In December 2017, Venezuela’s President Nicolas Maduro announced its controversial cryptocurrency Petro in order to circumvent the U.S. sanctions and prevent Venezuela’s economic collapse. Since then, Maduro took several steps to push the adoption of Petro. For example, he made the mandatory to pay for passports with Petro. Starting from November 1, the cost of issuing new passports is 2 Petros while that for the extension is 1 Petro.
Another initiative to boost Petro adoption was the government’s plan to present Petro to the Organization of the Petroleum Exporting Countries (OPEC) in 2019 and make it the main digital currency backed by oil. The government assumes that such a step will enable them to strengthen the country’s economy and ensure growth and prosperity.
Recently, Nicolas Maduro said on state television that Venezuela would put in place in 2019 a program to sell all its oil production in Petro. While delivering his speech, Maduro enumerated the benefits of using Petro, calling the initiative a ‘genius economic’ move that will result in lead to ‘greater dynamism and security’ for Venezuelans.
As Maduro has said, with such a move, Venezuela will free itself from the currency used by Washington “to create economic pain” to other countries, and to “persecute countries, as it does with Venezuela, Cuba, Iran, and Russia”.
According to the report from state-run media network TeleSUR, a schedule for selling Venezuela’s oil reserves via Petro will be announced for 2019 shortly.
Maduro said (according to translation):
“In 2019 we are scheduled to sell crude oil for Petro and in this way continue to free us from a currency that the elite of Washington uses.”
Further, he noted that the measure would lead to the increase of the national revenue and foreign trade through a basket of currencies and a six-year plan aimed at offsetting the impacts of US trade sanctions.
“It is necessary to promote a balanced, fair and diverse monetary system, in which the dollar enters as an exchange currency, but which is not used as a political mechanism.”
The measure is also aimed at diversifying the international market and embracing new forms of payment through cryptocurrencies from allied countries.
Is Petro a Scam?
Petro was launched in pre-sale in February as a means of economic recovery. Developed by the government, Petro is backed with the country`s natural resources. Maduro claims that the currency is strengthening his recently announced economic overhaul plan and will “revolutionize” the global crypto economy with a new form of trade, finance, and monetary exchange.
However, experts and analysts are skeptical that the Venezuelan cryptocurrency is really backed by oil assets and minerals. Some of them believe that Petro is nothing but a scam and another effort by Venezuela to skirt sanctions and mask the inability to overhaul the ailing domestic economy.
According to Alex Tapscott from the Blockchain Research Institute, there is no proof that each unit of the Petro is backed by oil. The International Monetary Fund (IMF) is not optimistic about the country’s opportunities to solve the problems with Petro. As the Fund estimates, Venezuela’s economy will collapse by 18 percent this year, while inflation is expected to be at 1,370,000 percent.