In Venezuela, a food crisis is happening due to government currency controls that are making it very expensive to buy food from other countries. But Venezuelans have found a way to bypass these restrictions, thanks to digital currency.
The Latin American 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.
Rodrigo Souza, founder of BlinkTrade, which operates the exchange for Venezuelan online marketplace SutBitcoin, where people can buy and sell government-issued bolivars for bitcoins, told Reason that the exchange’s monthly trade volume has tripled in the last year as more and more people started using the popular cryptocurrency, primarily to buy food from e-commerce sites like Amazon and Walmart.
Meanwhile in Brazil, digital currency is being used as a tool to bypass the high tariffs charged by the government when purchasing products like the latest smartphones or even when moving investment capital into the country. Even Brazilians traveling out of the country have found that using a bitcoin credit card will enable them to escape the 6.38 percent levy that they pay every time they swipe a debit or credit card.
In terms of cutting government red tape, entrepreneurs believe that digital currency—or rather, the distributed ledger on the blockchain network—can help solve the long-winding process of starting a new business in the region, particularly in Brazil.
Blockchain, according to bitcoin supporters, can potentially fill the void left by Latin America’s weak government institutions. In Honduras, for example, one company has started exploring moving land titles from ancient paper volumes to the bitcoin blockchain where residents can verify that they haven’t been secretly altered.
Current bitcoin price and transaction volume
Bitcoin traded at $744.01 late Wednesday morning, with a trade volume of $6.02 million.