Many Venezuelan citizens use Bitcoin as a financial alternative and a method of preserving value against their permanent devaluation of their national currency, the sovereign Bolivar (VES). However, this is not the only use for the cryptographic currency in the Latin American country, since for several months bitcoin (BTC) has become the US dollar exchange rate criterion.
If we enter the words "dollars Bitcoin" on Twitter, we can get an endless comment from Venezuelan users they use BTC as a reference to US currency exchange in the country.
I've heard several people who have used this reference page for the parallel dollar.
They use the relative price of bitcoin to indicate the rate. pic.twitter.com/a4QTnRNDOm
– Jesus (@ ChuZen1) January 6, 2019
To understand this phenomenon, it is necessary to know a little about the complex system of exchanging values in Venezuela, which has become a case study of economists within government policy and hyperinflation that is worsening every day.
Since 2003, Venezuelan citizens have controlled access to US dollars thanks to the economic measures set by Hugo Chávez Frías, which remain in Nicolás's Maduros Moros government. For years, the system has undergone a number of changes that somewhat limited the dollar change to private and public institutions until it was finally possible to buy or sell only dollars through a national bank. The exchange of dollars outside the system was illegal for more than ten years. Since August last year, laws that prevented foreign currency trading in the country were abolished.
Currently, the Central Bank of Venezuela (BCV) and the Ministry of Finance have created a foreign exchange auction market called DICOM, whose dollar is managed by a country with a controlled rate.
DICOM is both an auction system and a national official exchange rate set by the government, and businesses and citizens must rely on this rate to exchange currency on the national market. However, it is based on reality this market does not have sufficient supply to cover Venezuelan demand.
In view of this shortage of dollars, Venezuela has developed parallel or alternative markets where citizens can buy and sell American currencies at prices set according to supply and demand dynamics. Temporarily buyers and sellers calculated the dollar value based on the price of the currency at the Venezuelan border exchange home, which corresponds to an alternative exchange rate known as "parallel dollar " social networks.
Last April we reported the appearance of CriptoNoticias exchange rate calculated from the price on the AirTM and Localbitcoins markets as a reference.
This term, known as "Bitcoin Dollar", refers to the dollar exchange rate, which is calculated indirectly using the bitcoin price of sovereign bolivarians. In this respect, users advise BTC on the Bolivars (VES) Localbitcoins and then check the BTC price in dollars on international markets, thus visiting the approximate value of the US currency in Venezuela.
Although in 2018, many were skeptical about whether this rapporteur would remain in the market, the odds for everyone Venezuelan users Bitcoin adopted several exchange ratesBy becoming one of the references closest to the "true value" of the dollar, according to the users. Today, "Bitcoin Dollar" refers to sites with large user circuits, such as DolarToday, and the speeds mentioned on social networks.
Last week "Bitcoin Dollar" was almost institutionalized by Venezuelan government institutions. At the stock exchange home Interbanex company Venezuelan Central Bank (BCV) to exchange currencies, Twitter, which would use this rate as a benchmark in its market.
– Markets and Stocks (@mercadosyaccion) January 27, 2019
The decision was changed this Monday when the Interbanex market was opened to the public with a different exchange rate than "Bitcoin Dollar", user criticism They believe that the value of this currency is much higher than that calculated on the currencies exchange platforms. However, regardless of whether the rate was this movement is recognition points out that there is a rate calculated on the basis of the market price of bitcoin, and that its credibility is intended.
In this context, bitcoin is also an alternative to avoiding a direct link to the US dollar when setting the exchange rate. Instead of calculating the rate using the value of that currency in the currency exchange offices of other countries, a direct non-dollar (USD) reference is used to calculate the currency price.
Also this indirect calculation approve bolivar price volatility compared to other currencies or currencies. The Bolívar price is so volatile, because in Latin America inflation is taking place, that bitcoin usage is possible as a stable value reference, although this cryptocurrency goes for price fluctuations.
Featured image: Edalin / stock.adobe.com