Venezuela is sinking into failed-state territory. Inflation is on course to reach a million percent, crime is epidemic, and neighboring countries are sending armed troops to the country’s border. Each day 2,500 people queue up to leave Venezuela for Colombia. Over a million have done so in total. Meanwhile, buying everyday goods is becoming tougher. Worthless bolivar banknotes are fashioned into paper sculptures on the streets of Caracas.
Venezuela’s economy has contracted by almost a third since 2013, turning it from South America’s richest nation into one of its poorest. The Bolivarian Revolution that Hugo Chavez bequeathed to Nicolas Maduro is crumbling. Ordinary Venezuelans face a choice: struggle to pool bolivars, spend US dollars on the black market, or leave.
In a desperate attempt to scrabble back the ashes of its economy, Venezuela’s government this month introduced the petro, a state-backed cryptocurrency pegged to the price of a barrel of oil, the country’s biggest export, which is around $60. It won’t work, because the petro is neither decentralized nor transparent, as other cryptos are. But in addition to showing how incompetent Maduro’s politburo is, the petro shines a light on other cryptocurrencies gaining traction in a nation that looks increasing like it has collapsed.
Bitcoin mines have popped up across Venezuela, taking advantage of the country’s heavily-subsidized electricity. But widespread mining is hampered by frequent blackouts, and government meddling that includes having established a required registry for those wanting to extract bitcoin. But there are other options.
Dash is an altcoin launched in Scottsdale, Arizona, in 2014. In recent years it has pursued developing economies like Venezuela, which has taken to the cryptocurrency like few other places. Over a thousand Venezuelan merchants already accept Dash – a number CEO Ryan Taylor expects to leap ten times that, having teamed with Kripto Mobile Corporation (KRIP), a smartphone designed to handle crypto payments that is popular across South America.
This week Dash’s value soared 20% to $186, bumping it back up a cryptocurrency value chart, the top ten of which it achieved in December last year with a price of $1,600, before most currencies took a sharp tumble. For Venezuelans, Dash is an option they desperately need.
“We haven’t seen any other cryptocurrency achieve anything close to what Dash is achieving in Venezuela,” Dash CMO Fernando Gutierrez tells Red Herring. “Bitcoin has a presence, but it can’t be used for smaller, everyday payments, so it is not the same use case.”
Thanks to its tiny fees, low payments and boots-on-the-ground community, Venezuela is in Dash’s top three countries for website traffic and app installs. Forty percent of the merchants listed at Dash’s website, are based in Venezuela.
“Dash can solve many financial problems in any country, such as high inflation or an unreliable financial system,” adds Gutierrez. “Venezuela is the most extreme and urgent case, but there are others, mainly in South America, Africa, and the Middle East.” Zimbabwe, which recently emerged from the despotic rule of Robert Mugabe, is another nation under the Dash spotlight.
It’s not only hyper-inflationary economies that can benefit. New markets, like cannabis in the US, are minimally covered by federal law, and chronically underbanked. Neither do traditional banking solutions offer much to increasing migratory movements. Cryptocurrency can step in to help with remittances, Gutierrez says.
But for now, Venezuela is its headline-grabbing success story. And while Venezuelans will hope their state can turn a corner, at least with Dash, and other crypto, they have another way to survive a little better each day.