Venezuela’s Cryptocurrency Has Yet To Show Its Useful
One of the most interesting things that the cryptocurrency market experienced this year was the creation of the first national virtual currency called Petro. Venezuela decided to launch this digital asset in order to avoid international sanctions and also have wider control over its population. Nevertheless, since it was launched earlier this year, the digital asset did not show any important use case.
Nicolás Maduro, Venezuela’s president has been promoting the Petro since they announced its creation. However, there is no information about how it works, how to use it, or where to buy it.
In order to increase its presence in the market, the virtual currency is currently used to pay for salaries and pensions. At the same time, it has proposed other countries to start using this virtual currency but they did not accept to do so. Clearly, it will be very difficult to convince another country to accept this virtual currency.
For example, the country offered the currency to Russia, Argentina and Poland. None of them has accepted this offer. The main intention behind it is to make the Petro an international virtual currency for oil transactions. At the same time, Venezuela wanted to purchase some goods to Argentina and Poland using the Petro.
Officials from the three countries, Argentina, Poland and Russia have completely denied that they will be using the virtual currency issued by Venezuela.
Another possibility for Venezuela was to purchase auto parts using Petro coins, but representatives of Russia did not comment on this issue.
Belarus has also received some proposals to start using the Petro. The state-owned Belarusian company Belzarubezhstroy, could receive a payment using the Petro for the housing services provided.
The financial situation in Venezuela is tense. We are considering alternative options for repaying the existing debt. One of them is to use the Petro cryptocurrency, explained the company’s deputy Director Alexander Falevich.
The company would have a difficult situation trying to accept virtual currencies for the houses it constructs in Venezuela. Belarus does not recognize cryptocurrencies as legal tender, which could create further problems for the Belarusian company. It might be possible for Venezuela to pay its debt with raw materials as well, something that Belarus could accept.
Another plan to start using the virtual currency around the world is to use it as the unit of account in the Organization of the Petroleum Exporting Countries (OPEC). At the moment, the US dollar is the dominant currency in this market. This could be not good for countries such as Venezuela that have been sanctioned by the United States and other countries around the world.
At the time of writing, it is not possible for individuals and investors to have access to the virtual currency. Users that purchased it received ‘petro certificates’ rather than the Petro itself. If the virtual currency created by Venezuela has the inherent risk of being issued by a country that has more than 1 million percent inflation a simple ‘petro certificate’ is literally worthless.
The country has also proposed nations in the ALBA group to accept this virtual currency to be really independent of other currencies such as the US dollar. However, it might be very complicated for the currency to be accepted by countries such as Bolivia where cryptocurrencies are completely banned.
Venezuela has been one of the worst performing economies in the last five years. The country is also experiencing a humanitarian crisis and inflation rates are reaching new records month after month. Furthermore, individuals in the country are embracing other virtual currencies such as Bitcoin (BTC) or Dash in order to process transactions or protect their funds from the government.