Industry Experts Call Venezuela’s Petro Crypto a Smoke Curtain Backed by Debt
Venezuela has been going through a tough time and in an attempt to combat against its failing currency and economic troubles, the country released a national oil-backed cryptocurrency, called the Petro (PTC). Many experts are now stating that the PTC is a “stunt” supported by centralized and debt-saddled entity.
If the PTC truly is a smokescreen, then Venezuela will need to do a lot more to fight against its troubles. Wired, a news platform, discussed an assessment of Venezuela’s economy by the International Monetary Fund as follows:
The International Monetary Fund recently forecast that Venezuela’s economy will shrink about 18 per cent this year, while inflation is set to surge to one million per cent. Two months ago, the annual rate of inflation stood at 40,000 per cent. People are scared; more than 400,000 Venezuelans have already crossed the border into the [neighboring] Ecuador, trying to scape their home’s crumbling economy. Brazil has also seen a surge in illegal immigration.
In terms of Petro’s role, the news source also mentioned:
The Petro was announced last December at the peak of the crypto bubble, emerging just when Venezuelans were trying to raise billions of dollars on the back of rather vague white papers outlining an Initial Coin Offering. The crypto world was bemused but curious: this might be the first time that any government would issue its own digital money.
Since Venezuela released the PTC, it has raised around $3.3 billion. However, the lack of “Petro” currency in circulation suggests that it truly is all a smokescreen and the true purpose is to convince Venezuelans that its oil-backed technology will bring the Bolivar into the future.
Another individual, Roger Benites, the CEO of Bitlnka, a Lima-based crypto exchange, stated that he believes that Maduro is using the Petro as a “smoke curtain” to distance his actions from Chavez’s failed fiat endeavor and that the situation “is just plain nonsense, backing up a fiat currency with a cryptocurrency tied to the barrels of oil from an entity that has an external debt they cannot pay.”
Dicke Armour of Core Innovations reported to Wired, “It may be a stunt, but a stunt that is working. The question is though – working for whom? President Nicholas Maduro and his cohorts? Or the people of Venezuela? Sadly, it’s more likely to be the former.”
The big question that arises is what will be the future of Venezuela’s economy? At this point, crypto seems to be a far stretch, especially when there is no indication that there is one in existence.