Venezuela’s stubborn insistence on promoting the Petro, the oil-backed cryptocurrency, might finally be paying off. Their UN representative, Jorge Valero, revealed the country is in talks with Russia to potentially use the currency for mutual trade settlements.
In an interview with Russia Today, Valero suggested that Venezuela was exploring the possibility, along with an alternate plan to use the Russian ruble. The move is necessary due to continuing U.S. penalties against Venezuelan oil.
Those sanctions, along with a freeze on USD bank accounts, has caused runaway inflation in Venezuela, he claimed. Because the country can’t participate in international free trade the way other countries can, it’s economically crippled and forced to look for other methods of trade.
That’s certainly true, but it doesn’t explain the entire situation in Venezuela. President Nicolas Maduro’s handling of the economy has been disastrous, and the roll out of the Petro, which was supposed to help save the economy, has been bundled badly, leading to a very tepid reception of the cryptocurrency internationally.
Proving that point, Venezuela’s hyper-inflation is not matched by other sanctioned, oil producing countries, like Iran. While the Iran rial is by no means strong, and suffering from a potential build up towards war, it is still outperforming Venezuelan offerings.
All the same, this is the playbook that sanctioned countries need to turn to. Cryptocurrencies, because of their decentralized nature, can help countries that are considered “bad actors” to potentially keep their international trade going. The U.S. can’t halt their trading quite so easily with crypto, and it looks to be the best option, other than changing their ways.
That’s what Iran is trying to do too. With President Donald Trump teasing that a war might be on the way, Iranians have spiked local Bitcoin Core (BTC) markets, hoping to rid themselves of rial before its value plummets.
This is a great short term plan to keep some liquidity, but it may not work for long. As public blockchains become fall backs for international trade, the U.S. will eventually get better at tracking their transactions and finding new ways of cracking down on trade they don’t approve of.
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