issued its own cryptocurrency, the Petro, which is backed by its oil reserves. While banned in the US, the Petro received an award earlier this week from the Russian Association of Crypto Currency and Blockchain (RACCB) for its "outstanding contribution to the development of the blockchain industry."
Some experts suspect that Russia had helped to create Venezuela’s national cryptocurrency and the Russian government could have played an essential role in launching the project. The Russian finance minister has denied these allegations.
Earlier, Venezuelan President Nicholas Maduro issued a decree instructing all state enterprises to accept the national cryptocurrency. Maduro has also established two new public offices to manage the country's cryptocurrency affairs.
While this controversial coin raises lots of questions among experts and global investors, Maduro is obviously very enthusiastic about his creation. He claimed recently that the US sanctions against his country had boosted in interest in the Petro from international investors, including Americans.
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