Venezuela battling hyperinflation with bitcoin

If any country knows the risk and harm that can come with excessive price volatility, it is Venezuela. It is also the worst kind of volatility, as Venezuela has seen the bolivar decline in value by over 8577.08% since the start of 2018. This means if you had $100 USD in January, it would be worth $1.15 today.

Imagine this: You receive your wage, go to buy food, and have enough funds for all your groceries before getting in line. However, by the time it is your turn to pay, your funds can no longer cover the cost of your food. This is if there was any food left to buy in the first place, as trade is difficult and commerce is in bad shape.

This is not an exaggeration, it is the effect of extreme hyperinflation. The money stops working and does not hold value. The economy breaks, and valuing goods becomes difficult. Businesses do not know what to charge, and the exchange of goods becomes a struggle as people get upset and angry, having bought the same thing for 50% less the day prior.

Vendor prices along the same street will vary drastically during the day, even hourly. There is no possibility to save money long term. With the average minimum wage at already less than $0.52 USD per month, this has become a crisis of epic proportions.

Steps toward stability

This is where bitcoin comes in. Even though the bitcoin price can be volatile, it retains value much better than the bolivar. Now people are able to save a little extra. They can afford to wait days between receiving their wage and buying groceries, so their food is fresh. Their schedule is no longer dictated by the instant they receive funds in their bank.

This process is not ideal as it still revolves around converting bitcoin to bolivars through a LocalBitcoins seller who has the same bank as the vendor selling goods. Between different banks, the wire transfer can take over 1 business day, at which time the value will already be vastly different.

We need better solutions. Solutions that allow people to not only obtain bitcoin, but also use it as a means of exchange for all products and services. A solution that gives both customers and vendors the option to use bitcoin with ease, instead of having to facilitate same bank transactions with LocalBitcoins sellers.

BitcoinVenezuela and OpenNode

Over the past few months, we have been working closely with the humanitarian aid project, Bitcoin for Venezuela Initiative (BFVI), to deliver such a solution. We started by setting up a donation service, which has so far raised over $252.60 to help provide food, water, and hard-to-buy meats for Venezuelans in need.

Now we are taking the next step, as BFVI has developed ‘Pay me with Bitcoin,’ a mobile and desktop Point Of Sale interface that, when linked with OpenNode, will allow for both on-chain and Lightning Network transactions. With this pairing, there will be no fees on transactions for the majority of Venezuelans as the first $1,500 USD in processed transactions each month is free.

Using an open source API, we calculate an accurate BTC/VES (bitcoin/bolivar) rate so customers and vendors have a more stable base to conduct business from.

‘Pay me with Bitcoin’ allows users to complete both on-chain and Lightning transactions from their mobile devices with ease. Vendors can also use the OpenNode dashboard to manage their finances if they are looking for more detailed and intuitive merchant tools.

We hope our joint efforts will make a difference in Venezuela and further illustrate the value of how bitcoin can help economies in need.