Today, Tuesday, Venezuela is launching a new cryptocurrency to combat US “blockade,” as president Nicolas Maduro put it during his weekly televised broadcast.
The state has opened a registry for crypto miners who will be able to earn petros by running cryptocurrency transactions. The president predicts the petro will be a roaring success.
But will it?
The world is watching with great interest the progress of a large cryptocurrency experiment that Venezuela is currently running on a nation-wide level.
Some experts say Venezuela’s new cryptocurrency an ingenious plan to evade U.S. sanctions. Critics see the petro as a desperate move to secure cash amid an unprecedented economic meltdown. They predict the petro could become worthless over time, proving to be a state-run scam.
The petro is designed to raise hard currency and to function as a payment method for foreign suppliers now that most transactions have been stymied by financial sanctions imposed by Washington last year.
Maduro said petro will help combat a Washington-backed conspiracy to sabotage his government and end socialism in Latin America.
The announcement highlights how US sanctions this year are hurting Venezuela.
The launch on Tuesday comes amid a deep economic crisis.
Currency controls and excessive money printing have led to a 57% depreciation of the bolivar against the dollar in the last month alone on the widely used black market. Venezuelans are now suffering from widespread food shortages, hyperinflation, and the collapse of the traditional currency, the bolívar.
Mostly the critics of petro cite the fact that the initial batch of petros will be backed by Venezuela’s oil that has yet to be pumped. What’s more, it is to be extracted through joint ventures in which the government holds only a 60% stake.
Moreover, petro will be issued by a central bank, and who in Venezuela would trust a currency from a bank that hasn’t even been unable to maintain the traditional currency in a good standing?
Add here the fact that last month, the US Treasury Department warned against investing in the petro, and the future of this cryptocurrency looks rather dim.
Still, Maduro’s government is pressing ahead.
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