Maduro Unveils "The Petro": Venezuela's Official Cryptocurrency To "Overcome Financial Blockade"

Tyler Durden's picture

Three months ago, in a not entirely surprising move meant to circumvent US economic sanctions on Venezuela, president Nicolas Maduro announced that his nation would stop accepting dollars as payment for oil imports, followed just days later by the announcement that in a dramatic shift away from the Petrodollar and toward Beijing, Venezuela would begin publishing its oil basket price in Chinese yuan. The strategic shift away from the USD did not work quite as expect, because a little over two months later, both Venezuela and its state-owned energy company, PDVSA were declared in default on their debt obligations by ISDA, which triggered the respective CDS contracts as the country's long-expected insolvency became fact.

Fast forward to today when seemingly impressed by the global crypto craze, Maduro on Sunday announced the creation of the "Petro", Venezuela's official cryptocurrency "to advance in the matter of monetary sovereignty, to make financial transactions and to overcome the financial blockade".

"Venezuela announces the creation of its cryptocurrency, the Petro; this will allow us to move towards new forms of international financing for the economic and social development of the country," Maduro said during his weekly television program, broadcast on the state channel VTV.

"The objective is to advance in the Venezuelan economy and overcome the financial blockade, this allows us to continue in the economic and social development supported by Venezuelan riches," said the president, explaining that his government will make a cryptocurrency issue "backed by reserves of Venezuelan gold, oil, gas and diamond wealth."


Nicolas Maduro dances with supporters in Caracas, Venezuela, December 1, 2017

It was not exactly clear how this PetroCoin would be backed by various natural resources when the whole point of cryptos is that they are not backed by anything, and as such it appears that what Maduro is trying to do is admit that the hyperinflating Bolivar has failed as a sovereign reserve, and the country is hoping to confuse its global trading partners enough into believing that it somehow had a new "bitcoin" on its hands, which like the real thing would then proceed to appreciate in value in the near future.

While that is very much doubtful, as of this moment there is little additional information on this radical monetary overhaul, which is why we were amused by the following rhetorical question: instead of a cryptocurrency, perhaps Maduro meant to unveil the world's first kleptocurrency instead?

Joking aside, perhaps Maduro is on to something: as CoinTelegraph reported some time ago, "Venezuelans have found a better alternative to escape hyperinflation. They’ve taken Bitcoin as an alternative, and  mining Bitcoin has become big in the country." The reason: unlike most places in the world, electricity here is virtually free, allowing miners to create blocks without almost any recurring costs:

With few utilities that its citizens can still afford, electricity happens to be among them. In fact, electricity power in the country is hugely subsidized and virtually free. This is all thanks to President Nicolas Maduro of the socialist regime.

 

Such a setup created an opportunity for struggling citizens, as Bitcoin miners can run many transactions and earn at least $500 a month. This can feed a family and provide them their basic needs – goods, medications, and such.

That said, Venezuela's miners quickly become the government’s “capitalist parasites”, since Bitcoin is still not legally regulated in the country, leading to some miners getting arrested for stealing free electricity. In other words, what Maduro is trying to do is impose the first de facto sovereign crypto, one which however has no other parallels to any of the dozens of other accepted cryptocurrencies.

One also wonders how long until the Venezuela government launches the first ever bailout ICO to save, well, itself.

One thing is clear, however: the fate of the "Petro" will be closely watched by the rest of the world in the coming weeks.

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Joebloinvestor's picture

The first government nail in crypto currencies coffin.

knukles's picture

So we're electronically trading and owning bankrupt currencies now. 
Having them online makes things so good.

Reminds me of the early days of Milken's junk bond business.  There was no problem a big enough coupon could not overcome.

???ö?'s picture

Wow.  Cryptocurrency cures communism.  Who would have known.

hedgeless_horseman's picture

 

Well, Bitcoin can cure inflation.

But I doubt Maduro wants that.

MagicHandPuppet's picture

"You get a cryto!  You get a cryto!  You get a crypto!  E'erybody gets a crypto!!!"

hedgeless_horseman's picture

 

Actually, only 21 million Bitcoin will be mined, so not everyone.

Deflation, bitchezzz!!!

IH8OBAMA's picture

I'm sure this is going to work out just fine for Maduro.  LOL

 

YUNOSELL's picture

Thankfully, the algorithm for mining new currency has a limit of 985 quadrillion units of currency to insure against hyperinflation

nmewn's picture

lol...don't be.

