The country of Venezuela has gone through quite a few changes over the years and still is in the process of getting its bearings on its economy, national policy, and other matters. The authorities of the country are looking to the cryptocurrency market to rejuvenate it, as members of the private sector have already turned to the emerging industry to aid it in its time of crisis. Households are seeking to transact in satoshis as opposed to Bolivars because of excessive inflation that is running wild in the country. As a response to this increasing interest in cryptocurrencies, the government has established new initiatives to participate and potentially lead the way in growing the sector in the beleaguered country.
The Petro to launch in the next few days
The Socialist government of Venezuela, led by Maduro, will launch their cryptocurrency, the Petro, over the course of the next few days. The cryptocurrency will fundamentally rest on the reserves of 5.3 billion barrels of oil, valued at the current price of $267 Billion. The coin will also be supported by reserves of precious metals as well as gas.
The country, which is an Opec affiliated, oil powerhouse, (albeit somewhat mismanaged), is currently in the process of defaulting on a portion of its dollar bonds and is seeking to rebound and reverse its present course with the release of the Petro. The announcement of the Petro caught the world by surprise due to it coming from Venezuela, a nation that seems to be stuck in financial disarray.
Many are wondering how can a country like Venezuela pull off a turn around like this. A turn around focused on an innovative technology, a blockchain-based system that is just recently being integrated across the world at prestigious institutions.
People wonder if the country has the expertise and know how to deploy, run, and operate the currency. Most think that the country has suffered dramatically from brain drain due to its various policies that have not been favorable for many.
They also ponder, what will happen to the current bonds that the country is in the process of defaulting on? Will those assets be the collateral that is pledged to the cryptocurrency? If so, what does that mean for the idea of backing, as they haven’t relinquished any assets to cover the defaults?
How will companies and countries who have loaned money or supplies ascribe value to the petro?
Jorge Rodriguez, the Minister of Communications, pushes back. He stated that:
“Camp one of the Ayacucho block will form the initial backing of this cryptocurrency.”
“It contains 5.342 billion certified barrels of oil. We’re talking about backing of $267 billion.”
Crypto-currencies based on real-world assets is a growing sector and will continue to thrive as the overall market pushes forward. For Venezuela, being able to manage their crypto-currency, the Petro, differently from how they handled their Bolivars must be of utmost importance.
The Communications Minister went on to note that they already have set of miners who are willing to do the work of crypto mining.
Further details on the aspects of transparency and managing of the economy were not provided.