So, where exactly do you put your savings during times of hyperinflation? This is a question reserved only for those facing unprecedented levels of currency devaluation – like Germany’s Weimar Republic during the 1920s, Zimbabwe in the late 2000s or modern day Venezuela.
As the International Monetary Fund predicts inflation in the Latin American nation could reach 1,000,000% by year-end, hyperinflation in the 21st century is proving to be more versatile than in episodes of the past. Rather than banking on the nation’s fiat currency of the Sovereign Bolivar, or its state-sponsered, petro-backed cryptocurrency Petro – more and more Venezuelans are banking on one cryptocurrency while inflation runs wild.
Dash, with its ecosystem of super fast transactions, inexpensive fees and solid security, has become the cryptocurrency of choice for Venezuelans both at home and abroad during the economic crisis. Venezuela is registering tens of thousands of Dash wallets every month as the crisis stretches into its eighth year, becoming the second biggest market on earth for the cryptocurrency.
Dash Core Group chief executive officer Ryan Taylor told Business Insider that brand names including Subway and Calvin Klein have signed up to accept Dash in the country.
“Earlier this year, Venezuela became our [number two] market, even ahead of China and Russia, which are, of course, huge into cryptocurrency right now,” he said.
Dash has been a noted, stable currency for Venezuelans in the midst of its ongoing economic crisis. Caracas restaurant Victoria Merchán said late last month the digital currency offered her business some sort of stability during times of hyperinflation, which were typified by medical and food shortages. “Cryptocurrencies, especially Dash, have helped me to have an alternative means of income that, unlike the bolivar, is stable and much safer,” she said. “In addition, it has opened the doors of my business to many more clients and the general public.”
“Effectively, even if I accept a credit card, three days later, when the funds hit my account, it’s worth significantly less in Venezuela than when the authorization went through,” Taylor said of the situation facing Venezuelans using fiat currency. “This is a problem that cryptocurrency can solve. Our instant transactions can solve it, and the relative stability of our cryptocurrency is better than their fiat currency.”
There appears to be no end in sight for Venezuela’s economic woes. The Venezuelan economy has contracted 10% this year, totaling 45% over the past four years. The latest inflation figures are about 45,000%, with a recent prediction from the International Monetary Fund that inflation could reach 1,000,000% by the end of the year.
At present, about 2,200 merchants in Venezuela accept Dash for payment, accounting for more than 50 per cent of the global total.
The Venezuelan uptake of Dash is evident through its popularity in neighbouring Colombia. More than one million Venezuelans have crossed the border into Colombia since the start of this year with some 5,000 people entering the country every day, Colombia’s migration authority said on Thursday. Roughly 675,000 of those Venezuelans subsequently moved on to other countries like Ecuador, Peru, Chile, the United States and Mexico – however more than 300,000 Venezuelan refugees have remained in the country next-door.
According to DiscoverDash.com, there are 113 Dash merchants in the city of Medellin alone. In the neighbourhood of Laureles, 15 Dash merchants cover a four-block radius to facilitate the influx of refugees who use the cryptocurrency outside of their home nation.
Dash, the open-source cryptocurrency created in 2014, has low fees and nearly instant transactions. It is the 13th-largest cryptocurrency in the world, according to CoinMarketCap.com, with more than $1 billion in circulation.
Meanwhile, the government of Venezuela has attempted to join the cryptocurrency revolution through its creation of the oil-backed Petro (PTR) – which has since been deemed an official alternate currency in the country. Its launch generated significant controversy earlier this month however with claims that it was a “blatant” copy of Dash. The government cryptocurrency contains the same mining algorithm, similar features, and an entire section of its whitepaper allegedly lifted from that of Dash.
Think tank Brookings Institute claimed the government cryptocurrency undermines legitimate cryptocurrencies as its pre-sale was essentially a way for the government to bypass international sanctions and bring in foreign capital.
To make it easier for Venezuelans, the nation’s central bank has launched an app to convert bolivars to the Petro-pegged Bolivar Soberano, a convential fiat currency. The cryptocurrency’s wallet app is now live on Google Play.
The success of Petro remains to be seen, but the uptake of Dash demonstrates an interesting solution to hyperinflation in the modern age. Citizens for the first time have an alternative of where they store and spend their money – an empowering decision during times of economic and systemic failure.