Venezuela Has Started the Issue of Its Petro Coin
CryptoBit News Today2 min read
Venezuela recently announced it has begun issuing its state-sponsored cryptocurrency, the Petro. The pre-sale of the Petro opened this past month, with the official launch of the digital coin coming this coming week. ## Background on the Petro
The Petro, approved by President Maduro last December, is designed to be backed by Venezuela's oil, gold, and mineral reserves. The government hopes the Petro will help alleviate the country's economic crisis, which has included a steep devaluation of the national currency, the bolívar, and shortages of food and medication due to US sanctions and falling oil prices. This is all in an effort to attract foreign investment and do an end-run around American financial sanctions.
The cryptocurrency, which will have the code VET, requires residents to buy the Petro using one of Venezuela's two official exchange rates, which are valued far higher than those on the black market.
Critics question the Petro's utility. The newly launched coin already appears to be struggling. The Petro app does not work on many Android phones and requires a costly iPhone for iOS users.
Furthermore, the International Monetary Fund has pointed out that the country's oil revenues are already heavily committed to paying down public debt and keeping up imports.
Many also question that valuing the petro in dollars will deter those looking to escape the country's economic crisis from exchanging bolivars for the digital coin.
This effort comes on the heels of the rollout of the Petro, which was broadly criticized by economist for its current price and for affirming that the coin was backed by oil. The sheer expense to buy the Petro underscores that the Venezuela government's plan is to keep the Petro as a speculative asset, rather than to make it a practical tool for commerce.
Additionally, the Petro is likely to serve as a conduit for corrupt officials to offload their wealth and infiltrate the global financial system, which they have been evading for decades.
There are questions on the Petro's legality in Venezuela, where the Supreme Court has ruled the Maduro government illegitimate. ## What's Next for Crypto in Venezuela?
The Petro has several challenges to face in the coming months. Skeptics question its utility for daily transactions, while analysts caution that its stated oil backing may not hold up to scrutiny.
At the same time, there are concerns over the legality and transparency of the Petro within Venezuela, as well as its potential to be used for illicit purposes given the country's economic and political situation.
Only time will tell how the Petro will play out, but its launch marks a significant development in the world of state-sponsored cryptocurrencies and the evolving relationship between blockchain technology and governments around the world.
