February 21, 2018 -- ADVFN Crypto NewsWire -- Venezuela has
started to pre-sell its commodity-backed ‘Petro’ cryptocurrency,
calling it the world's "first state-issued cryptoasset." Venezuelan
President Nicolas Maduro declared on Tuesday “Petro is born, and we
are going to have a total success for the welfare of
Venezuela.”
The Petro token is backed by Venezuela's oil, gas, gold, and
diamond reserves, with the price for a single Petro being pegged
directly to the price of one barrel of Venezuelan oil. Venezuela
has allocated five billion barrels of oil to back the Petro. 38.4
percent of the Petros will be sold in the pre-sale private auction
at a 60% discount.
Petros are "pre-mined", meaning the government produces it and
controls its release. The Petro's value is tied to the cost of a
barrel of Venezuelan oil. At the current price equivalent of $62
USD per barrel, the 100,000,000 Petros up for grabs in the pre-sale
could help raise around $6 billion USD equivalent.
Venezuela intends for the Petro to help it overcome huge trade
deficits caused by US and European sanctions. Venezuela will first
use the Petro to pay for imports from Brazil. A group of Brazilian
companies have already agreed to receive payment for the sale of
food to Venezuela through Petros. Turkey and Qatar are buying
Petros during the pre-sale, apparently as a speculative
investment.
The basic idea to back a cryptocurrency with a hard commodity
seems to be a good one. Even so, there has been surprisingly little
support for this initiative in the cryptocurrency community, and
Venezuelans themselves are doubtful that the Petro project will
succeed. The opposition-controlled National Assembly party has
opposed the idea of the Petro, labeling it illegal. The U.S.
Treasury Department has warned that buying the Petro would violate
sanctions against Venezuela, which prohibit the purchase of any
newly issued Venezuelan debt. President Maduro does not consider
the sale of the Petro as an issuance of debt since it is backed by
a commodity, though ownership of a Petro doesn't actually translate
into ownership of any exchangeable concrete asset.
The Petro is being sold in hard currency and other
cryptocurrencies, but not in the local Venezuelan bolivar currency.
Its distributed ledger will be built out on the Ethereum blockchain
platform.
The Petro will go on sale to the general public in March, though
it is unclear how Venezuelan citizens could come to use and benefit
from it in everyday life. A few merchants have already pledged to
provide goods and services in exchange for Petros, with Maduro
promising that "In a short future Venezuelans can buy in the bakery
with the Petro."
By: BGN Editorial Staff