How Long Will the Petro Cryptocurrency Last in Venezuela as Credit Rating Nears Bankruptcy?
There are several cryptocurrencies that were released to the market during the last years. Some of them have already disappeared after a bear market that affected the whole industry. However, there is one that was created by the government of Venezuela. But how long can it last?
Venezuela is a country that has been facing difficult economic issues. In the last years, the economy completely collapsed and individuals in the country emigrated to other neighboring nations such as Brazil or Colombia, among others. The European Union (EU), the United States and other countries do not recognize Nicolás Maduro as president of Venezuela, indeed, these countries recognize Juan Guaidó, the actual president of the National Assembly of Venezuela.
Venezuela is a country that has one of the largest oil reserves in the world and it was also one of the biggest exporters in the country. Instead of offering a good life quality to citizens, the socialists' governments decided to sink the country in chaos and poverty.
Back in December 2017, Maduro launched the so-called Petro cryptocurrency. This was an oil-backed digital asset that was going to be used by the population and some companies in the country. The coin was issued through an Initial Coin Offering (ICO) and was sold back in October 2018.
Reuters, for example, conducted an investigation in which they apparently discovered that there were no signs of Petro. Additionally, no shops were using it and the town where the oil reserves to back the coin were going to be extracted seemed empty.
Nevertheless, there are some Venezuelans that seem to have tested the network of the Petro. Jose Antonio Lanz, a lawyer, and specialists on strategic planning mentioned that he received a transfer with the Petro from a friend. Mr. Lanz said that everything was perfect and that they did not even have the wallet verified. The government has not yet released them to the market.
Hoy hice por curiosidad un ejercicio. Me baje la apk del #Petro y le pedí a un amigo que me hiciera una transferencia. Quería saber si era una #blockchain o si nos habían mentido
Todo fue perfecto incluso con la wallet sin "verificarme"
Por qué no los Liberan? pic.twitter.com/vrm4NzDoxm
— Jose Lanz (@jaldps) January 15, 2019
Talking with the BitcoinExchangeGuide team, Lanz said that if the government did not release them to the market is because they don’t want since it seems that the technology works properly.
At the moment, each Petro does not have a clear value. According to its white paper, the Petro should have a value related to gold, diamonds, and oil. The central bank of the country says that each Petro is worth 36,000 sovereign bolivars (the fiat currency of Venezuela) close to $17 US dollars.
The main intention behind the launch of the Petro was to bypass sanctions imposed by the United States and other countries.
The government of Venezuela is waiting for oil prices to grow once again as they were a few years ago. If the price of oil barrels increases, the Petro would be worth more than what it currently is and it would help Maduro retain its power.
At the moment, the trading volume of the Petro is close to zero since there are no parties transacting it. Thus, if there is a revolution in the country or there is a change in the government, that means that the Petro would not be affected in terms of trading volume. What can happen is that the next government would just not keep with the project and leave it in stand by for an undetermined period of time.
As the government of Venezuela seems to be focusing on how to avoid losing their power, the Petro does not seem to be on the list of high priorities. That means that investors that placed their fund in this virtual currency might not see their funds never again, something similar to what happened to other ICOs released to the market.