It’s a fact that many economies—even the most advanced ones—struggle to lift inflation, but that’s nothing compared to what Venezuela is going through.
The country is in the middle of the worst inflation period in history, with consumer price inflation hitting 480 percent this year. But that’s nothing, according to International Monetary Fund (IMF) experts, who predicted the inflation rate will soar to 1,640 percent in 2017.
The situation is already affecting all aspects of daily living in the country, and the reports of food and medical supplies shortages, weak oil prices and rampant theft has forced the government to declare a state of economic emergency. Economists believe it’s only a matter of time before Venezuela turns to the IMF for a bailout.
There’s just one thing: the Hugo Chavez’s government severed ties with the IMF nearly a decade ago, and there are no indications that the current administration will try to restore relations with the world’s emergency lender.
IMF spokesman Gerry Rice told Wall Street Journal the organization has been urging Venezuela to reestablish their relationship, but so far, “the Venezuelan authorities have not contacted us.”
All of this turmoil is creating an important opportunity for bitcoin adoption in the country. We’re not saying that Venezuela is about to see a massive bitcoin adoption. The idea is that the government can use digital currencies as an investment vehicle that will ward against fiat currency inflation. Experts, as we all know by now, have long been advocating bitcoin as a “safe haven” asset—one that “benefits in times of macroeconomic uncertainty in which its strengths as an investment vehicle whose value is derived solely from a global market are best on display.”
Current price and daily transaction volume
Popular digital currency bitcoin traded at $663.02 on Thursday, a slight drop compared to previous day’s price, with a market cap of over $10.52 billion.