Traffic in Caracas (luisana zerpa/Unsplash)
The Venezuelan government’s push to create a cryptocurrency-centric economy appears to be working, but perhaps not in the way officials had hoped.
That’s the main takeaway of a by blockchain analytics firm . On Thursday, the startup revealed exclusively to CoinDesk that Venezuela ranks third in the world for crypto adoption, according to Chainalysis metrics, behind Ukraine and Russia.
“The reason why it ranks so highly is the peer-to-peer marketplaces. That’s why Venezuela stood out to us,” Chainalysis research lead Kim Grauer said in an interview.
The new data tells of a society so sick of hyperinflation that citizens are willing to turn to BTC) as a haven, Grauer said. They’re getting their bitcoin from peer-to-peer (P2P) exchanges such as Paxful and LocalBitcoins, centers of Venezuela’s burgeoning crypto scene.
Meanwhile, Venezuela’s government-approved exchanges are struggling to gain traction.
, an exchange owned by the Venezuelan state of Zulia and one of only seven exchanges with government approval, eked out just $380,000 in dollar-adjusted volume over the last year, according to Chainalysis research.
LocalBitcoins reported $242 million in bolivar-to-bitcoin trading volume over the past 365 days, according to . Over the same period, Paxful posted $311,000 in bolivar-to-bitcoin volume. (Paxful suspended payments with the Bank of Venezuela in June, citing U.S. sanctions.)
On-chain data suggests Criptolago is mostly being used by Venezuela’s elite, according to Chainalysis. The majority of its bitcoin transactions – 75% are over $1,000 – are simply too large for vast swaths of the cash-poor country to afford.