The first day of October was very important for Venezuela because the head of the state declared the release date for the national-backed cryptocurrency, dedicated to battling Venezuela’s hyperinflation issues. They will initiate the first phase on November 5, making Petro coins available in sovereign “bolivars”.
The Venezuela’s hyperinflation issue continues to plague the government, which developed crypto in order to battle it. Both experts and general cryptocurrency community remain skeptical over the project’s success. Apart from complete control over the supply, the coin pegs its value to a barrel of Venezuelan oil.
Crypto Developed to Battle Venezuela Hyperinflation
Venezuela’s President, Nicolás Maduro, announced November 5 as the final release date for Petro. The idea of a national cryptocurrency saw daylight in December 2017. The current head of the state announced that the digital currency would have its value backed by oil, gasoline, gold, and diamonds. The main reason for the government to opt for crypto financing is the failing economy of the country.
According to the Forbes analysis, 96% of all export figures that the country possesses come from oil. With crude oil price decline in 2014, the Venezuelan finances took a hard hit, leading the market towards hyperinflation in January 2018. Since the start of the Bolivar’s fall in January, the currency has suffered over 1.000.000% decline due to Venezuela’s hyperinflation. Thus, the price of commodities, food, and all other goods within the country’s borders grew at a tremendous pace.
Petro’s Development and Future Plans
As the result of a failing economy, a cryptocurrency Petro was conceived. Officials decided not disconcert the market cap of the crypto in terms of volumes at this time. However, President Maduro ordered a production of 100 million coins for the first stage of supply. The initial plan for circulation mentioned August as the potential target. However, to accommodate the market needs, authorities pushed the release date towards November.
According to the live announcement, President Maduro stated that six large exchanges would offer the coin, as well as sovereign “bolivars” within Venezuela. Apart from the crude oil price going down, U.S. sanctions took a toll of the domestic economy, according to the analysts. Thus, President Maduro announced the Petro coin to be a getaway for “a free and independent country.” The government, in order to tackle Venezuela’s hyperinflation problem, will completely control the cryptocurrency’s supply.
Experts and Community Skeptical
The opposition, experts, and communities alike expressed their skepticism over the project’s success. Moises Rendon from the Center for Strategic and International Studies in Washington, U.S., stated that Petro “has no confidence and it won’t get any.” Venezuela’s National Assembly, led by the opposing parties, went a step further and labeled the new crypto project as illegal. In the latest move, U.S. President, Donald Trump, ordered barring of the cryptocurrency in any US-based exchanges.
— Joey Zhou (@josephzhou) October 2, 2018
Additionally, the technical side of the Petro has issues as well. According to the tech expert claims made by Ethereum developer Joey Zhou on Twitter, Petro’s White paper replicated the 11th page of the Dash’s repository document. The claim also stated that oil-backed currency copied the Dash’s blockchain. According to the Twitter post, the Venezuela hyperinflation crypto solution is a Dash clone.