Mad Maduro says its simple really, its a "crypto"-currency backed by his nationalized nations "wealth" that hasn't been dug out of the ground yet.  

Wait...now so am I ;-)

BallAndChained's picture

Blockchain of OIL is better than Blockchain of NOTHINGNESS (Bitcon).

Even a bucket of dirt has more substance than a Blockchain of NOTHINGNESS.

 

ATM's picture

Only if it is actually redeemable in the real asset that supposedly backs it.

I will guarantee you that the Petro will not actually be redeemable.

eforce's picture

Maybe Tether can (temporarily) pump up the value of their currency.

BTFDemocracy's picture

Can't wait for the pump on Bitfinex to new ATH's on PetroCoin pump. Rumor is Jan 1st is pump time for Petro.

Right now every single crypto coin is pumping hard, doubling in prices in days or hours, now they probably gonna pump (n' dump) Venezuela's new Petro coin. Especially if it appears on Bitfinex and there's newly minted USDTethers that day.

Bunga Bunga's picture

Wrong, the MaduroCoin has no mining limit and it can be mined by the government only. In addition the government can seize and re-spend any coin, when they don't like the person holding it. 

MonetaryApostate's picture

Nailed it, the corrupt wealthy have only exposed their scams further, eventually all of their lies will surface for the world to see.

If you can't see cryptos as a scasm by the wealthy globally, then you are clearly ignorant!

Look, a farmer one day decided to start an apple farm, soon other people wanted to work on his apple farm, & he paid them with apples, then the farm grew & the workers felt like they were getting cheated by working for something that grew off of trees, so the farmer, having a warehouse full of apples decided to fire all of his workers & hire new ones, of course the new workers were over joyed at having an opportunity to work, but after a while they began to see the futility of working for apples that they took from trees.

Stop & think about the story, replacing apples with money, but the farmer who controlled the farm got all of their labor at what real cost to him?

Now read this collection & you'll get it!

 https://plus.google.com/collection/QorNbB

(May need to open in a new tab)

vato poco's picture

Satoshi Maduro today proudly unveiled his country's *other* new cryptocurrency, the pendejo - which, as opposed to other cryptos, is backed by a solid commodity: ALL of the air in venezuela

the pendejo surged in early-morning trading today ... 

syzygysus's picture

how many pinches in each pendejo? you know, like satoshis.

MonetaryApostate's picture

Lmfao, now that's fucking funny!

pavman's picture

Yes, but if every0ne can fork the blockchan with some semblence of parity, then all cryptos are inflationary by nature and thus worthless.

IH8OBAMA's picture

Well, Bitcoin can cure inflation.

Have you seen the price of Bitcoin?  It's inflation incarnate. (Until it crashes)

floosy's picture

Exactly the opposite..it's hoovering up the inflation of all the other fiat currencies at the moment.

Mister Ponzi's picture

Don't try. He doesn't want to understand.

IH8OBAMA's picture

Oh. It's deflation incarnate. (until it crashes) Then it's inflation incarnate.  Got it.  LOL

 

BuyBitcoinNowOrCryLaterr's picture

How do you cope with the fact that you'll be on your deathbed watching Bitcoin hit yet another all time high?

jmack's picture

Next Kim Jong Un will come out with the Perro, where north koreans can trade the token for some supper.

MonetaryApostate's picture

NuclearCoins or MissileCoins?

???ö?'s picture

Next up, the DNC introduces the PEDO-sta coin for trading children.

SaulAzzHoleSky's picture

He should call it the Pedro!

hedgeless_horseman's picture

 

It was not exactly clear how this PetroCoin would be backed by various
natural resources when the whole point of cryptos is that they are not
backed by anything

Exactly.

They sould have named it the "I don't trust anyone coin"

Killtruck's picture

 No worries, mate...the bus driver's got this one figured out. 

knukles's picture

May I please have 2 ib of nothing?  Oh good, I'll take it electronically, please.  Yes, I feel safer about my nothing now that it's held on line.  Thank you

 

Arrraaaggggaghhh!

cro_maat's picture

HH - The first part of Tyler's sentence "...how this Petrocoin would be backed" remains to be seen. The second half " when the whole point of cryptos is that they are not backed by anything," is pure fiction and surprising that it comes from an alt trading website.

The main feature and appeal of cryptos is the distributed ledger which bypasses CBs and the ponzi scheme financial system that dominates today's markets. The Tylers should know this (most likely do know it) and lose creditbility pushing such a BS meme.

