You’ll never guess the world’s most expensive city.
It’s not Zurich. It’s not Tokyo. It’s not New York, either.
No. It’s Caracas, Venezuela. Strange, huh? After all, Venezuela isn’t a rich country. It’s in the Third World.
But there’s a simple reason why Caracas tops this list.
Inflation is skyrocketing in Venezuela
Now, it’s hard to say exactly how high inflation is in Venezuela right now. That’s because the government stopped publishing inflation data two years ago.
But independent economists have been tracking inflation in Venezuela. And the figures they’re reporting are astronomical.
According to Venezuela’s National Assembly, inflation hit 2,616% last year. That means prices for everyday goods and services in Venezuela got around 27 times more expensive in just 12 months.
And the situation has only worsened. Recently, the National Assembly said that inflation in Venezuela is now running at nearly 24,600% per year.
The bolívar, Venezuela’s currency, is losing value so rapidly that many people can’t afford food or medicine. Some Venezuelans are even selling their own hair just to survive. It’s a tragic situation.
Venezuelans are taking shelter in bitcoin
Many of the Venezuelans are now exchanging their bolívars for bitcoin. Just look at the chart below. It shows the weekly bitcoin trading volume in Venezuela.
You can see that bitcoin trading volume in Venezuela has exploded, up 211% this year alone.
Venezuelans are loading up on bitcoin because the bolívar is in free fall, and because bitcoin is a decentralized currency. It’s not controlled by a government or central bank.
Venezuela is a small, poor country
It will never move the needle on the price of bitcoin.
Still, Venezuela could emerge as the first country where a cryptocurrency effectively replaces a government-controlled paper currency. And that would encourage other people around the world to also seek shelter in bitcoin.
After all, Venezuela isn’t the only country with major money problems.
Just look at Argentina. Last year, its official inflation rate hit 25%. The year before, it was 37%. This means that everyday goods and services in the country are 71% more expensive than they were at the start of 2016.
Argentina’s currency, the peso, is in free fall, too. It’s down 27% against the U.S. dollar this year.
The same goes for the Turkish lira. It’s lost 18% of its value against the dollar this year.
We could go on and on. Even “stable” currencies like the U.S. dollar and the euro are approaching their intrinsic value of zero.
This is why people all around the world will seek shelter in bitcoin in the coming years.
Here’s what The Casey Report and Crisis Investing editor Nick Giambruno said in a recent interview:
Bitcoin offers regular people a safe haven. They can use it to send and receive wealth while bypassing the unsound banks, worthless currencies, and government confiscation schemes of their home countries. When a crisis hits, a government can easily steal money in the banks or steal purchasing power by printing currency units. But it cannot easily steal bitcoin or prevent people from using it. In a crisis, bitcoin is invaluable to the common man.
In short, bitcoin’s role as a crisis currency could cause its price to explode in the coming years.
So consider speculating on bitcoin if you haven’t yet.
Just remember that bitcoin is still highly volatile. As always, never bet more money than you can afford to lose. It only takes a small stake to make a fortune in the years ahead.