Despite the country’s impending economic collapse, they are attempting to create their own cryptocurrency backed by oil and gold reserves. However, this initiative has unlocked widespread criticism from experts and the Venezuelan government alike.
Venezuela, a country continuously plagued by hyperinflation, poverty-stricken residents, and a lack of basic supplies such as food and medicine, has recently announced its intention to create its own cryptocurrency, the petro. Nicolas Maduro, the Venezuelan president, announced earlier this month that the government would spend almost $6 billion to develop the petro, which will be backed by the country’s own oil reserves. In addition, the country sent a delegation to Qatar in order to procure necessary investments.
However, so far, this ambitious plan has been met with mostly criticism, both within and from outside the Venezuelan government. The Venezuelan opposition party declared the petro illegal, while the spokesperson from the US Treasury Department noted that the petro would violate current economic sanctions placed on the country.
In addition, most would-be investors seem cautious at best at the country’s latest attempt to salvage its rapidly collapsing economy.
A sovereign analyst specializing in the Latin America region, Mauro Roca, stated that at this point, the petro resembled an IOU more than cryptocurrency.
Roca added that currently, Venezuela faces billions in debt and hyperinflation. In addition, the country is currently experiencing massive problems in drilling for oil, which hugely undermines the novel concept behind the petro. Roca seemed unconvinced that the petro would alleviate the country’s increasing economic troubles, and he’s not the only one.
Most experts in the field agreed that this cryptocurrency is unlikely to succeed as most entities would be reluctant in accepting it as an asset or store of value.
The director of international consultancy at Control Risks, Raul Gallegos, noted that currently, the petro would be used as a means of money laundering which is likely to push the country into an economic crisis even more.
Last year, the country experienced hyperinflation of 2,700%, and currently, there is no promising prospect which might bring relief.
Gallegos predicted that the country is likely to continue in economic turmoil until forced to declare a debt default. As far as the petro is concerned, however, most experts seem unconvinced that it will prove successful.