Venezuela has experienced a 95% devaluation in the bolivar over the past weekend, sparking interest in the country’s cryptocurrency Petro. There are many reasons as to why Venezuela started their own cryptocurrency but being devaluation proof was indeed one of the many reasons.
Petro has been offered to the public for months now, however mystery still looms over the cryptocurrency thus scaring investor from participating in the marketplace. According to Maduro and a website created by the Venezuelan government Petro is a “sovereign crypto asset backed and issued by the Venezuelan state” and is linked to the country’s crude reserves. According to the white paper in January 100 million Petro tokens would be distributed and no tokens can be created.
The token is supposed to represent the previous day’s oil basket price and act as a legal tender for paying taxes, however the token’s trading value is not reported. As of now the government values the petro at 3,600 bolivars (Approximately $0.014 USD at time of publishing).
Critics have questioned the token as soon as news broke out about its upcoming existence. Several rating sites consider the token to be a fraud some ICO rating sites have labeled the Petro as a fraud. These ratings are due to the lack of transparency behind the inner workings of the token and valuation method. Another concern is whether or not the government is able to handle blockchain technology. Cryptocurrencies have also been created to be decentralized and free from third parties or the government and Petro is not.
Maduro believed the Petro would be a great asset for the nation especially to obtain goods and services around the world and was supposed to be a solution to the country’s dollar shortage due to sanctions imposed by the U.S.
Venezuela has approved the use of the Petro and all other cryptocurrencies at tourist locations however many countries do not wish to purchase Petro as they are unsure if the purchase will truly equate to a specific amount of oil.