by Cindy Huynh
Venezuelan President Nicolas Maduro officially launched the Petro, a state, and oil-backed cryptocurrency. According to the RT article published on October 8, 2018, while the goal of the state-backed cryptocurrency is to consolidate Venezuela’s economic stability, experts and analysts, however, remain skeptical and question whether oils and minerals back the token.
Financial Experts Believe the Petro Will Not Catch On
While the El-Petro was designed to revolutionize Venezuela from its economic woes, financial experts and analysts are unsure whether the country’s plan for financial recovery will work out as there are some problems with the Petro token.
“The government says each unit of the petro is backed by oil,” said Alex Tapscott, from the Blockchain Research Institute, as he spoke to the BBC. “But we have no proof at all. There is very little technical information about it.”
There are also many different claims about how much the Venezuelan Government raised for the Petro for during its pre-sale and initial coin offering (ICO) period. The Miami Herald reported that the Maduro Government allocated $3.3 billion during the pre-sale process, They, however, also acknowledged that the government mentioned $5 billion at another stage.
The contradictory information makes the numbers not very credible, making it difficult to trust the Government, which has also not provided any clear evidence to support these numbers.
The Petro also fails to meet the basic standards present in over 2,000 cryptocurrencies in the world. Robert Viglione, the co-founder of Horizen, agrees with Tapscott and believes that the Petro cryptocurrency token won’t work out. Viglione noted that the Government’s claim is relatively weak. Since the cryptocurrency is backed up by the nation’s natural resources, it’d be tough to claim the resources if there is a problem with the cryptocurrency.
Not only are there problems with the token, but the international leaders also seems to be in dis-agreeance with Maduro’s approach. According to the US Congress Bill, the US imposed sanctions on Venezuela and their cryptocurrency token. The US is also adamant on ensuring that the Petro cryptocurrency cannot bypass any US sanctions.
Venezuelans Must Use Petro For Passport Fees
While these cryptocurrency tokens are designed to revamp the economically unstable country, the South China Morning Post reported that they have also become a tool to prevent migration.
According to a press conference on Friday, October 5, 2018, Delcy Rodriguez, Venezuela’s Vice President stated that citizens need to pay their passport fees in the Petro cryptocurrency token. The new rule will come into effect from November 1. New passports will cost two Petros, (approximately $115) and the passport extension will be one Petro (approximately $57.)
Bloomberg reported that these passports cost four times the monthly minimum wage. With an estimated 5,000 people leaving Venezuela every day, the enforcement of the Petro appears to be making the situation even more difficult for everyday Venezuelans.