TL;DR Breakdown
• Venezuela used Blockchain technology to create the Petro in 2018.
• The digital Bolivar will be launched in October and based on electronic payments by text message.
Cryptocurrencies issued by banks in the world have gained popularity, with several governments taking the initiative. Venezuela has also chosen to join this host of countries as its central bank announced that it would launch the digital Bolivar.
The bank plans to create a CBDC for October 2021, joining the new global financial systems. All these revelations were released by the vice president of technology and communication in Venezuela through Twitter.
The statement added that the South American country would go through a new monetary reconversion to balance the national economy. On this occasion, the Venezuelan government seeks to eliminate six zeros from the Bolivar, its national currency.
The digital Bolivar arrives in Venezuela and seeks to enter as a cryptocurrency
Venezuela announces that the digital Bolivar will enter into circulation. The central bank will also issue banknotes of 5, 10, 20, and up to 100 Bolívares.
Digital Bolivar under the CBDC scheme will be supported by an exchange that bases its technology on text messages. In this way, the citizen in the country can quickly make transactions and payments in different services.
The banking authority clarifies this new economic model will not affect the value of the national currency. The CBDC tries to create a simple currency range so companies can use it without problems.
Other Latin American countries’ route with cryptocurrencies
Although Venezuela’s announcement about the digital Bolivar looks like a novelty, it is not the first time it has dabbled into crypto. In 2018, the national authority created crypto-based prices on a barrel of oil called “Petro.” The cryptocurrency evaded the prohibitions that the United States government imposed.
However, Petro was a failure because it did not have a scalable blockchain but manipulated it. So far, the national government has continued to insist that the Petro is a cryptocurrency with a future, however, it is considered a hoax in reality.
The Venezuelan government is desperately trying to reduce the hyperinflation it faces today. The country in Latin America suffers an economic crisis, with inflation exceeding 2,500 percent in 2021.
With the points clear, introducing the new digital Bolivar may be another failure for Venezuelan history. This could even cause the citizens of the country to further shy away from cryptocurrencies.
The Venezuelan government has not tried to regulate cryptocurrencies but seeks to rely on them. Venezuelan citizens use Bitcoin and USDT transactions to avoid inflation.
On another hand, Uruguay has created an excellent cryptocurrency bill plan that will help circulation by September. The El Salvador government also accepts payments in Bitcoin and has increased its attempts to create a unique financial model.
