Venezuela’resident, Nicolas Maduro during a Christmas Television Special announced cryptocurrency that will be backed by the economically embattled country’s commodity reserves, which include oil. Reports say, the as yet, unreleased cryptocurrency will be known as Petro.
Maduro, who took office back in 2013 and has had much criticism lobbed against him for his borderline
autocratic behaviour, according to a statement published on the official government website said
“Venezuela will create a…cryptocurrency to advance monetary sovereignty, as it will help to overcome
the financial blockade and thus move towards new forms of international financing for the economic
and social development of the country.”
Opposition leaders, true to form, have already stepped up to ‘poo-poo’ the announcement, claiming the
idea has no credibility.If the announcement holds any water it would probably a great move for Venezuela, which once boasted the highest worker wages in Latin America, suffers inflation rates of well over 400%.
Things have reached a point where protest actions have become a national pastime.
Despite its poor GDP (Gross Domestic Product) growth, the country does sit on the world’s largest oil
reserves. We’re talking about 298 billion barrels of proven oil reserves here.
Oil revenue has sustained Venezuela’s economy for years. During Hugo Chavez time in office, the price
of oi leapt to a historic high of $100 a barrel. The billions of dollars in revenue were used to finance
social programmes and food subsidies, but those programmes and subsidies became unsustainable
when the price of oil began to nose dive.
According to the Central Bank of Venezuela, the country is running out of cash, country has $10.4bn in
foreign reserves left, and it is estimated to be $7.2bn in debt. That’s deep in the red. WIth the Bolivar
taking a beating against the US Dollar, and Venezuela recently releasing a 100,000 Bolivar note, an oil-
backed crypto token could go a long way towards putting value back in people’s hands if the
government does it right.