Venezuela Launches National Cryptocurrency
The President of Venezuela announced the creation of a national cryptocurrency, Petro (backed up by oil reserves) in December 2017. On November 5, Venezuela launched the official sale of its widely-discussed cryptocurrency. Apparently, the new coin has made huge progress: on the first day of the Petro token pre-sale on February 24, it attracted about $735 million from investors. Now Petro can be bought directly, on the official website of the coin or on local cryptocurrency exchanges authorized by the government. Since August 20, the country’s national currency has been pegged to the rate of the Petro cryptocurrency.
Petro, the first cryptocurrency based on a country’s energy and mineral resources, was able to raise funds worth more than $5 billion from 186,000 certified buyers, according to reports from the local publication channel telesurtv.net. This “oil” cryptocurrency was recognized as the official alternative currency in the country. The Central Bank of Venezuela has already released an application for converting bolivars into the Petro-tied “sovereign bolivar” – a fiat currency that will gradually replace the depreciated currency. The government has now ordered the purchase of passports with the help of the Petro.
Expert Opinion
At Crypto Investor Day, we had a conversation with several experts who shared their opinions on the new Venezuela project.
One of them was Ben Bartlett, who is a partner at the San Francisco office of Tackett Bartlett LLP, where he counsels Blockchain startups:
It is important to view this project in context, beyond all the controversy concerning it. Right now, there are two thousand coins, and this is because the old world, the hierarchical and unanimous wealth concentration, is over. The cryptocurrency industry is all about diversity. There is going to be a coin for everything and for everyone. These are micro-economies evolving. In the Petro coin case, it is a micro-economy that’s tied to a larger economy – oil. So, I’m excited to see how it plays out. And I think it is worth trying out any creative mechanism to get money in the hands of people who are starving and in need of bread, in need of food.
Chris McCann, an advisor for Nervos, HTC Exodus, Nebulas, and Dekrypt Capital, shared his ambiguous thoughts on that:
I’m not deeply familiar with the Petro coin, but I think it is very interesting, especially when it comes to making it a national cryptocurrency. We can assume that a coin can be connected to anything, not only a dollar, but also commodities: for example, oil. So if somebody wanted to get exposure to oil, he or she can simply buy a coin instead of going to the open market. But from an ideological point of view, since there are some restrictions for trade with Venezuela, I’m not sure that this is going to work out.
Another interesting hypothesis was put forth by Matt Leidlein, President and Co-Founder of Big High Wall Capital, a division of RCM Alternatives:
I don’t have any foresight on what is going to happen in the future, but it will be very interesting to see how international regimes enforce sanctions against countries that are parachuting out of conventional finance into cryptocurrency. I think that it will be a very interesting journey, because on the one hand, we have these cryptocurrencies which are the most traceable transactions in the history of the world, and on the other hand, we have this end-goal of sanctions avoidance, which is encryption-based, private, and achieves a certain outcome. How that outcome gets discovered is, I think, the whole game here.
Andrew Bonner, Co-Founder/Director at Instant Access Medical, LTD, stated:
I think that this is an opportunity for equality for productive management of commodities in the country. It has the chance to spread global wealth opportunities all over the world.