Bitcoin Lessons from Venezuela, Where Hyperinflation Reigns

by Lathrop Gage

Most U.S. businesses have been introduced to the concept of blockchain and Bitcoin by now. Even with scalability and other concerns, investment grows in these technologies.  In Venezuela, we have a real-world business laboratory for Bitcoin in the face of a hostile government.  

Why is Bitcoin Use Surging in Venezuela?

Not long ago, Venezuela was the richest country in Latin America, supported by the world’s largest supply of crude oil. Its economy is now in freefall and its money is broken. For at least some Venezuelans, Bitcoin represents a potential financial lifeline, not merely a speculative investment.   

Venezuela’s currency, ironically called the “bolivar fuerte”  (“strong bolivar”), has lost 99.99 percent of its value since 2011.1 At black market rates, one dollar bought 3,164 bolivars in January 2017.2 Just a year later, in January, 2018, a dollar bought about 191,000 bolivars.3 On June 8, 2018, one dollar bought 2.1 million bolivars.4 Some economists predict the exchange rate to rise to 58 million bolivars per dollar by year end.5

Not surprisingly, prices are skyrocketing. In 2011, Venezuela’s annual inflation rate of 27 percent was one of the worst in the world. As of a couple of weeks ago, according to Professor Steve Hanke of Johns Hopkins University, Venezuela's annual inflation rate was an astonishing 36,569 percent.6 In contrast to the prior 57 instances of hyperinflation since the French Revolution,7 there is now an alternative digital currency available:  Bitcoin (BTC).    

How Do Venezuelans Purchase Bitcoin?

Bitcoin itself is volatile; it is now valued at about $6,000 per BTC, down from near $20,000 in 2017.8 Still, it holds its value better than the bolivar, which has been battered by Venezuela’s economic policies of the last decade or so.9 Dollars are scarce and can attract the attention of both the government and criminals. The Venezuelan government shut down two cryptocurrency exchanges in April, freezing over a thousand bank accounts in the process.10 One Reddit contributor explained:

[B]itcoin allows us to have complete control over our funds, to hide them so bad people don’t know they even exist in our possessions, plus we can really easily purchase them or sell them at a 3 percent exchange fee at localBitcoins, and doing so safely by choosing a seller/buyer who has 100 percent positive feedback, 1000+ transactions and at least 250BTC volume history on his account.11

“LocalBitcoins,” referenced above, is the world’s most popular blockchain platform for peer-to-peer Bitcoin exchanges. Since May, Venezuelans have doubled their LocalBitcoins trading volume, setting a new platform record nearly every week.12 LocalBitcoins recently began requiring Know Your Customer (KYC) details from frequent customers, which may slow its momentum.

Another cryptocurrency exchange founded by Venezuelans, Cryptobuyer, set up cryptocurrency ATMs at banks in Panama, so Venezuelan ex-pats could, among other things, transfer cryptocurrencies to their relatives. The brokerage claims over 10,000 registered users, a black-market exchange rate and lower commission fees than banks.  Citing scalability issues, however, Cryptobuyer claimed to drop Bitcoin for a time in favor of Dash and Litecoin. It now appears to offer all three. Its demonstration of an ATM crypto-transaction is currently available on YouTube.13     

Uses for Bitcoin in Venezuela 

As Currency. On rare occasions, a Venezuelan merchant might accept direct payments of Bitcoin for its goods or services. In the entire country, however, only about 180 businesses currently do so.14 

As Bank Account. A Venezuelan will typically hold his or her Bitcoins in an account, find a low-volume trader who will exchange bolivars for Bitcoin, then try to spend those bolivars quickly before they lose too much value.15 Transactions are difficult. Point-of-sale terminals often do not work, bolivars are physically scarce, and prices can change by the hour or day.

To expedite payment, merchants sometimes give customers their banking account information, but a regular bank transfer of bolivars can take four days or more.16 If the customer uses the same bank, however, he or she can instantly e-transfer bolivars to the merchant’s account by mobile phone. If the customer uses a different bank, the customer can seek out a low-volume trader with the same bank as the merchant, and the trader can serve as middleman.17

For Mining Income. Mining involves the use of computers to solve complex algorhythms and create blocks for the blockchain, for which the miner receives a cryptocurrency reward. Mining takes large amounts of energy, but electricity is cheap in Venezuela. A successful miner can earn up to $500 in crypto per machine per month, a princely sum.18 Payment is in cryptocurrency, not bolivars. The downside is that the government watches for unusually high electric usage, then takes the computers and/or arrests or extorts the miners. 

