Venezuela, the oil-rich hard cash-strapped South American country, is finally launching the pre-sale of its oil- gold- and diamonds-backed token, the Petro, on Tuesday.
In a bid to circumvent the financial sanctions imposed by the USA and the EU, Venezuela will become the first country to launch its own national cryptocurrency. According to media reports, the country’s president Nicolas Maduro hopes to attract investors from Qatar, Turkey, and other parts of the Middle East and, hopefully, Europeans and Americans will also participate.
Last year, the Economist Intelligence Unit’s Democracy Index downgraded Venezuela from a “hybrid regime” to an “authoritarian regime” due to its “continued slide towards dictatorship.” The financial sanctions and the nationalization of the country’s businesses and farms by the government, has driven the economy into collapse and hyperinflation, while the population of the once rich country is in practice starving. According to the International Monetary Fund, this year hyperinflation could hit 2300%.
“We have reached the future. Venezuela advances as an economic power,” the president remarked, quoted by Infocoin.net, specifying that the petro pre-sale will be “through ERC20 tokens.” “Venezuela is at the forefront of the world, and we are going to accelerate permanently the start-up of the cryptocurrency, the petro,” Maduro added.
According to his plan, the petro will be used to raise hard currency and as a payment method for suppliers.
Maduro said that 100 million petro tokens worth some $6 billion will be issued, despite the fact that the opposition-controlled Venezuelan parliament declared the petro illegal. Under Venezuelan law, the parliament has to approve any government borrowing. The petro “is not a cryptocurrency. This is a forward sale of Venezuelan oil,” MP Jorge Millan said in a speech, quoted by The Guardian. He added that the petro “is tailor-made for corruption.”
Maduro, who is a president and a prime minister, however, was undaunted and in January said 800,000 Venezuelans had already been recruited to mine the cryptocurrency. “We are going to call them a special cryptocurrency team… They will set up cryptocurrency mining farms in all states and municipalities of the country,” he said.
At the same time, many analysts comment that the Petro may quickly become “a shitcoin” – digital currencies that become worthless over time or are considered scams, despite the claims it is backed by tangible assets like oil, gold and diamonds.