Bitcoin Notified As A Vehicle Currency To Trade Across Latin America

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Priyanka Kulkarni
Priyanka Kulkarni, post-graduated in Business Administration holds worthy experience in market research and investment banking. She is passionate to flaunt her perception towards cryptocurrencies.
  • The date March 7, 2019, is notified in Venezuela’s history as a fire near the power lines of a dam on the Caroni River caused the largest electrical blackout in the nation. Over seventy percent of all Venezuela’s electricity generates from this single dam.
  • This too affected the largest bitcoin trading platform in Venezuela, LocalBitcoins.com.
  • In the Latin American markets of LocalBitcoins, Bitcoin is mainly used as an intermediate currency between fiat currencies for the people transferring in and out of Venezuela.

The date March 7, 2019, is notified in Venezuela’s history as a fire near the power lines of a dam on the Caroni River caused the largest electrical blackout in the nation. Over seventy percent of all Venezuela’s electricity generates from this single dam.

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The effect of blackout over LocalBitcoin.com

The intensity of the outage was so widespread that it was visible from outer space. Which lasted for several days in urban areas and weeks in rural areas. The economic damage was estimated at up to $200 million in a day. During this outage, the schools were closed, hospitals were encumbered, and the residents locked themselves up at home.

This too affected the largest bitcoin trading platform in Venezuela, LocalBitcoins. About all of the LocalBitcoin transactions in the country are trades of bitcoin from electronic bank transfers in the form of their local currency, the bolivar.

Upon research on Bitcoin usage

Latin America’s Bitcoin usage researchers estimated the number of hourly transactions based on twelve-week data leading up to the blackout. Then they superimposed the actual number f transactions that took place during the week of the outage. And finally, they compared the number of active internet connections data provided by Netblocks, to know the vicissitudes of the blackout as they compare to the number of bitcoin trades.

Upon this analysis, one could assume that if the power is off in the entire country, bank transfers and bitcoin trades in that country will stop working. It is the climax while looking at the transaction activity of the Latin American currencies that time all other Latin American currencies with a considerable volume on LocalBitcoins exhibited some impression of this behaviour.

By these practices, one thing comes into mind, why the online banking transactions for currencies of the countries where not affecting a blackout be so profoundly impacted by a country?

In the Latin American markets of LocalBitcoins, Bitcoin is mainly used as an intermediate currency between fiat currencies for the people transferring in and out of Venezuela. We can say the transfer was peer-to-peer exchange transactions.

When the power cuts off in Venezuela, bitcoin trade across Latin America, as well as money transmitters outside the country, are no longer able to communicate with their counterparties in the country to complete the cross-border transfer.

Moreover, going through advertisements and trading data on LocalBitcoins, it is found that a considerable mass of those selling bolivars to gain bitcoin on LocalBitcoins is members of the Chinese-Venezuelan community.

Since the crisis, the Venezuelan government has taken a step back from their rigid monetary policies and have gradually complied to free-market forces in some sectors.

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