What do you need to know about Venezuelan Petro?

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The President of Venezuela, Nicolas Maduro said on Tuesday that Venezuela had received 735$ million in the first day of the pre-sale of the national cryptocurrency “petro”. Maduro didn’t give details about the investors and currently there is no evidence for the invested capital that was presented. He added that tourism, gasoline and oil sale transactions could be made with petro.

Many Blockchain experts were warning that the petro will not attract significant investments or interest from the public. Some opposition leaders have said that the sale constitutes of an illegal debt issuance that preempts Venezuelan majority-opposition legislature. Nicolas Maduro said: “Today, a cryptocurrency is being born that can take on Superman”. The president used the reference with the superhero to refer to the United States.

What is Petro?

The petro was announced in December 2017 and was launched in February 2018. The cryptocurrency is developed by the Venezuelan government and is designed as the country’s national cryptocurrency. The currency should be backed by the country’s oil and mineral reserves from the Orinoco belt.

Around 100 million tokens will be the entire petro circulation and is estimated that petro will have around 6$ billion market cap. The estimation is according to the details given by the president and each token should be backed by a barrel of Venezuelan crude oil. From these 100 million tokens, 82.4 million will initially be available to the public.

Venezuelan Cryptocurrency Superintendent Carlos Vargas said that the government is expecting to draw investments from investors in Turkey, United States, Europe and Qatar. The official website of petro published a guide on setting up a virtual wallet that holds the cryptocurrency which will go public next month. Initially the petro was designed as an ERC-20 Token but recent announcements denied this. Instead on the Ethereum network, petro will operate on the NEM network.

During the Initial Coin Offering in March, the Venezuelan government plans to sell 82.4 million petros to the public at a discount from the official price which is 60$. After the ICO people will then be able to buy petros from those who obtained them during the ICO. The plan is for Venezuelans to eventually be able to use the petro to make payments to public institutions, including taxes, fees, public services and other utility payments.

However you can’t buy petro with Venezuelan bolivars which is obvious. The reason is that the government wants to raise foreign fiat currencies. It is a greedy reason for a token that aims to bring power to the people.

What are the goals with Petro?

The cryptocurrency aims to save Venezuelan Economy out of an economic catastrophe and to bypass U.S. sanctions. The Venezuelan national currency Bolivar is currently at a record low with a collapsing socialist economy. The currency struggles with hyperinflation and is unlikely to win the fight.

“Petro is born and we are going to have a total success for the welfare of Venezuela… The largest and most important companies and Blockchain in the world are with Venezuela, we are going to sign agreements.” – said the president Nicolas Maduro.

The petro cryptocurrency should supplement Venezuela’s plummeting economy and will help the country to access international financing. Also Nicolas Maduro is hoping that petro will help with and allow Venezuela to sidestep U.S. imposed sanctions. The U.S. Treasury Department has warned that the cryptocurrency may violate these sanctions.

President Nicolas Maduro said that his government is the victim of an “economic war” led by opposing politicians with the help of the U.S. government. The sanctions on Venezuela were imposed last year by Washington and are blocking U.S. Banks and investors from buying newly issued Venezuelan debt. This effectively prevents the nation from borrowing and bringing debt from abroad or refinancing existing debt.

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About Peio Purlev

I write articles on cryptocurrency and blockchain-related news, comprehensive guides about cryptocurrency projects and blockchain technology, and also price analysis articles.