On February 20, Venezuela's government launched the advance sale of Petro (PTR), the world's first state-run, oil price-based cryptocurrency. With PTR, foreign investors should be able to avoid the sanctions imposed by the USA and the EU.
82.4 million petros are currently available for exchange for US dollars, euros and selected cryptocurrencies - but not for the Venezuelan currency Bolivar. In order to buy and trade in petro, investors must download a digital petrol wallet, software developed by the Venezuelan government.
Earlier, President Nicolas Maduro had ordered the issue of 100 million petros worth one barrel of oil each. The president hopes that the sale of PTR will generate a total income of just over six billion US dollars. The catastrophic depreciation of the Bolivar prompted the government to look for alternative ways to save the economy from collapse.
The recent high point of the economic crisis was the plunge in oil prices in 2014, when foreign creditors stopped lending to Venezuela, the indebted government devalued the currency to cover budget deficits and inflation got out of control.
Money and power monopoly at risk
Consequently, Venezuela's citizens are moving away from the domestic currency and against the US dollar. But not just him. Bitcoin and other cryptocurrencies also enjoyed great popularity and have remained so to this day. While prices for food and clothing skyrocketed, electricity remained almost free of charge. Reason enough for many to get involved in Bitcoin mining, the production of new digital coins.
It is hardly surprising that the socialist government should react in the way it is expected to when the monopoly of money and then power is put at risk. After arrests and show trials with Petro, the occupation of the rebellion now follows. However, since petroleum is linked to the price of oil and is not subject to the mechanism of supply and demand, it is questionable whether it can be technically described as a cryptocurrency at all.
In addition, the number of exchanges on which petroleum can be traded has been drastically reduced. According to a ten-page manual published as part of a series of publications related to the newly introduced cryptocurrency, only eight exchanges can initially be admitted to trading on the market.
The document, published on 20 February, describes the requirements for local crypto exchange systems to work. And it suggests that the ceiling should be monitored from the outset by Venezuelan financial supervision.
Desperate attempt of a socialist government
President Maduro was quoted in a report in the Venezuelan newspaper Panorama: 36 of the "most important crypto-currency exchange offices in the world" are already in negotiations with the Caracas government to soften this ceiling.
After the first foreign exchange millions have already flowed into the state coffers, the government has already announced the second cryptographic currency. Petro gold is also issued by the state, but is not tied to the price of oil, but to the price of gold. Not only is it unclear how much gold lies in the state vaults to cover, but like petroleum gold also contradicts the fundamental philosophy of cryptographic currencies: Decentralisation and transparency. Moreover, the Blockchain, the basic software of Petro and Petro Gold, is a state secret.
In the end, there remains another desperate attempt by a socialist government to create new money out of nothing - this time from bits and bytes.