Venezuela’s digital currency – the “petro” – is having a little trouble recruiting followers. Many analysts continue to claim that the currency is a scam, and the coin isn’t garnering the attention and usage government officials had in mind.
The petro came about in February 2018 through an initial coin offering (ICO). After years of struggling with hardcore inflation and poverty, Venezuela claimed the petro would bring about both economic growth and financial stability, but things have been shaky from the start.
Allegedly backed by the country’s oil reserves, the currency faced intense criticism, as many claimed the petro’s potential oil backings were false and couldn’t work logistically. U.S. Treasury officials were also wary and suspicious of the coin, and one month after its debut, President Donald Trump issued an order banning U.S. citizens from buying or trading petro units.
Want to Get Paid in Petro?
Recently, the petro made headlines when Venezuelan President Nicolas Maduro announced that the digital asset would be linked to the country’s national fiat currency, the bolivar. This would purportedly boost workers’ salaries and put the nation’s many economic issues at ease.
“I want the country to recover, and I have the formula. Trust me. They’ve dollarized our prices. I am petrolizing salaries and petrolizing prices. We are going to convert the petro into the reference that pegs the entire economy’s movements.”
Many Experts Remain Unconvinced
Like before, many weren’t buying the news. Steve Hanke – an applied economics professor at Johns Hopkins University – explains that there’s been no change in the written economic policies of Venezuela, and thus the implementation of the petro is virtually meaningless.
“Linking the new bolivar to the petro is a scam. Appearances change, though in reality, nothing changes. That’s what’s in store for the bolivar: a facelift.”
Could the Petro Actually Cause More Problems?
Luis Vicente Leon – president of the Caracas-based pollster Datanalisis – explains that the petro is likely to give rise to further U.S. sanctions, which could wind up making things worse for Venezuela and cause problems for major domestic businesses. In a recent tweet, he commented that:
“The transition to apply the concrete elements of the proposal: exponential increase in salaries, massive requests for advancement of benefits and increase and change of frequency of tax payments puts companies in a situation of catastrophic cash flow.”
Nobody’s Using the Petro
As the numbers edge in, it’s clear that practically no one is using the petro, nor does it appear to be stemming interest from any single party. One cabinet member working in Maduro’s administration claims that the technology behind the petro is still in development, and thus cannot be used just yet. Furthermore, the Superintendence of Crypto Assets – the branch of the government designed to handle entities like the petro – doesn’t have a physical office or a working website to boot.
In addition, the currency cannot be found on any major digital currency exchange. From Coinbase to Bitfinex, they’re all wary of the asset, and refuse to add it to their trading platforms. The petro is also not accepted by retailers, and few buyers have been found via online forums.
A Region in Crisis
One of the big problems goes back to the claim that the petro is supported by oil reserves. Even if this were true, the Venezuelan government has made no attempt to tap into the country’s fuel stash. While Venezuela does sit upon potential underground oil spouts, the country doesn’t boast the equipment necessary for extraction.
Overall, Venezuela remains a country in severe crisis – severe enough to have caused roughly 1.5 million citizens to flee the nation since 2014.