The Future of Petro: Will The National Crypto Survive If The Maduro Government Is Over?
Venezuela is facing some harsh times for a while now. In the last couple of years, the Maduro government is slowly but surely losing popular support and the economic crisis is quickly getting more and more severe. The fact that the inflation in the country was over a million percent last year also damaged the economy and led many people to starve.
Now, soon after Nicolas Maduro was elected for more time in office as he won last year’s election (which was highly controversial, by the way), the leader of the opposition, Juan Guaidó, has basically elected himself as the interim president. This was, obviously, very tumultuous for the country.
In spite of being the chief of a very badly managed government, Maduro has the backing of the country’s military and a fair share of the population, too, as some still miss the former president Hugo Chavez, which was from the same party as Maduro and fear the opposition.
The opposition is very strong, though. The government is accused of being illegitimate (because the elections were very tumultuous), it is proven to be authoritarian and Guaidó has a very strong popular support as the crisis is raging on.
To make things even more complicated, the United States recognized Guaidó as the legitimate president of Venezuela, as well as Canada, Brazil, Chile, Argentina and others. On the other side, however, is the powerful Russia, which has the backing of Mexico and Uruguay, too.
What does all of this has to do with actual cryptocurrencies, you ask? Well, it’s kind of a long story.
The Crisis In Venezuela: Bitcoin, DASH and The Creation of The Petro
As the inflation was very high in Venezuela, a lot of people started to use cryptos. Bitcoin is very popular in the country now and Venezuela is one of the most powerful DASH markets on the world. Losing 87% of its value in a year is nothing when compared to having an inflation of 1,000,000%, so it was a good idea to invest in cryptos. This gave the government an idea.
In 2017, the crisis led the Maduro government to decide for a very creative, yet not really very well thought idea: to create its own crypto, the Petro.
The idea is that the Petro would be backed by oil companies in the country and would be a way to sto the inflation. It would not be a decentralized token, however, but one emitted by the governmnet. A perverse twist on how cryptos work, some would say, others looked forward to it.
Petro kind of flopped, though. It was delayed, it faces several issues and a global rejection spearheaded by the lack of transparency for what actually backed the token, the United States government interference and overall distrust from investors.
While the token is not very famous internationally, the government requires its usage in many economic stances within the country, so it is being still used now. Approved exchanges started to sell the token and some public officers were paid in Petro.
In order to buy a passport, for instance, you would need Petro,
The Future of Petro
Guaidó disliked the Petro. He is a very open fan of Bitcoin, as it is decentralized and not made by his mortal enemy and state-controlled, so crypto investors in the country should not be worried for Bitcoin and DASH, at least.
However, in the case of Petro, Guaidó has spoken against it several times so far. He has called the sale of the asset illegal and affirmed that the asset is inoperable. He said that it was an instrument used to defraud the people of Venezuela and was against linking the price of the crypto asset with the national fiat currency.
Basically, for the Petro to stand a chance of being alive, Nicolas Maduro has to stay in power. In case he falls, the Petro will probably fall together. At the moment, it is hard to say who will win. It is unlikely that Maduro will stay in power forever, but there is no way to say when he will be out, if now or when his term ends.
The more violent the transition is, though, the more chances there are that the Petro will not survive, especially if Guaidó is able to seize the power of the country.
A question that has to be asked, though, is whether the Petro should be salvaged or not. Despite being the first token emitted by a government in the world, which is very interesting, it does not seem that it actually works very well, so not a lot of people will actually miss it if it ever goes away.