Bitcoin is the Dollar Price Reference in Venezuela

Since 2018, the price of bitcoin is used to calculate the value of the dollar in Venezuela. A change house of the Venezuelan government contemplate dusing this reference price of bitcoin. Bitcoin is the benchmark for the price of the dollar in Venezuela

Many citizens of Venezuela use Bitcoin as a financial alternative and a method of safeguarding value, against the constant devaluation of their national currency, the sovereign bolivar (VES). However, this is not the only use that is given to the cryptocurrency in the Latin American country, since for several months the bitcoin (BTC) has become a benchmark for the exchange rate of the US dollar.

If we enter in Twitter the words “dollar Bitcoin” we can get an infinity of comments from Venezuelan users who use the BTC as a reference to exchange US currency in the country.

I have heard from several people who have used this reference page for the parallel dollar. They use the relative price of bitcoin to indicate therate.

To understand this phenomenon it is necessary to know a little about the intricate system of exchange of value in Venezuela, which has become a case study for economists due to the government policies that frame it and the hyperinflation that is getting worse day by day.

Since 2003, Venezuelan citizens have access to US dollars in acontrolled manner, due to a set of economic measures imposed by Hugo Chávez Frías and sustained during the government of Nicolás Maduro  Moros. For years the system underwent several changes, which little by little was circumscribing the exchange of dollars to private and government entities, until finally it was only possible to buy or sell dollars through the state bank. Exchanging dollars outside the system was illegal for more than a decade. Since August of last year the laws that prevented the free trade of foreign currencies in the country were repealed.

At present, the Central Bank of Venezuela (BCV) and the Ministry of Finance have established a foreign exchange auction market, called DICOM, who sesale of dollars is managed by the State at a controlled rate.

DICOM is both an auction system and the official exchange rate of the country, established by the national government, for which companies and citizens should rely on this rate to exchange their currencies in the national market. However, the underlying reality is that this market does not haveenough supply to cover the Venezuelan demand.

In view of this shortage of dollars, in Venezuela parallel oralternative markets have been formed where citizens can buy and sell American currency at prices that are established according to a supply and demand dynamic. For a while, buyers and sellers calculated the value of the dollar based on the price that currency has in the exchange houses of the Venezuelan borders, conforming to an alternative exchange rate known as “parallel dollar” in social networks.

In April of last year we reported in Cripto Noticias the emergence of anexchange rate that is calculated from the price in the AirTM and Localbitcoins markets as a reference.

Known as “Bitcoin dollar”, this term refers to a dollar exchange rate that is calculated indirectly by means of the bitcoin price insovereign bolivars. In this sense, users consult the price of BTC in bolivars (VES) in Localbitcoins and then verify the BTC price in dollars in international markets, thus taking an approximate of what the real value of theUS currency in Venezuela might be.

Although in 2018 many were skeptical about whether this referent woul dremain in the market, against all odds Venezuelan users adopted Bitcoin in its multiple exchange rates, becoming one of the references that comes closest to the “real value” of the dollar, according to users. Today, the”Bitcoin dollar” is a reference in portals of great circulation ofusers, such as Dolar Today, and at a rate very mentioned in social networks.

Last week the “Bitcoin dollar” was about to be institutionalized by Venezuelan government entities. After the exchange house Interbanex, an entity authorized by the Central Bank of Venezuela (BCV) to exchange foreign currency, tweeted that it would use this rate as a benchmarkin its market.

The decision was changed on Monday, when the Interbanex market opened for the public with a different exchange rate than the “Bitcoin dollar”, generating criticism among users who consider that the value of this currency is much higher than the one calculated in the cryptocurrency exchange platforms. However, regardless of whether the rate was adopted or not, this movement is a state recognition of

Reference:  criptonoticias.com

Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.

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