Venezuelan President Nicolas Maduro announced yesterday the creation of an oil reserve-backed cryptocurrency "Petro" to fight the economic crisis with hyperinflation.
As Reuters reports, Maduro announced the launch of "Petro" on a TV program, but mentioned few details for the currency itself.
The Venezuelan cryptocurrency is said to be supported by oil, gas, gold and diamond reserves. Petro's goal to help the country overcome the financial "blockade" is stated in a government statement on the official website.
The state-owned fiat currency, the Bolivar, is currently in free fall. Recently, the government issued a new 100,000 Bolivar note. As the New York Times reported, extreme Bolivar inflation has led to a sharp rise in consumer prices. In addition, basic needs such as food and medicine are scarce.
The worsening of the crisis also comes as a result of the US sanctions imposed this year by the Trump government, which targeted Venezuelan officials, executives and the country's debt securities.
The announcement of "Petro" is also so interesting because many residents of Venezuela have Bitcoin mining and the purchase of Bitcoins as a store of value to save their assets from inflation or to earn money by mining. In this respect, the introduction of the Petro may also curb the spread of non-state cryptocurrencies. Whether this succeeds, but at least remains to be doubted.
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