Unless I missed the sarcasm tag :)

Pure Evil's picture

Ah, yes.

The good ole block chain.

Unlike gold, has anyone figured out if you can eat the block chain?

 

 

(OK, I'm gonna add the sarc tag /s so no one gets triggered)

BallAndChained's picture

> Unlike gold, has anyone figured out if you can eat the block chain?

You can put the Blockchain of NOTHINGNESS on a plastic USB stick and eat it.

But it will taste the same as any other plastic USB stick, so you are not getting value for the money, and you can be scammed by somebody putting ordinary NOTHINGNESS on the plastic stick instead of luxurious chained NOTHINGNESS.

To truly experience the luxury of eating a Blockchain of NOTHINGNESS, you will need to hire an independent auditor to make sure the plastic USB stick really contains a Blockchain of NOTHINGNESS instead of ordinary NOTHINGNESS. So you can show your friends the certificate to prove that you have eaten certified NOTHINGNESS.

 

MEFOBILLS's picture

The blockchain can also be used for transmission of public created money, keeping public money honest.  

Mister Ponzi's picture

The whole point of cryptos is that they are not backed by anything.

I've written that before. As you pointed out the main feature of cryptos is the distributed ledger. Now, we know that a decentralized database is worse than a centralized one in almost all respects (especially, processing time and costs) except for one: Due to the decentralized character there is no central counterparty to trust enabling trustless transactions. If you take out this one feature there really is no point in having a decentralized database.

If you back cryptos by something you are doing exactly that: reintroducing counterparty risk into the equation. Being backed by something means it can be exchanged for the thing it is backed by. This "collateral" cannot be decentralized meaning the need for trust is reintrodoced. Is the collateral there? Is enough collateral there? Is part of it fake?

A crypto backed by something is a contradiction in terms IMHO.

BallAndChained's picture

> Due to the decentralized character there is no central counterparty to trust

Aren't you trusting the centralized Chinese miners and centralized few developers?

If the centralized Chinese miners jump ship to another crypto of their choice, Bitcon plunges.

Anybody holding Bitcon is putting a huge amount of trust on the centralized Chinese miners and putting huge trust on the centralized few developers to not screw it up.

 

BallAndChained's picture

> If you back cryptos by something you are doing exactly that: reintroducing counterparty risk into the equation.

So that proves NOTHINGNESS is better than hard assets? LOL

 

serotonindumptruck's picture

Sorta like back in the day (25-30 years ago) when telecommunication companies were competing for market share.

The sales rep would ask the customers if they wanted AT&T or MCI.

If the customer said something like:

"It doesn't matter"

or

"I don't care"

Well then, there was an extremely expensive telecom named "It doesn't matter" or "I don't care" who would gladly service your long-distance calling plan.

VWAndy's picture

 Its backed by guns. Take this in exchange or we will shoot ya and take ur shit anyway.

Bunga Bunga's picture

Crypto nail into the government coffin. Fixed it for you.

Son of Captain Nemo's picture

Because like America he doesn't have the Au to cover his shorts and needs the blockchain to "window dress"!...

Yukon Cornholius's picture

But unlike Amerikkka, he doesn't have access to as much Pb , and therefore his threats of financial reset mean nada.

MEFOBILLS's picture

Because like America he doesn't have the Au

 

They have shit-loads of oil, why do they need Au?  Russia gave them a money loan, that is to be paid back in oil, even though Russia doesn't need the oil.

Perkins book, Confessions of an economic hitman, describe the mechanism by which "resource rich" nations are attacked.


Son of Captain Nemo's picture

"They have shit-loads of oil, why do they need Au? Russia gave them a money loan, that is to be paid back in oil, even though Russia doesn't need the oil."

"."

Thanks for finishing it!

Looks like Yankee Jewdle up North is going to need some "assertive drills" like this in order to get Venezuela to be more cooperative (http://www.zerohedge.com/news/2017-12-03/largest-ever-military-drill-us-...)... When all you have left is the "hammer" and everything else is a "nail"!!!

Ah... but for those of U.S. old enough to remember the humble beginnings of our steady decline 40 years ago when we still had $$$ that was worth something and oil reserves other than "shale" that could be tapped CONUS... And... well of course... We still had phyz on demand with far fewer paper contracts chasing it! And weren't hemorhaging as many friends back then because our money was still good enough to "talk"!!!

Anderson Coopers Gerbil's picture

Sounds like somthing a bus driver would come up with