Other Alternatives to Bolivars

The Petro. The Venezuelan government recently created its own cryptocurrency, the “Petro,” purportedly backed by the country’s oil reserves. Numerous cryptocurrency observers have labeled the Petro a sham for lack of transparency and in part because of blockchain and Bitcoin’s anti-government, libertarian origins.19

Gift Cards. Venezuelan residents can use their Bitcoins, for example, to acquire gift cards they can use in online marketplaces such as Amazon, although there have apparently been issues with credit limits and exchange rates.

Internet Goods. If a Venezuelan wanted to purchase gold jewelry or other goods online to avoid devaluation of the bolivar, PayPal typically would charge a 30 percent fee to exchange currencies, which most view as an unacceptable double tax.20 Goods have less liquidity than currency in any form, and remain subject to depreciation or theft. 

Virtual Dollars. AirTM currently provides virtual dollar accounts (cryptocurrency tied to the value of the dollar – like Ripple) to around 200,000 Venezuelans.21 Likewise, Abra uses smart contracts on a blockchain platform so that an individual keeps Bitcoin in hand at all times, but can “virtually” trade for fiat currencies and other cryptocurrencies, always getting paid in Bitcoin (or Litecoin) on any positive spread.22

In summary, necessity is the mother of invention, or in this case, adaptation. One hopes that the suffering of the Venezuelan people eases soon.  In struggling for their future, they are showing the rest of the world how Bitcoin and blockchain platforms may perform under pressure in daily life.    

Let the members of the Blockchain and Disruptive Technologies practice group at Lathrop Gage, led by Tedrick Housh and Dale Werts, answer your questions regarding the legal aspects of new technologies, like Blockchain and Bitcoin.


[1] Kyle Torpey, Crypto Insider, “Here’s how Venezuelans use Bitcoin in their daily lives,” June, 2018,

[2] Patrick Gillespie and Rhonny Zamora, CNN Money, “Venezuela’s hyperinflation is jaw-dropping. See for yourself,” Aug. 3, 2017,

[3] Shefano Pozzebon, CNN Money, “You can’t get 1$ out of the bank in Venezuela. I tried., Jan. 17, 2018,

[4] FocusEconomics, “Bolivar slides further in official and parallel markets in early June,” June 2018,

[5] Id.

[6] Torpey, supra.

[7] J.O’S., The Economist, “The Economist explains: The roots of hyperinflation,” Feb. 12, 2018,

[8] Coinbase 1 Year Chart for Bitcoin, June 29, 2018,

[9] Connor Wulf, “Bitcoins in Venezuela: Examining the Origins, Nature, and Viability of Cryptocurrencies in the Hyperinflated Country of Venezuela,” Portland State University Honors Thesis, Mar. 2, 2018,

[10] Kevin Helms,, “Venezuela Shuts Down Two Cryptocurrency Exchanges,” Apr. 28, 2018,

[11] Wilma Woo, Bitcoinist, “LocalBitcoins Sets Biggest Gain Ever as Venezuelans Exit Fiat,” with Kyle Torpey quote from Reddit User Repost, Dec. 4, 2017,

[12] Cryptonews, “Records Aplenty for Bitcoin (BTC) Trading Volumes on LocalBitcoins and Paxful, June 2018,

[13] YouTube Cryptobuyer site, Feb . 16, 2018,

[14] Staff, The Daily Hodl, “Venezuela:  Why Cryptocurrency Has Real Value,” June 20, 2018,

[15] Christian Garcia, Let’s Talk Bitcoin (LTB) Network podcast #366 at 15:45, May 20, 2018,

[16] Id.

[17] Id.

[18] Cady Voge, Wired, “Where Could Bitcoin Succeed as a Currency?  In a Failed State,” March 22, 2018,  

[19] Patricia Laya, Bloomburg, “Crypto Rating Sites Are Already Calling Venezuela’s Petro a Scam,” Apr. 3, 2018,

[20] PYMNTS Staff, “Letting the Air(TM) Out of Venezuelan Hyperinflation,” May 4, 2018,

[21] Torpey, supra.

[22] Torpey, supra, and Abra website,

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Lathrop Gage | Attorney Advertising

Written by:

Lathrop Gage

Lathrop Gage on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.