Venezuelans try to beat hyperinflation with cryptocurrency revolution
With Venezuela’s official currency plummeting for years, both the government and cryptocreators are trying to stem the rot with digital tokens. For ordinary Venezuelans, the cryptoboom also means regaining freedom.
Returning to his home country of Venezuela would be dangerous for Gabriel Jimenez. The 31-year-old programmer has been living in exile in the United States for two years now, from where he is striving to push a cryptocurrency revolution in his country with a digital coin called Reserve.
The cryptocoin is intended to circumvent Venezuela’s notoriously high inflation and has been in circulation since March this year. The socialist politicians ruling Venezuela “have no solutions for our country” and its depreciating legal tender, the bolivar, he told DW.
Officially charged with designing Venezuela’s first cryptocurrency three years ago, Jimenez — then a youthful startup founder at the age of 27 — saw a chance for both beating hyperinflation and taking clandestine revenge on the country’s detested socialist government.
Before the government of leftist leader Nicolas Maduro approached him about creating a digital coin, Jimenez was part of Venezuela’s anti-government movement and took part in several street protests. At the time, the economy of the oil-rich South American country was already in free fall.
Petro: the world’s first state-backed cryptocurrency
Jimenez saw an opportunity to change his country from within. If a Bitcoin-like cryptocurrency was done right, he believed, he could give the government what it wanted — a way to bypass excruciating financial sanctions imposed by the Trump administration — while also stealthily introducing technology that would give Venezuelans a measure of freedom.
The perilous ride transported Jimenez from the life of an activist to the center of Venezuela’s dark institutions of power. However, the world’s first state-owned digital coin, the Petro, he helped create didn’t become the kind of revolution he had hoped for.Last year alone, the annual inflation rate reached 6,500%, causing Venezuelans’ lifetime savings to go up in smoke, and accelerating their flight to the US dollar. According to Venezuelan think tank Ecoanalitica, some 66% of all financial transactions in the country are already made in the US currency. At the same time, cryptocurrency trades paid for with Venezuelan bolivar have been surging, data from cryptotrading platform LocalBitcoins shows.