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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Venezuela Has Officially Launched Its Oil-Backed Cryptocurrency

Venezuela has officially launched what its President Nicolas Maduro claims is a first state-backed oil-backed cryptocurrency, El Petro, which analysts and experts see as nothing but a scam and another effort to skirt sanctions and mask the inability to overhaul the ailing domestic economy.

Over the past months, Maduro has been touting a new plan for economic recovery, which includes a new policy on gasoline pricing that would raise Venezuela’s ultra-cheap gas prices for the first time in two decades. The plan to ease the severe economic crisis also featured a devaluation of the currency and pegging the new bolivars to the Petro.

Maduro claims that the Petro is strengthening his recently announced economic overhaul plan and will “revolutionize” the global crypto economy with a new form of trade, finance, and monetary exchange.

The official public sale of the Petro—which Venezuela say is backed by oil, natural gas, diamonds, and gold—will begin on November 5, Maduro has said.

According to authorities in Venezuela, the “Petro is an instrument to consolidate Venezuela’s economic stability and financial independence, coupled with an ambitious and global vision for the creation of a freer, more balanced and fairer international financial system.”

Just a few months after Maduro first announced the idea of the oil-backed Petro, the U.S. prohibited in March U.S. dealings with any digital currency, coin, or token issued by Venezuela.

Experts and analysts are skeptical that the Venezuelan cryptocurrency is really backed by oil assets and minerals. Related:  Why The Saudis Can’t Keep A Lid On Oil Prices

“Reaction from the cryptocurrency community has been a mixture of dumbfoundedness and anger,” Alex Tapscott from the Blockchain Research Institute told the BBC.

According to Tapscott, there isn’t any proof at all to back up Venezuela’s claim that each unit of the Petro is backed by oil.

“There is very little technical information about it,” he told the BBC, adding that the launch of the Petro is eclipsing a more significant development in Venezuelan economy—the trade of Bitcoins in bolivars has soared since the start of the year as people are trying to keep the value of their money amid inflation currently running at 13,860 percent, as per IMF estimates.

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Woody Willson on October 04 2018 said:
    Q: How often will Venezuela (re)launch this scam?
    A: As often as Cuba, Russia, and China say.

    Still not exchange traded; still no suckers fooled.
  • John Brown on October 04 2018 said:
    LOL. The Petro is a joke. It’s backed by the same thing that backs the Bolivar. A failed brutal murdering Communist State. Oil, Gold, Diamonds? Really? If Venezuela could deliver any of those things to market the Bolivar wouldn’t be worthless. Go ahead & but Petros but buy a bucket, pick, & shovel. When you want to use your Petros to get your oil, gold, & diamond you need to go dig for them yourself. Anybody at this point listing anything or doing business w the murdering criminal Chavez/Maduro regime should know that when Maduro flees or ends up hanging from a lamp post by his heels the Venezuelan people will seize anything you’ve used to help Maduro starve them & repudiate any debt you provided Maduro to oppress them. The clock is ticking on these gangsters & anyone helping them will be judged equally guilty of their crimes which include murder.
  • cowboybob on October 05 2018 said:
    Maduro should hire Musk as his ICO manager....
  • Rod Gillis on October 05 2018 said:
    The Venezuela Bolivar is now worth about as much as one sheet of toilet paper, worthless. Now Maduro is launching the "petro" which is supposed to replace this currency, based on oil in the ground. That would be okay but there is a problem. Buying the "petro" means that Venezuela will be able to pump that oil out of the ground. This is problematic since production has fallen nearly 50% since 2014. What they are able to produce now will hardly cover the interest on what they owe, so how is anyone going to benefit from buying into the petro? Besides this, the Venezuela government, over the years, has nationalized many foreign companies illegally, including oil companies, who have now won billions of dollars in lawsuit awards and are now seizing government assets, including oil assets, to recoup their losses. No one in their right mind would buy into this scam because under these circumstances they would never get their money back. Venezuela owes too much to Russia, China and other countries such that anything they produce will just just cover what they owe and will not make anything for any investor in the "petro".

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