Business 3 October 2018

Dennis Wafula

Venezuela to start selling state-backed Petro in November

Venezuelan President Nicolas Maduro announced that the country will officially launch the state-backed Petro in November, after the Parliament passed a decree on the nation’s official oil-backed crypto coin. Maduro made the announcement during an appearance on National Television, and a summary of the president’s speech was posted on the government website last Oct. 1.

An official website for the crypto has already been launched. In addition, the official Petro Wallet is also available on Google Play, with the official public launch of the currency expected to take place November 5.

Maduro stated in his announcement that Petro will become available on six major crypto exchanges as of last Monday. However, he failed to specify which ones will offer the state-backed cryptocurrency. According to CoinMarketCap, it has not been listed by largest traders such as Binance, OKEx and Huobi by the time of going to press.

Henceforth, all the oil purchases into and out of Venezuela will have to be done through Petro. The impact of this move will ripple across a myriad of the nation’s sectors. The airlines industry, for instance, will have to shift its operations into using cryptocurrency. This stipulation also relates to international airlines whose routes lie through local airports, since fuel for aircrafts will also be sold with Petro.

Petro’s new white paper states that the currency is backed 50 percent by oil, 20 percent by gold, 20 percent by iron, and 10 percent by diamond assets.

Meanwhile, the reconversion has been criticized by a number of financial experts, with economist Maxim Ross claiming that the measure “does not solve anything,” Local 10 News reported in March.

CoinGeek reported that economist Angel Alvarado, an opposition legislator and Petro critic, opposed the decision, stating that the new measure will end up increasing inflation rather than putting it to an end. Alvarado claims that taking a few zeros from the old currency is not what Venezuela needs to get back on track financially.

Recently, the Venezuelan government has initiated a number of social projects funded by the Petro. In July, the Ministry of Habitat and Housing revealed plans to initiate a housing construction program for the homeless, funded by the Petro. In May, Maduro announced the launch of a Petro-funded crypto bank to support youth and student initiatives.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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