Venezuela launches its oil-backed crypto-currency, the petro
- by Derrick Holloway
- in World
- — Feb 21, 2018
Venezuelan leaders face an unprecedented economic crisis, and their currency is nearly worthless.
Venezuela's President Nicolas Maduro took to the U.S. president's favorite medium, Twitter, on Monday to ask him to start a dialogue between the two countries.
Harry Colvin, director and senior economist at Longview Economics, told CNBC ahead of the petro's launch that he was "doubtful" the introduction of the world's first state-backed cryptocurrency would be a success.
Cryptocurrencies by design are decentralized financial systems, so one created by a government runs contrary to that spirit and creates an opportunity for manipulation, said Leidenz.
However, a number of cryptocurrency experts are dubious about the move with one going so far as to claim that there is, "no reason why a rational investor should put money into it". The government is trying to sell $2.3 billion worth. The petro does not give investors any ownership stake in Venezuelan oil. The Latin American country has the world's largest proven oil reserves.
Some investors say it's innovative nonetheless, and could draw investment from Middle East, Europe and Asia. The government has been in default on some of its debt since November.
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Eric Farnsworth, vice president of the Council of Americas, a New York-based organization that promotes free trade, open markets and democracy among countries in the western hemisphere, told Newsweek: "The regime is desperate to portray themselves as the victim".
It's unclear how much demand the petro will draw.
Opposition leaders said the sale constitutes an illegal issuing of debt, while the US Treasury Department warned it may violate sanctions imposed a year ago.
Maduro has also touted the petro as the fulfillment of the late Hugo Chavez's dream of upending global capitalism away from the dominance of the USA dollar and Wall Street. They can't buy it with Venezuela's official currency, the bolivar, which is worth almost nothing because of hyperinflation.
"Today, a cryptocurrency is being born that can take on Superman", said Maduro, using the comic character to refer to the United States, as he was flanked by mining rigs in a state television address. Diosdado Cabello, the PSUVs perpetual number two man, made the request for early legislative elections April 22nd, the same day as the divisive Presidential vote.
On February 4, US Secretary of State Rex Tillerson said Washington was weighing sanctions on Venezuela's oil sector to increase pressure on the country's authorities and make them "return to constitutional process".
