Venezuela Launches Controversial State-Issued Cryptocurrency El Petro

Venezuela’s President Nicolas Maduro announced the official launch of the first ever state-backed cryptocurrency, El Petro, RT reported on October 7.

In works since its February 2018 presale, the coin is scheduled to hit the market on November 5.

Maduro Announces Forthcoming Public El Petro Crypto Sale

President of Venezuela, Nicolas Maduro, holding El Petro’s whitepaper

(Source: RT)

Venezuela has officially launched what its President Nicolas Maduro claims is a first state-backed oil-backed cryptocurrency, El Petro, RT reported on October 7.

According to the government’s official website dedicated to the coin, the petro “is an instrument to consolidate Venezuela’s economic stability and financial independence, coupled with an ambitious and global vision for the creation of a freer, more balanced and fairer international financial system.”

The Venezuelan cryptocurrency was available for purchase during its presale held on February 20, 2018, when it allegedly raked in over five billion dollars. However, despite the Venezuelan government claiming that the cryptocurrency has reportedly received 186,000 certified purchases, a third-party validation of the data has never been provided.

The official public sale of the Petro will begin on November 5, Maduro has said in a statement. According to a notice published on Venezuela’s government website, people are now able to visit the official Petro website and download the official wallet on Google Play.

During a televised speech on a local news channel, Maduro said that a meeting with miners and cryptocurrency experts would take place on October 29, just a few days before the Petro sale. According to the Epoch Times, the petro no longer will be backed solely by physical oil reserves, and the Venezuelan government will release 100 million pre-mined petro tokens at $60 each during the sale.

Experts Concerned About The Legitimacy of the Petro

During the press conference, Maduro said that the Crypto Assets Superintendency and the Venezuelan Crypto Assets Treasury would hold 51 percent of the petro’s money supply, while the remaining 49 percent would be available for the public in general. The petro will apparently run on its own blockchain developed by the government.

Epoch Times explained that 50 percent of the petro’s price will hinge on oil prices, 20 percent on gold prices, and 20 percent on iron prices, while 10 percent will rely on the price of diamonds. However, despite being asset-backed, the coin will have a tough time maintaining a price consistency, as the number of petros will be finite.

According to RT, experts and analysts are already skeptical that the Venezuelan cryptocurrency is really backed by oil assets and minerals. Alex Tapscott from the Blockchain Research Institute told BBC that the reaction from the crypto community has so far been “a mixture of dumbfoundedness and anger.” He also pointed out that there isn’t any proof at all to back up Venezuela’s claim that each unit of the Petro is backed by oil.

Tapscott also told BBC that the launch of the Petro is eclipsing a more significant development in Venezuelan economy—the trade of Bitcoins in bolivars has soared since the start of the year as people are trying to keep the value of their money amid inflation currently running at 13,860 percent, as per IMF estimates.

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