Venezuela’s government has plans to launch its own cryptocurrency backed by oil assets – possibly as soon as this week.
The Venezuelan government claims that the cryptocurrency will help the country overcome its debilitating economic problems, adding that it will be backed by 5.4 billion barrels of oil valued at $267 billion.
President Nicolas Maduro has named the cryptocurrency “Petro” and, in additino to the oil and gas assets it will also be backed by the country’s diamond and gold reserves.
However, Maduro hasn’t revealed exactly how this backing will work, nor how it will help the country overcome its self-inflicted economic difficulties.
Maduro is delusional if he thinks that creating a new #cryptocurrency will save Venezuela’s finances. He is especially mistaken for basing it off its failed oil industry.https://t.co/hlrEUsCjct
— Prof. Steve Hanke (@steve_hanke) January 1, 2018
But communications minister, Jorge Rodriguez, is optimistic.
“Camp one of the Ayacucho [oil] block will form the initial backing of this cryptocurrency,” he told reporters. The field is located in Venezuela’s southern Orinoco belt, one of the most oil-rich regions of the world.
Rodriguez added that the Petro cryptocurrency will be different to other digital currencies because it is backed by valuable resources.
The country’s cryptocurrency plans come as the country continues to suffer from hyperinflation, caused by the government’s own economic policies. Its currency has fallen by around 97 per cent against the US dollar over the past year alone.
While the Venezuelan officials haven’t given any technical details about Petro and how it actually works, the currency is intended to revive the country’s economic fortunes and help restock empty shops.
“It will be materially impossible for the dictatorial financial centres of the world to intervene against this initiative,” said Rodriguez, adding: “It will allow us to overcome any financial blockade.”
Venezuela is one of the most resource-rich countries in the world, with proven reserves of oil greater than Saudi Arabia.
However, its nationalised oil company, PDVSA, has seen output crash over the past two decades as a result of political interference and chronic underinvestment.
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