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Page added on December 6, 2017

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Maduro Unveils “The Petro”: Venezuela’s Official Cryptocurrency To “Overcome Financial Blockade”

Public Policy

Three months ago, in a not entirely surprising move meant to circumvent US economic sanctions on Venezuela, president Nicolas Maduro announced that his nation would stop accepting dollars as payment for oil imports, followed just days later by the announcement that in a dramatic shift away from the Petrodollar and toward Beijing, Venezuela would begin publishing its oil basket price in Chinese yuan. The strategic shift away from the USD did not work quite as expect, because a little over two months later, both Venezuela and its state-owned energy company, PDVSA were declared in default on their debt obligations by ISDA, which triggered the respective CDS contracts as the country’s long-expected insolvency became fact.

Fast forward to today when seemingly impressed by the global crypto craze, Maduro on Sunday announced the creation of the “Petro“, Venezuela’s official cryptocurrency “to advance in the matter of monetary sovereignty, to make financial transactions and to overcome the financial blockade”.

“Venezuela announces the creation of its cryptocurrency, the Petro; this will allow us to move towards new forms of international financing for the economic and social development of the country,” Maduro said during his weekly television program, broadcast on the state channel VTV.

“The objective is to advance in the Venezuelan economy and overcome the financial blockade, this allows us to continue in the economic and social development supported by Venezuelan riches,” said the president, explaining that his government will make a cryptocurrency issue “backed by reserves of Venezuelan gold, oil, gas and diamond wealth.”


Nicolas Maduro dances with supporters in Caracas, Venezuela, December 1, 2017

It was not exactly clear how this PetroCoin would be backed by various natural resources when the whole point of cryptos is that they are not backed by anything, and as such it appears that what Maduro is trying to do is admit that the hyperinflating Bolivar has failed as a sovereign reserve, and the country is hoping to confuse its global trading partners enough into believing that it somehow had a new “bitcoin” on its hands, which like the real thing would then proceed to appreciate in value in the near future.

While that is very much doubtful, as of this moment there is little additional information on this radical monetary overhaul, which is why we were amused by the following rhetorical question: instead of a cryptocurrency, perhaps Maduro meant to unveil the world’s first kleptocurrency instead?

Joking aside, perhaps Maduro is on to something: as CoinTelegraph reported some time ago, “Venezuelans have found a better alternative to escape hyperinflation. They’ve taken Bitcoin as an alternative, and  mining Bitcoin has become big in the country.” The reason: unlike most places in the world, electricity here is virtually free, allowing miners to create blocks without almost any recurring costs:

With few utilities that its citizens can still afford, electricity happens to be among them. In fact, electricity power in the country is hugely subsidized and virtually free. This is all thanks to President Nicolas Maduro of the socialist regime.

 

Such a setup created an opportunity for struggling citizens, as Bitcoin miners can run many transactions and earn at least $500 a month. This can feed a family and provide them their basic needs – goods, medications, and such.

That said, Venezuela’s miners quickly become the government’s “capitalist parasites”, since Bitcoin is still not legally regulated in the country, leading to some miners getting arrested for stealing free electricity. In other words, what Maduro is trying to do is impose the first de facto sovereign crypto, one which however has no other parallels to any of the dozens of other accepted cryptocurrencies.

One also wonders how long until the Venezuela government launches the first ever bailout ICO to save, well, itself.

One thing is clear, however: the fate of the “Petro” will be closely watched by the rest of the world in the coming weeks.

zerohedge



8 Comments on "Maduro Unveils “The Petro”: Venezuela’s Official Cryptocurrency To “Overcome Financial Blockade”"

  1. bobinget on Wed, 6th Dec 2017 2:24 pm 

    Facts remain;
    Venezuela still has the largest stash of proven oil reserves on planet Earth.

    If your car payment is a few weeks late, expect nasty letters. If your lender has put an entire bank at risk to build (Trump Towers), that bank will make every effort to get repaid. IOWS, do anything.

    Russia and China are chief Venezuelan lenders.
    Reportedly over 60 Billion$ an counting.

    Maduro’s crypto currency, based on block-chain,
    will work if other crude oil enablers latch on.
    This happens when USD begins to lose value.
    IMO, we will know quite soon WHEN, not if, the US government shuts down this week or two weeks from today when Republicans punt to get a “CR”.
    In either case, IMO USD is peaking.

    The USD is being patched together not with
    duct tape but that blue, far weaker, painter’s tape.
    Passage of the Republican Tax measure seals the deal for most international bankers. Adding yet another 1.4 Trillion $ to our already bloated debt
    makes Venezuelan loans look like a car payment.

    Stupid crook stories are always good for a laugh.
    Electing the same crook president because he played on your fear of a women, not funny.

  2. onlooker on Wed, 6th Dec 2017 2:56 pm 

    Defying the US hegemony while an honorable goal I not going to extricate Venezuela or the planet from its overshoot predicament

  3. peakyeast on Wed, 6th Dec 2017 5:42 pm 

    When it comes to the bitcoin currency I cannot imagine anything that is more stupid. 100.000s if not millions of computers crunching useless equations using enormeous amounts of energy to make extremely simple transactions.

    They call it “Proof of Work”. I call it “Proof of Waste”. Because that is what it is. WASTE.

    At least bitcoin could ally itself with distributed protein folding software and actually do WORK. This currency system is evil AND stupid almoste 100% WASTE.

  4. peakyeast on Wed, 6th Dec 2017 5:44 pm 

    oh – and the same goes for this currency if its also relying on Proof of Waste. Which it looks like.

  5. twocats on Thu, 7th Dec 2017 5:52 am 

    the global financial system is already digital and nearly all transactions are happening by computer “crunching”. if venezuela could succeed (yuan or petro or basket) it would be a huge accomplishment.

    one can’t rule out the potential that all the “problems” of venezuela are being spurred by the fact that they were attempting to do this in the first place. it “did in” Iraq.

    even the so-called corruption – why create a coup when you can foment corruption? perhaps the CIA has modified its playbook slightly.

  6. Davy on Thu, 7th Dec 2017 7:03 am 

    “one can’t rule out the potential that all the “problems” of venezuela are being spurred by the fact that they were attempting to do this in the first place. it “did in” Iraq.”

    On the other hand it is pretty obvious that years of graft and mismanagement is likely the leading cause of what happened in Venezuela. Venezuela de-Americanized more than any country in the hemisphere and was in full embrace of Russia and China. Where are Russia and China when a friend needs a shoulder to cry on? US meddling failed when the Chavista movement started in earnest. Chavez was a strong man and in the begging was unbeatable that was the seeds of his countries demise along with easy oil money. All along the US has been a thorn in Chavista movement but never a determining factor. Venezuela’s problems are its own making from living a way of life with no future for a small oil rich small country that was far more than it was capable of.

  7. fmr-paultard on Thu, 7th Dec 2017 7:54 am 

    may i add VZ has virtually no supertards like aswangland. yes and i hate strong men. putin is running for another term that’s 24 years! why doesnt erotard move to russia if he likes being part of PBMB

  8. fmr-paultard on Thu, 7th Dec 2017 8:03 am 

    why i don’t like russia.
    dictatorship
    juche culture, not a lot of attention to living
    no supertards. not natural habitat for them. Cambridge Five drank to death
    lack of respect for women

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