Venezuela Officially Launched Its Oil-Backed Cryptocurrency

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Venezuela Officially Launched Its Oil-Backed Cryptocurrency

Nicholas Maduro, the President of Venezuela claims to have officially launched the country’s first state-backed oil-backed cryptocurrency, named “El Petro“. Maduro has been in the news over the past few months for his claims of coming up with an economic recovery plan that included provisions to raise the gasoline prices for the first time in the last twenty years. The new cryptocurrency may devaluate the existing national Venezuelan currency and peg the new Bolivars to the Petro.

The new launched cryptocurrency, Petro is boosting the economic recovery plan. Maduro believes that “El Petro” will revolutionize the global economy of cryptocurrency with the new form of finance, trade, and monetary exchange. He further announced plans for making Petro available officially for public sale on 5th November 2018 and also claimed that the cryptocurrency is backed by commodities like gold, natural gas, diamonds, and oil.

The authorities of Venezuela believe that the Petro will make their economy stable and provide them with financial independence. It will provide a fairer and balanced international financial system. A few months ago, Maduro announced the plans of oil-backed cryptocurrency, but later US prohibited the entry of any digital or cryptocurrency developed by Venezuela in the March 2018 US dealing.

Experts and analysts have also condemned Petro, doubting minerals and oil assets supporting the cryptocurrency. In fact, the cryptocurrency community’s reaction to Petro has been a mixture of dumbfoundedness and annoyance, reports BBC, citing Alex Tapscott from the Blockchain Research Institute. Tapscott went even further by saying that Venezuela has no single proof to prove its claims of Petro’s units being backed by oil.

Speaking to BBC, Tapscott said the technical information available to the media is too little to believe in. He further noted the development of the newly launched cryptocurrency is overshadowing the latest happenings in the country’s economy.  The trade of Bitcoins in bolivars has reportedly increased since the start of 2018. The rise has been due to the shift in the way people have been using their money. Tapscott said that more of people are trading Bitcoins in bolivars to keep the value of the money as the country’s inflation stands at 13,860 percent as per IMF estimates.

Venezuela has made about 82 million Petro available before the sale. The government is expected to issue initial coin offering (ICO) in a month. Being powered by Ethereum blockchain, Petro is said to be the world’s largest cryptocurrency. The country claims Petro to be a part of its plan to save the country from inflation. The Bolivar, Venezuelan currency, has reached quadruple-figure inflation with one Bolivar to be worth 0.00004 USD. Maduro intends to issue 100 million Petros, which will be allegedly backed by 100 million barrels of oil reserves. The newly launched Petro is also expected to overcome any financial blockade faced by the country.

Although Petro is supported by gold, diamond and other commodities, there are no provisions to exchange Petro for those commodities. Venezuelan government’s plans for Petro have received worldwide criticism for being lofty and completely unattainable.