Money is Changing with Venezuela’s Petro Crypto and Central Banks’ Digital Currencies (CBDC)
Earlier this year, in February, Venezuela has finally gone through with the launch of their national cryptocurrency, Petro. The coin was said to be the means of dealing with hyperinflation, as their native fiat currency, the bolivar, continues to lose its value almost constantly.
At the time, Petro came as a big breakthrough in dealing with similar financial issues, and it has inspired several countries around the world to consider launching their own coin. However, Petro still stands as the first state-backed crypto, and despite several false starts, it finally arrived in February.
However, things are not as great as everyone expected them to be, as even now, Petro buyers do not have tradeable tokens at their disposal. Despite the fact that Petro was supposedly officially launched, it still remains just an obscure proof of concept. In fact, many have started viewing it as nothing more than a theoretical clone of a privacy coin Dash, which became big in Venezuela since it became a crypto-friendly country.
Petro doesn't have functioning wallets capable of containing it, making transactions in a mystery to everyone, and its miners are supposedly stationed in secret locations known only to the government. Furthermore, there are no crypto exchanges that can exchange the bolivar into Petro, or any other crypto or fiat currency, for that matter. Petro still remains mysteriously absent.
That is, until recently, when Venezuela's citizens, including seniors, received a text, notifying them that their money is transferred to a more convenient financial system made by the government. As seniors, these people had their pensions — however small and worthless due to hyperinflation — taken and converted into something new and unfamiliar. Something that requires a high level of technology proficiency, just to get to a small amount of money. The message also informed them that the money is placed on a stealthily created account which is a part of the “petro savings” program.
Problems Of The New System
However, there was something unusual going on with the Petro block explorer, which only processed around three transactions per minute, while the time between the blocks sometimes took hours. It remains unclear how can this be possible when the number of people now forced to use Petro includes around 4.3 million individuals.
Considering the attention that Petro received at the time, it is not possible that people were unaware of it. And, as they had no way of getting to their money otherwise, the lack of transactions is quite mysterious. In fact, as far as anyone can tell, Petros only exist as part of the government's database. As such, these coins are not the real cryptocurrency. Instead, they exist as CBDC or Central Bank Digital Currency.
This type of money is classified as a digital form of fiat money, and can only be issued by the central bank and used as legal tender. In other words, both Petro and the bolivar are digital, fit the description of fiat currencies, centralized, they have decreed legal tender, they are opaque and arbitrary. According to the IMF (International Monetary Fund), which has defined the CBDC, this type of money might be the next step in money evolution.
However, the biggest issue and risk with this way of handling money lies in the fact that the government has the ability to move money of millions of people without their consent. Many have called this ability “any dictator's economic fantasy”. Still, the citizens are desperate for any kind of financial stability, and surviving under such conditions has made learning how to use such money a priority.
After the message was received, around 3% of people converted their petros back into bolivares. However, the process takes 8 days to be completed, and during those 8 days, bolivar has lost yet another 23% of its value.
The problems of centralization were always present, but they are becoming much more obvious with the introduction of digital money. Experiments with money in Venezuela are damaging to its people, and they can lead to oppression. Most experts agree that these are systems that should never be created or used, and that everyone should pay attention to it before it spreads out around the world.