Venezuela has made an offer to India to buy crude oil from them using their new blockchain technology based cryptocurrency 'Petro.' If India accepts this it will get a 30% discounts on crude oil imports. This is a significant discount but the rider here is that the trades will take place using 'Petro' cryptocurrency.
It's an amazing development because Petro is the world's first state-backed cryptocurrency which is directly tied to Venezuela's oil reserves. The fact is that Venezuela's oil reserves are the highest in the world. It has 300 billion barrels of crude oil reserves. Saudi Arabia given it's reputation as the world's largest producer of crude oil only has 266 billion barrels in reserve.
India imports more than 80% of it's crude oil to meet domestic needs. Local production in insufficient and it needs to constantly import oil from other countries. 30% discount will certainly help the economy but the caveat is the Petro cryptocurrency. Indian government currently calls cryptocurrencies as crypto-assets and doesn't consider them to be a currency in anyway.
According to Business-Standard, "A team of experts from Venezuela’s blockchain department was in India last month, according to multiple sources. They entered into a pact with Coinsecure, a Delhi-based bitcoin trading firm, to sell Petro in India."
Coinsecure Chief Executive Officer Mohit Kalra said Venezuela wanted to add Petro as a cryptocurrency on Coinsecure, so they can trade Petro against bitcoin and the rupee.
Petro seems to have raised over $3 billion dollars with interests from over 127 countries during it's pre-sale in February. It's interesting how the cash-strapped economy is relying on digital currency to pave the way towards its economic growth and sustainability. It will be launched after the presidential elections scheduled to take place on May 20th, 2018.
Venezuela also plans on making their Petro cryptocurrency it's official currency by 2020. This sounds incredible and yet it's the fact apparently. US government led by Donal Trump has already declared a ban on Petro. But that hasn't deterred Venezuela's efforts to take Petro to the world.
As per Reuters, India’s oil imports from Venezuela averaged around 300,000 barrels per day (bpd) between November, 2017 and February, 2018, a drop of about 20 percent from the same period a year earlier and the lowest such level since 2012, according to data from shipping sources and industry.
Coinsecure, led by Kalra will provide the White Label cryptocurrency exchange software solutions. This will enable all cryptocurrency players in Venezuela to trade on that exchange.
“That would be run by their brand name, but the back-end will be us. We plan to provide them with 10-15 cryptocurrency players,” Kalra said.
Coinsecure since then has been caught up in a major Bitcoin theft which is likely to be an inside job. At the point it's unclear if Coinsecure will remain a partner to launch Petro in India on their exchange. Nonetheless, this is a fantastic development.
India's central bank RBI recently issued a circular banning banks from rendering their services to any cryptocurrency business or exchange in India. There is a law suit filed against RBI in the Delhi high court and the next hearing is scheduled for May 24th.
There's not a lot of data regarding Petro's token supply or how it will be issued currently. For the sake of Venezuela's economic growth I hope their Petro works out to be successful, even though it sounds a bit complicated and centralised.
But Venezuela has a big challenge getting the Indian government to accept the Petro cryptocurrency. It also owes several billion dollars in debt to countries such as China. If it can get beyond supplying to the countries it already owes maybe there will be sufficient logistical capability to ship to India as well. Neverthless, these are some exciting times indeed and we'll know how these things pan out in the months to come.
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