"What´s the deal with Petro?"
Updated: Feb 16
I’ve heard several times about Venezuela and cryptocurrency. I had no idea the government of Venezuela had launched a new cryptocurrency called Petro. I knew that the bolívar (currency used in Venezuela) was not doing well, so I initially thought this was a good idea; reaching out to crypto may solve their economic problems. Little did I know it is way more complicated than that.
First of all, it’s crazy to think that Venezuela was once the richest South American country, and that it also has one of the biggest oil reserves in the world. You can check the current situation at the following link: Venezuela Collapse Analysis.
The downfall of the Bolivar and the rise of the Petro, that`s what it looks like to me.
In a previous blog I wrote about how cryptocurrency is only valuable because people are giving it value, so having a lot of discussion about a coin is the best way to go according to me. Therefore, I believe that in the public eye this coin can either be very good or very bad. When it comes to popularity, I’m sure it will work; unfortunately, this new currency comes with many questionable factors.
According to The Guardian, Venezuelas President, Nicolás Maduro, informed that each Petro coin will be backed by one barrel of the oil-rich nation`s petroleum. Apparently, this coin was designed to raise fiat cash and to function as a payment method for foreign suppliers. This is useful now that most transactions have been blocked by financial sanctions imposed by the United States in 2017.
In an article at PBS.org, it's stated that, “President Donald Trump imposed new financial sanctions against Venezuela on Friday, a response to President Nicolas Maduro convening a special assembly to rewrite the country’s constitution — seen by the U.S. and its allies as his attempt to grab more presidential powers." The article also explains that the sanctions are meant to block banks from dealing with the government of Venezuela, the state-run oil and the natural gas company PDVSA. I’m not taking sides, but these sanctions I’m sure have been a harsh hit on Venezuela, considering that their main resource is oil.
I’ve read in many sites that the idea of Petro is just the way to get around these sanctions. I believe that might be the reason, and it may be a desperate move considering their economy is failing. This idea has made crypto users state that Petro will give cryptocurrency bad fame, thus getting the wrong idea on this digital currency. Sure, as if the U.S government didn’t have any more reasons for disliking cryptocurrency.
And then this happened: “President Trump has approved Treasury Secretary Steven Mnuchin to enforce any regulation or policy to ensure that US-based investors are barred from purchasing the Venezuelan Petro. The decision of the US government to prohibit investment in the Venezuelan cryptocurrency was likely influenced by the additional sanctions imposed on four more government officials at the G20 summit," assures Cointelegraph.com
Hope you enjoyed it! Feel free to comment.