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Hyperinflation, shrinking economy versus Petro - The Venezuelan crypto-revolution

People run in front of burnt CICPC (Scientific Police) cars during an opposition demontration against the government of Venezuelan President Nicolas Maduro, in Caracas on February 12, 2014. Unidentified assailants on a motorcycle fired into a crowd of anti-government protesters, leaving at least two people wounded and a pro-government man dead. AFP PHOTO / LEO RAMIREZ

The countries such as Venezuela is looking for cryptocurrencies adoption as an alternative store of value, very recently, Turkey’s lira has remarkably collapsed to flash headlines across the world.

Yes, Venezuela is also currently in a similar situation, where the hyperinflation of the bolivar has caused a significant surge in crypto volumes, and merchants are even accepting any of the top 14 cryptocurrencies as payment. Many traders assume could bitcoin offer a solution to market volatility?

Venezuela’s inflation is soaring as the economy has been broken by failed socialist policies, corruption and a collapsing oil industry. While oil accounts for 96% of Venezuela’s exports, so when the crude price tumbled from 2014, the economy took another major hit. The Venezuelan economy shrank by 30% from 2013 through 2017, and a fall in real GDP of 18 percent in 2018 is expected, as per the IMF projections.

The member of Venezuela’s National Constituent Assembly, Mr. Hermann Escarra, has informed in an interview with Reuters about the assembly’s ideas for cryptocurrencies. While the digital currency named “the petro” has already been unveiled by the Venezuelan government in the beginning pf this year that is said to be a cryptocurrency backed by the oil reserves in the region. And, Venezuelan president, Nikolas Maduro clarified that the government would back each petro with an actual barrel of Venezuelan oil in order to allure credible investors.

Nicolas Gilot, Co-CEO of blockchain-powered gaming distribution platformUltrasays:

“Cryptocurrencies have become increasingly popular in countries such as Venezuela, where the local economy is in turmoil and the currency is struggling. Bitcoin has now become a store of value, and many recognize it as digital gold instead of a payment system. As the lira’s crisis deepens, Turkey’s crumbling economy could also turn to bitcoin in its hour of need as it offers an alternative solution to hyperinflation and a collapsing currency.”

Thomson Reuters came up with an exploratory report into Venezuela’s national oil-backed cryptocurrency, the Petro, bidding to square government claims with facts on the ground and evidence of the Petro’s transaction history to date.

Currency Strength Index: FxWirePro's hourly BTC spot index is inching towards 64 levels (which is bullish), while hourly USD spot index was at -74 (bearish) while articulating (at 06:49 GMT). For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex

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