The growing world of cryptocurrencies and the petro in Venezuela

Written by:Diomer Antonio Galán Rincón.

Bachelor's Degree.Public Accounting / MSc.Science of Higher Education.

New ways of conducting economic and financial transactions such as paying, buying or using money are changing at an accelerated pace. The world plays an outstanding role, as each nation tries to impose its own rules of the commercial game, generating variations in the global economic system. Currently, the trend that is gaining momentum to make these payments and exchange of goods or services are the so-called cryptocurrencies, which are a means of electronic payment, its proponent was the Japanese Satoshi Nakamoto at the end of the last decade with Bitcoin, highlighting that if cryptocurrencies maintain that volume of marketing we can say that they will displace in the next 20 years the paper money or metal that we currently know. If we look at a global panorama, some nations in Europe and Asia are already in the process of developing their economies entirely with electronic money, i.e.; they will not depend on cash in the very short term. Hence the importance of countries adopting the new method of payment or the new international currency.

In history, money has gone through great changes: from barter to metal coins, then the appearance of banknotes, debit cards, credit cards and traveler's checks and nowadays digital payments. These changes have taken an average of 50 to 120 years to change the form of money used by a society; and cryptocurrencies are expected to achieve this in less time with a higher level of financial security.

The operations currently carried out as the so-called online payments or electronically, used by public and private banking as it is currently known, use data that run through networks that have been intercepted on several occasions by hackers, bringing as consequences loss to the financial system and discomfort to bank users.

Although transactions are made "online" and in compliance with the regulations to which the financial system of each country is subject, in some cases, the transfer of money between banks in different countries can take weeks or months. In the case of cryptocurrencies, in addition to the trust offered by Blockchain technology, the most relevant particularity is the speed of transactions, since there are no intermediaries, transferring money anywhere in the world is very fast and in a few minutes.

Cryptocurrencies have been part of the evolution of money and will remain for history, with these digital currencies can make purchases as with the current money, however, cryptocurrencies have a variety of services that make them more attractive to consumers.

However, it is normal that many people nowadays are no longer suspicious and want to venture into the world of cryptocurrencies. And they are certainly right, since it has become common to get news about hacker attacks on the traditional banking system, organizations and even private security systems, damaging databases, stealing money, deleting and publishing users' personal information. In this case, cryptocurrencies are presented as a great business opportunity being synonymous with the future, transformation, innovation and progress. Technologies such as Blockchain make them more secure, and therefore very popular today.

In the Venezuelan case, several efforts are already being made for the implementation of this new payment and exchange system, since phenomena such as smuggling of paper money, food, fuel, among others, to neighboring countries, hinder the good and natural development of the economy. In addition to this, the Venezuelan state created a cryptocurrency called the Petro, as of April 9, 2018 by Decree of the National Constituent Assembly where it legalizes all existence and creation of all cryptoassets including the Petro which is the first Venezuelan digital currency issued by a country that will allow the mobility of resources at any level and the digital transformation of the same into its equivalent in any type of currency or cryptocurrency, facilitating financial transactions between the interested parties. On the other hand, the Petro cryptocurrency, its technology is based on the blockchain and is one of the first currencies backed by the reserves of various natural resources such as oil, gold, diamonds and gas.

The Petro, today is used by very few commercial establishments and is a reference for payment of taxes to the state such as passport and fees in some institutions of higher education that provide services to their graduates to generate their own income, also highlighting an unstable market for investors to invest in this currency, but with a Venezuelan domestic market where all other existing cryptocurrencies make life.

We can say that if there were a state-of-the-art technological park where all economic and financial transactions were charged and paid with Petro, this cryptocurrency would be lost from sight, accompanied by a policy of payment of wages and salaries, thus increasing the purchasing power of Venezuelans. This would consolidate the Petro as one of the strong and solid cryptocurrencies in the market.

On the other hand, if we use cryptocurrencies as a mechanism for the payment of goods and services accompanied by payments also with cryptocurrencies for the entire public administration, this breaks and allows circumventing the economic and financial siege imposed by the blockade. Hence the importance of finding an option for Venezuelan finances.

More support should be given to the primary agricultural sector with clear tax and financing policies, to strengthen the national agricultural sector so that it can guarantee the total national supply and leave aside imports of agricultural products, most of which are low in nutritional and nutritional quality.

I hope you like my article and I would appreciate all your comments.

1.- National Constituent Assembly (2018) Constituent Decree. Available online:http://www.traviesoevans.com/memos/2018-04-09-6370-extraordinario-Decreto-Criptomoneda.pdf.

2- Cryptotrend(2017).https://criptotendencia.com/2017/12/30/parte-v-historia-del-dinero-desde-el-trueque-hasta-las-criptomonedas/.

3.- Infante, A (2019). Hyperinflation on the prowl again for cash. Available online: https://www.panorama.com.ve/politicayeconomia/Hiperinflacion-al-acecho-otra-vez-del-efectivo-20190103-0006.html.