It’s always good news for the crypto industry whenever a country jumps into using blockchain. This simply gives the industry the credibility that it needs. Venezuela in February created its own cryptocurrency. The cryptocurrency called Petro was one of its kind as it is backed by oil, the country’s rich natural resource.
One of the reasons why the Maduro administration resorted to cryptocurrencies is because of the country’s economic problems. It has been designed in order to escape sanctions. In addition to this, the cryptocurrency has been used to back the new currency by Venezuela called Sovereign Bolivar.
Nowhere to Be Found?
Atapirire is a town that Venezuela claims brimming with 5 billion barrels of petroleum. And if you will listen to Venezuela’s announcements in the last few months, this was used in order to back their digital currency. This month, the Venezuelan government has vowed that there will be a recovery plan for the country dealing with a crisis.
According to the residents of Atapirire, there are no efforts whatsoever coming from the Venezuelan government to tap the resources. According to homemaker Igdalia Diaz, “There is no sign of that petro here”.
It turns out that the same is happening in different places across Venezuela. Also, there is no major cryptocurrency exchange that is selling the cryptocurrency. And worse, there are no businesses willing to accept Petro.
According to reports, the sales of the Petro raised $3.3 billion. And also, the coin can be sued to pay for imports. However, Hugbel Roa who works as cabinet minister who is involved in the project mentioned that the technology behind Petro is still being developed. And also, “nobody has been able to make use of the petro…nor have any resources been received”.
And also, another thing that makes Petro sketchy is the fact that the Superintendence of Crypto Assets, which is the agency that should oversee the petro is still not around the Finance Ministry. Reuters visited the Finance Ministry but was informed by the receptionist that it “does not yet have a physical presence here”.
Sovereign Bolivar Pegged on the Petro
Maduro announced that he is going to raise the minimum wage. In addition to this, salaries, pensions, and the exchange rate for the bolivar are now going to be pegged to the petro. Economists, as well as crypto experts, have unanimously agreed that a petro-bolivar tether is unworkable. Alejandro Machado who is a computer scientist and crypto consultant from Venezuela thinks that “There is no way to link prices or exchange rates to a token that doesn’t trade, precisely because there is no way to know what it actually sells for”.
Considering these facts, does it meant that Venezuela should rely on other cryptocurrencies? Recently, Dash has been used in Venezuela by businesses. Also, there is a growing number of Venezuelans starting their own mining setup in order to get cryptocurrencies as rewards. Since this is the reality behind the Petro, there really is enough reason to call the cryptocurrency as a scam. And also, it is far from the solution that the Maduro administration promised.