Venezuela releases cryptocurrency Petro to save Country from Economic Meltdown
VENEZUELA has launched a state-run, oil-backed cryptocurrency in a bid to end a crippling financial crisis that has seen the country teetering on the brink of hyperinflation.
In July, five zeros were slashed from the value of the Venezuelan Bolivar in a bid to bring it back under control, prompting suggestions of the use of cryptocurrency to ease the nation’s financial woes.
And in August, the International Monetary Fund (IMF) predicted the inflation rate in the country would reach one million per cent, although experts believed the figure was exaggerated.
Two million citizens have fled Venezuela to seek economic refuge elsewhere.
According to a statement posted on the Venezuelan government’s official site, President Nicolas Maduro appeared on national television and announced the official launch of the Petro cryptocurrency.
Petro’s brand new white paper states that the currency is backed 50 per cent by oil, 20 per cent by gold, 20 per cent by iron, and 10 per cent by diamond assets.
Maduro stated that the official website for the Petro has already been launched, and the official Petro wallet is also available in Google Play.
The President also stressed Petro will be available on six major cryptocurrency exchanges from Monday, October 1.
Mr Maduro did not specify which exchanges will eventually trade oil-backed currency, nor was it listed by largest traders such as Binance, OKEx and Huobi.
However, the public sale of the cryptocurrency will begin on November 5.
He also stated all oil purchases in and out of Venezuela must be paid with the fledgling currency.
The rule also applies to international airlines whose routes lie through local airports as fuel for aircrafts will also be sold using Petro.
Maduro announced Petro would be used as the unit of account for local salaries, goods, and services as the national sovereign Bolivar kept struggling with hyperinflation.
But despite Maduro’s statements. experts remain sceptical on the use of Petro.
In August, Reuters claimed there was no sign of Petro existence in Venezuela.
American technology and culture magazine Wired called the Venezuelan coin “a stunt” that aimed to cover up the government’s failure to recover the national currency
Moises Rendon, of the Washington-based Center for Strategic and International Studies told AFP: “It’s too late to save the Petro. There’s no confidence and it won’t get any.”
As a consequence of the economic instability in the country, more than two million Venezuelans are predicted to have fled the country in search of economic prosperity and work.
The migrants have mostly fled to neighbouring South American nations such as Colombia, Ecuador, Peru and Brazil.
But Mr Maduro has persistently mocked those fleeing the country’s economic crisis, branding them as “slaves and beggars”.
As of September, inflation in the country was tipped at around 200,000 per cent — with basic food and medicine difficult for the public to obtain.
US Vice President Mike Pence delivered a stark warning to Venezuela last week, after the South American nation deployed troops to the Colombian border in what is seen by Washington as a highly incendiary move.
The US hit back by imposing sanctions on four key members of Venezuela’s govenrment: first lady Cilia Flores, Vice President Delcy Rodriguez, Communications Minister Jorge Rodriguez and Defence Minister Vladimir Padrino.
US Treasury Secretary Steven T. Mnuchin said in a statement, “Treasury will continue to impose a financial toll on those responsible for Venezuela’s tragic decline, and the networks and front-men they use to mask their illicit wealth.”
Maduro responded Tuesday night by saying: “If you want to attack me, attack me, but do not mess with Cilia, do not mess with the family, do not be cowards.”
Mr Maduro accused embassy staff from Colombia, Chile and Mexico of a failed assassination attempt on his life early last month.
Mr Maduro has officially launched the Petro crpytocurrency to tackle Venezuela’s economic crisis.