Venezuela: The Laughable Launch of the Petro, Maduro’s New “Cryptocurrency”
Maduro has heavily promoted a new cryptocurrency, the petro, which is supposedly backed by Venezuela's oil reserves, but markets aren't buying it.
A year after its absurd creation, the chavista cryptocurrency, the “petro” has been yet another embarrassment for the Venezuelan government: like the bolivar, for the rest of the world it has no value, but for the regime of Nicolás Maduro it serves as a reference point for prices in a devastated economy.
On Wednesday, January 2, the value of the petro increased fivefold from 9,000 sovereign bolivars to 37,837 in the first week of the year; a reflection of how the national currency continues to devalue in relation to a nonexistent cryptocurrency that only has value in Venezuelan territory.
For the Venezuelan economist, José Toro Hardy, the official increase in the petro is nothing more than a lie mounted by the dictatorship in Venezuela.
“Bitcoin is turning 10 years old. Its price fell by 30% in one month, 50% in 6 months and 80% in one year. If that happens with Bitcoin, are we going to believe the story of the explosive rise of the petro?” he said.
Apparently, according to sources at the Central Bank of Venezuela, the Maduro regime is seeking to use the petro for “dual exchange”; that is, two different values. On the one hand, it will serve as a marker for the price of salary and certain services, such as passports; and on the other, “align” the cryptocurrency with new quotes from Dicom, Venezuela’s new currency exchange regime.
According to Noticiero Digital, “there are two petros: one for Dicom and devaluation, and another for salaries. This is what is being said in the Central Bank of Venezuela (BCV). It’s a mess,” the sources said.
In the eyes of the Maduro regime, a petro is equivalent to USD $60; however, there is no nation that recognizes this arbitrary value. The economic reality is that Venezuela currently enjoys two worthless currencies: one digital and one paper.
Economists and experts in cryptocurrencies do not recognize the petro as legitimate because, unlike currencies like Bitcoin, it gives the dictatorship another measure of control, a situation fundamentally violates the most basic concepts of a successful virtual currency.
Cryptocurrencies are virtual currencies that can be exchanged, and operate like any other traditional currency; the most consolidated are not issued by central banks, but are created in a virtual way by means of the shared registry of transactions. That is the difference with the petro.
The Venezuelan Parliament, in which the opposition holds a majority, declared null the decree of the issuance of Petro, because it is an illegal currency.
With the creation of this new cryptocurrency, the regime has once again violated the Venezuelan Constitution because, as it is ostensibly backed by state resources, it represents an issue of a public debt, and thus necessitates the approval of the National Assembly.
The creation of the Venezuelan cryptocurrency also violates Article 3 of the Organic Law on Hydrocarbons, which prohibits offering oil reserves as collateral.
Likewise, rating agencies of Initial Currency Offers (ICO) and cryptocurrencies have not hesitated to classify the petro as a scam on the part of the regime of Nicolás Maduro.
The renowned icoindex.com website offers a dismal view of the cryptocurrency; it maintains a skeptical view of trusting a digital currency created by a country with a ruined economy.
Making matters even more complicated, the Trump administration prohibited any transaction with the Chavista cryptocurrency. The executive order banned “all transactions” with “any digital currency” issued by the Venezuelan government.
In spite of all this, Maduro announced that from 2019 on, Venezuela will market its oil production through the cryptocurrency.