It’s probably common knowledge by now that Venezuela is facing an economic crisis of tremendous proportions. The cause of the crisis, however, remains in dispute. Could it be Venezuela’s socialist economy? Oil prices lower than they are able to compete with? Inflation that has reduced the value of the Venezuelan Bolivar by half in just the last month? Or could it all have started when the US began sanctioning the country in 2015, declaring it a threat to national security, sanctions which continue to this day? With each cause, the blame gets laid at the feet of a different party.
But now Venezuelan president Nicolas Maduro has come up with a novel way of circumventing that last reason – to some extent at least. With cryptocurrencies all the rage, perhaps he could tempt some of those Crypto Cat investors away via a cryptocurrency with a difference; promised real-world ties to Venezuela’s enormous oil and gas reserves.
“Venezuela is announcing the creation of its own cryptocurrency. It will be called The Petro. It will allow us to innovate towards new forms of international finance for the economic and social development of the country,” Maduro said in a statement.
In theory, at least, Maduro would not be able to print a cryptocurrency into oblivion – assuming it works the same way as Bitcoin.
On his weekly television show “Sundays with Maduro,” he claimed that Petro would be linked to natural resources including Venezuela’s oil and gas reserves. The money raised would be used “to advance the country’s monetary sovereignty, to carry out financial transactions and to defeat the financial blockade against the country.“
“We are facing a financial war against the country which we have denounced and the opposition has denied. There are business people who are unaffected by Donald Trump’s blockade. With this, we will join the 21st century,” claimed Maduro.
Venezuela has already refused to receive payments for its oil in the almighty US dollar, an act of defiance that has led to devastating consequences for some nations in the Middle East. Its alternative means of financing would put further strain on its… relationship… with the US.
One major critique of cryptocurrencies is the lack of tangible assets giving them a base with which to be valued at. If Maduro is lucky, Petro might one day be worth as much as a virtual kitten.