Bitcoin Global News (BGN)
August 16, 2018 -- ADVFN Crypto NewsWire -- The widely criticized
Petro cryptocurrency will be taking what will arguably be the
greatest role that a cryptocurrency has ever taken in a
country.
To recap, Petro is a cryptocurrency
which was apparently created by a team close to the Venezuelan
President and his executive team. According to its white paper, it
is backed by real oil reserves and thus, it is supposed to be a
stable coin that can be used reliably as an everyday
currency.
Like Tether and other controversial
stable coins, however, Petro is not without its own problems. In
particular, it has been criticized for not being available to
Venezuelan citizens at all up to now. In addition to this, its case
is not helped by the USA’s effective ban on any US citizens buying
Petro, via an executive order from
President Trump.
Despite this, on August
14, a Venezuelan news outlet
reported that Petro will effectively become the country’s
stable coin, with the aim of tying itself to the native Bolívar that has been
sinking in value due to inflation.
The trouble with this begins with
the fact that there is no indication that the Venezuelan government
will do this in connection with finally making Petro available to
the general populace.
Furthermore, the intended future
usage of Petro has been said to be, “as a unit of account,” which
is one of the primary functions of a national currency. In essence,
when money is used as “a unit of account,” it is tied to real items
which can be bought. For a prime example of this, think about how
we understand how much groceries are worth. The prices of each item
in a grocery store are quoted in dollars. Thus, the dollar is a
unit of account, or a unit for determining how transactions can be
settled.
It logically be concluded that
Nicolas Maduro and his administration are trying to create this new
unit of account with Petro, to eventually replace the Bolívar,
which is now known as one of the least valuable and most
inflationary currencies in the entire world. The fact that the
government plans to peg salaries to Petro as well, would seem to
support this conclusion.
On the other hand, the report by
Cointelegraph on the subject mentioned that in connection with
this, the government will be
introducing a “new” Bolívar to replace the old
one.
All in all, in the end, Venezuela
will end up, therefore, with two currencies. With the US ban in
mind, it also remains to be seen whether other countries will
follow suit.
If they do, it could reasonably
said that the country’s chances of pulling out of its economic
recession will be even more in question.
By: BGN Editorial Staff
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