Venezuela’s oil-backed cryptocurrency, the Petro, will be released to the global markets this Monday, marking one of the first cryptocurrencies in the industry to be created and administered by a government.
The cryptocurrency is part of the government’s “Economic Recovery, Growth, and Prosperity Program” that came about after the country fell into economic turmoil following a messy political switch to socialism.
While speaking to the country during a televised address, Nicolás Maduro, Venezuela’s president, said that the Petro is practical because it is backed by physical assets, including the country’s oil and precious metals, reports Venezuelanalysis.
“The Petro, unlike other digital currencies, doesn’t need to be mined because it already has a value, it is shielded with Venezuelan oil and mining wealth,” Maduro said.
The country has notably forced banks and businesses to accept the Petro and to treat it the same as the country’s fiat currency, the Bolívar, which has been the victim of hyperinflation over the past year. The government now requires the Petro to be a legal substitute to the Bolívar for everything ranging from real-estate to groceries.
Maduro clearly has high and unrealistic hopes for how impactful the Petro will be to Venezuela’s economy, expressing that their openness to nascent technologies, like cryptocurrency, will be the incubator for a new and robust economy.
“All Venezuelans will have access to the Petro and through it to make international purchases…The National Plan of Cryptoactives of Venezuela, will last 10 years. This is going to be the epicenter of the development of a new economy in the country,” Maduro added.
In addition to turning a new leaf for the Venezuelan economy, the government expects the Petro to neutralize threats of illicit activities in the country. This includes the black markets and money mafias, which the government blames for the Bolívar’s hyperinflation and the country’s economic troubles.
Petro Not Being Utilized by Venezuelan Citizens, Bitcoin the Most Popular Substitute
Despite the government’s efforts to mandate the use of the Petro, it is not being widely used by the country’s citizens, who are turning to Bitcoin and other cryptocurrencies in order to protect their money from the Bolívar’s inflation.
According to volume tracker Coin Dance, Venezuelan Bitcoin trading reached an all-time high last week, and is already close to surpassing last week’s high in the first couple of days this week alone.
Last week, Venezuelan’s exchanged approximately $620 billion Bolívar’s for Bitcoin last week, and have already traded approximately $640 million Bolívar’s for Bitcoin this week alone.
In addition to Bitcoin surging in popularity, the cryptocurrency Dash has seen increasing Venezuelan adoption in the past few months, making Venezuela Dash’s number two market in the world.
Ryan Taylor, CEO of the Dash Group, spoke about the growing popularity of Dash in the economically tumultuous country, saying:
“We are seeing tens of thousands of wallet downloads from the country each month… Earlier this year, Venezuela became our number two market even ahead of China and Russia, which are of course huge into cryptocurrency right now.”
Although U.S. citizens are banned from buying the Petro due to sanctions from the White House, it is unclear how well international investors will take to the state-backed cryptocurrency.
Featured image from Shutterstock.