Venezuela’s economic conditions are worsening by the day, and the authorities have turned to digital coins to help facilitate growth. However, what started with the “Petro” as a digital currency experiment has now given way to a unique (albeit crazy) plan of the Maduro-led government. The country will now witness the birth of the “sovereign bolivar” — a new fiat currency pegged to oil-backed Petro cryptocurrency, which the country’s parliament doesn’t recognize as legal. The new currency will be launched on Monday.
A Petro-Backed Fiat Doesn’t Make Sense to Many
Petro, an oil-backed digital currency, was launched in February to much ho-hum by the Venezuelan president Maduro and his allies. Now, they are launching a “sovereign bolivar,” which will be pegged to digital coin Petro — a currency that doesn’t trade anywhere. Experts believe that it is an attempt to hide the problems in the country.
Professor of applied economics at John Hopkins University, Steve Hanke, noted:
“This is a smoke-and-mirrors operation typical of Venezuela — I’ll believe it when I see it. The problem with the petro is it’s a scam; it doesn’t even trade.”
Going Full Circle on Oil
When Petro was unveiled, it was claimed to be a coin that represents the vast oil reserves of the country. According to Maduro, each Petro coin is backed by a barrel of oil, and the country will issue about 100 million Petro tokens, which could be worth around $6 billion. This exercise was supposed to bring some necessary cash into the economy, and Maduro claims to have raised about $735 million from the sale.
Authorities want to peg a new currency to this coin, which according to ICOindex.com has a “scam status.” The site evaluates the quality of new coin offerings using their whitepapers and other materials available. The Venezuelan parliament has also called the crypto sale unconstitutional, and basing the country’s new fiat on a crypto that isn’t recognized by the parliament could be a colossal mistake.
Maduro, on the other hand, seems convinced that this grand scheme could work. He wants to peg prices, pensions and wages to the Petro and value each of the coins at $60 or 3,600 sovereign bolivars.
Venezuela Is Launching a New Currency to Help Save Its Economy was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.