Bitcoin Surges Near $8000 Record Highs After Venezuela Default

We have already discussed the hyperbitcoinization of the Venezuelan economy and it appears, judging by the most recent surge, that tonight’s ‘official’ default events for the sovereign (and PDVSA) have triggered a further rush to the ‘safety’ of a decentralized store of wealth…

As we noted previously, Venezuela’s worsening economic collapse has created something of a social experiment in the use of a digital currency as a de facto currency – a phenomenon that’s also playing out in troubled Zimbabwe.

According to TheNational.ae, bitcoin adoption in Zimbabwe is seemingly skyrocketing as the country’s economic situation looks bleak. So much so, that one bitcoin is trading at nearly $10,000 on the Golix.io exchange, while the global average is, at press time, of $5,642.00.

According to a local trader, bitcoin isn’t just being bought by individuals, but by businesses with bills to pay. The country adopted the U.S. dollar back in 2009 as its fiat currency, as the Zimbabwean dollar had lost nearly all its value.

At press time, LocalBitcoins Zimbabwe has people buying bitcoin at the global average, and some buying the cryptocurrency for cash for well over $10,000 in the country’s capital. Bitcoin, as every bitcoiner would expect, is helping people in the country survive times of economic uncertainty, as Zimbabwe has been embroiled in a crisis for years.

And as inflation in Venezuela has spiraled further out of control – by one estimated, it peaked above 2,400% in September – more Venezuelans are resorting to mining bitcoin, litecoin and other digital currencies as a means of coping with the country’s out-of-control hyperinflation and surviving in a country where staples like food and medicine are scarce.

And then, moments after ISDA found that Venezuela had triggered its Credit Default Swaps by failing to repay its debt on time, Bitcoin surged over $500 to new record highs just shy of $8000.

With the collapse of the economy and now default, Venezuelans are running out of options. Bitcoin – just like gold – will come as a saving grace to many people. It has kept food on the tables of families, helped Venezuelans escape the distraught nation, and acted as a voice of rebellion against the oppressive government. But how Maduro’s regime will proceed remains to be seen.