Venezuela faced one of the worst financial crisis in the country’s history. It has a shocking inflation rate of 400% and an inconsistent exchange rate. The citizens are really trying to survive finding food, medicine, and other necessities. Last 2017, they also struggled with saving money with their country running out of cash.
The country owes an approximate $140 billion to foreign lenders. Venezuela is mainly dependent on their prime natural resource, oil. However, there is a significant decline in oil prices causing a political and economic crisis. The political leaders decided that enough is enough. They decided to explore the possibilities of relying on blockchain technology to experience economic growth.
The Venezuelan government has published a decree outlining the operation of Venezuela’s national cryptocurrency, the Petro. It details the government’s plans for the new currency, including its issuance, mining, and trading. In addition, the Petro will be backed by 5 billion barrels of crude oil.
5 Billion Barrels of Oil and Mining Plan
Venezuela’s president Nicolás Maduro has assigned 5.3 billion barrels of crude oil worth $267 billion to back the nation’s cryptocurrency. He first announced the creation of the Petro in early December, as news.Bitcoin.com reported.
During a weekly national radio and TV broadcast, he showed a “document formalizing the provision of the certified Ayacucho oil field, No.1 in the Orinoco Petroleum Belt, for the support of El Petro cryptocurrency,” according to RT. Citing that “every single Petro will be backed by a barrel of oil,” Maduro confirmed:
We will set up a special team of cryptocurrency specialists so they will be engaged in mining in all states and municipalities of our country.
In addition, the president “promised to allocate Arco Minero gold deposits from the Orinoco Belt along with the country’s diamond deposits” to the Petro, the publication noted.
Issuance and Trading Plans
The Maduro government has published a Gazette which outlines a decree consisting of 13 parts, referred to as Articles; nearly half of them concern the operational details of the Petro.
Article 4 of the decree describes the assets backing the new currency, stating that the Petro “is about Venezuelan oil quoted in the OPEC basket, as well as other commodities, including gold, diamond, coltan, and gas.” Moreover, each Petro “will have, as physical support, a purchase-sale contract for one (01) barrel of oil from the Venezuelan crude oil basket or any commodities that the nation decides.”
Article 5 reveals the nature of the wallets holding the Petro, as well as the cryptocurrency’s convertibility, stating:
The holder of the Petro may change the market value of the crypto-asset for the equivalent in another cryptocurrency or in Bolivares at the market exchange rate published by the national crypto-asset exchange house…The holder of each Petro will own a virtual wallet, which will be his [own] responsibility.
The Gazette also provides some issuance details of the Petro and hints at an initial coin offering (ICO). “The initial placement will be made through auction or direct assignment, made by the Superintendence of the crypto-assets and related Venezuelan activities,” according to Article 8.
Furthermore, the government explained in Article 9, “The custody will be decentralized once the Superintendence of the crypto-assets and related Venezuelan activities has carried out the initial auction and assigned the crypto-assets to investors.”
As for the launch timeframe, Minister of Communication and Information Jorge Rodríguez was recently quoted by local publications saying, “the first issue of the Petro cryptocurrency will be announced within days.” Then, during his year-end speech in a national radio and TV broadcast on Sunday, December 31, Maduro revealed:
In the month of January, I will be presenting all the conditions for the Petro to start operating.
What do you think of the details provided on the Petro so far? Let us know in the comments section below.