Venezuela’s Petro Nothing More Than “Smokescreen,” Says Experts

Venezuela’s oil-backed cryptocurrency, the Petro (PTR), has been contemptuously condemned as an opaque “stunt” supported by a centralized and debt-ridden entity.

The sentiments were reported by the Wired.

Amdist widespread hyperinflation in the Venezuelan economy, President Nicolas Maduro recently introduced a rebranded fiat currency – the sovereign bolívar – which would have five fewer zeros than its struggling predecessor, the Bolívar Fuerte (VEF).

The new currency has been anchored to the Petro, which is now valued at $60 or 3,600 sovereign bolivars. The plan essentially devalues the bolívar (VEF) from 285,000 per dollar to 6 million – a massive drop of 96%.

“They’ve dollarized our prices. I am petrolizing salaries and petrolizing prices,” Maduro said on state television last week.

“We are going to convert the petro into the reference that pegs the entire economy’s movements.”

“I know when you turn love into politics miracles can happen,” he claimed. But as Jorge Farias, CEO of Venezuelan startup Cryptobuyer, was quoted as saying in the report:

“One Petro is supposed to get you $60 or 3,600 sovereign bolívars. It’s supposedly backed by oil barrels produced by the national oil company PDVSA; the catch: PDVSA also has debts amounting to $45 billion. And in real life, the Petro – crypto or not – doesn’t exist at all. We have not seen a single Petro circulating, nor its smart contracts, or rules of the token, and much less its blockchain.”

Roger Benites, the CEO of Lima-based crypto exchange BitInka, expressed his belief that Maduro is making use of blockchain technology and the Petro as a “smoke curtain” to distance his actions from the earlier, doomed fiat redonimation of former president Hugo Chavez.

“[The situation] is just plain nonsense, backing up a fiat currency with a cryptocurrency tied to the barrels of oil from an entity that has an external debt they cannot pay,” he added.

Maduro has said that the Petro would function as a unit of account and has already presented it as a cure-all for all his country’s ills ranging from homelessness to youth unemployment. The government introduced the pre-sale of the Petro in February, and the ICO has already – allegedly – raised over $3.8 billion.

As Corre Innovation’s Dickie Armour was quoted as saying in the report:

“It may be a stunt, but a stunt that is working.The question is though – working for whom? President Nicholas Maduro and his cohorts? Or the people of Venezuela? Sadly, it’s more likely to be the former.”