Venezuela on Tuesday will become the first country to launch its own version of bitcoin, a move it hopes will provide a much-needed boost to its credit-stricken economy. The Petro, which Venezuela touts as the first cryptocurrency issued by a country, is promoted as a means to "boost monetary sovereignty", while many analysts think it is just a desperate attempt to skirt US financial sanctions.
Venezuela's president received a multitude of warnings about issuing the crypto, and he ignored every one of them.
Maduro has touted the petro as fulfilling the late Hugo Chavez's dream of upending global capitalism away from the dominance of the USA dollar and Wall Street.
Currently, Venezuela is under economic sanctions by the U.S. and the European Union, and raising funds in dollars from around the world will help the government resume global trading without depending on the American banking system.
Venezuela holds the world's largest oil reserves and the government is backing the Petro with its oil barrels. The establishment outlined its expectations, as well as, plans for the petro in its web portal meant for the virtual currency hosted by Ministerio del Poder Popular para Education Universitaria Ciencia, Technologia, coindesk.com reported. Europe's sanctions are against Venezuelan government officials.
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Wednesday's study flagged Venezuelans' deteriorating diets, which are deficient in vitamins and protein, as currency controls restrict food imports, hyperinflation eats into salaries, and people line up for hours to buy basics like flour. Interestingly the market cap of the ICO is pegged at about $5 billion and that takes it to about 5% of all Ethereum circulating presently in the markets and could equal to the total revenue that ICOs generated in 2017. However, critics claim that this is nothing but a desperate effort made by Caracas to raise cash. Another hurdle is that almost 50% of Venezuelan oil was headed for the US before the advent of Shale oil and consequent dip in global oil prices. If all these do not add up to a mountain of hurdles, Venezuela also suffers from chronic underinvestment in its oil sector which is by far the only source revenue for the nation.
The government will sell Petros for both fiat currencies and other cryptocurrencies, but it will not accept the bolívar - it seems that the government lost interest in its own currency.
The biggest hurdle that Petro will need to cross is "trust deficit".
"In the name of the vast majority of Venezuelans, we challenge the Maduro government to measure itself against the people in real elections". But, the blockchain technology has some inherent abilities that may be beyond any government to throttle.
'We are in the technological and economic vanguard to overcome the speculation of worldwide currencies that affect the lives of Venezuelans.