"The Petro Is Born Today" - Maduro Launches Oil-Backed Crypto "For The Welfare Of Venezuela"

More than two months after Venezuelan President Nicolas Maduro announced his intention to launch the world's first state-sponsored cryptocurrency to try and help Venezuela raise some badly needed foreign capital, the Petro - backed by 5 billion barrels of oil that are still waiting to be pumped out of a local oilfield - is now a reality.

Venezuela first tipped its hand at its intentions over the summer, when it appointed what we believe to be the world's first "superintendent of cryptocurrency."


The Venezuelan government has been saying for months that the Petro would be available for sale beginning Feb. 20. According to Bloomberg, it'll be a few weeks - if not months - before we know anything about the cryptocurrency.

Developed in secret, the project was spearheaded by a 27-year-old blockchain engineer who, according to Bloomberg, earnestly believes in the power of crypto to rescue one of the world's most repressive regimes from one of the worst economic disasters unfolding anywhere...

However, it turns out that the sale is the culmination of months of work, much of it done quietly by top bureaucrats loyal to Maduro. Working alongside them has been a 27-year-old Venezuelan technology entrepreneur named Gabriel Jimenez, who says he’s spent months helping develop the concept of the Petro and remains certain of its power to fix what ails Venezuela. “This is a lot more ambitious than just a cryptocurrency. It’s a project which I, along with a national and international team, have worked arduously to benefit this country,” says Jimenez. He says he hasn’t been paid for his work and will be compensated only in Petros if the token succeeds.   

For the past seven months, Jimenez has been part of a government team working in secret in Caracas to study how cryptocurrencies could alleviate some of Venezuela’s deepest problems, including its recent lack of bank notes. Despite importing billions of banknotes, Venezuela’s worthless currency has struggled to keep up with quadruple-figure inflation that values the highest-denominated bill (100,000 bolivars) at just 50 cents. As a result, ATMs are empty across Caracas, and local banks limit customers to withdrawals equivalent to just a few cents a day.

Rather than build their own system from scratch, the Petro is built atop the ethereum blockchain. Venezuela's petro team reportedly paid a visit to China, where People's Bank of China is supervising crypto trials of its own.


Maduro's near-daily updates about the status of the Petro were reportedly a headache for the team of engineers, who had to talk him out of setting the initial price close to the present value of a barrel of oil.

Maduro’s spontaneous, running commentary on the Petro during his near-daily television appearances has caused headaches for the Petro team, which must constantly change the currency’s parameters or speed up work to fit the president’s latest ideas, according to two people with the project. For example, in December, when Maduro announced that virtual exchange houses were in a trial stage, they were just being programmed, two people familiar with the work said.

During a speech in early January, Maduro mentioned a $60 price per Petro, roughly the current value of a barrel of oil. Some on the team disagreed, saying it was too high and warning that early volatility in the currency could bring huge losses to initial buyers. In the end, a series of decreasing discounts was set in place that mean only 24 million Petros (of a total of 100 million) will cost the full price. Under this system, earlier buyers will be rewarded with a better price.

Venezuela also hosted a cryptocurrency forum last year and invited several high-profile cryptocurrency experts. However, all three of the invitees later refused to endorse the government's "technical specs" for the Petro.

At the event, Evercoin exchange founder Miko Matsumura, digital-currency attorney Carol Van Cleef, and Bitcoin Center NYC founder Nick Spanos praised the idea of an open currency and a transparent marketplace, according to people familiar with the event.


Yet afterward, all three stopped short of signing onto the government’s technical specs for the Petro, enshrined in a white paper that has circulated among the top levels of Maduro’s government and has, over time, become more and more a political document infused with socialist doctrine.

To fuel demand, the government guarantees that it will accept the Petro as payment for taxes and fees. It has also said it will seek to promote the Petro abroad.

President Maduro was quoted as saying in a launch announcement:

"Petro is born and we are going to have a total success for the welfare of Venezuela... The largest and most important companies and blockchain in the world are with Venezuela, we are going to sign agreements."

And it appears the Maduro government was successful in securing buyers. After trip to Dubai, Maduro announced Tuesday that 40 million Petros (out of an offering size of 100 million) had already been placed with institutional investors, leaving the administration wide latitude to offer discounts and other enticements (no word yet on whether Goldman Sachs has already signed on). Members of the public won't be able to buy their Petros for another month.


While it's unconventional, after the US adopted a ban on trading in Venezuelan debt in August, the country has been effectively shut out of global debt markets. Some see the Petro as a potentially illegal way to circumvent these restrictions.

Already, US politicians are trying to subject the Petro to the same sanctions affecting other Venezuelan assets. Last month, US Senators Marco Rubio and Bob Menendez urged US Treasury Department Secretary Steven Mnuchin "to outline the department’s enforcement mechanisms and efforts to combat the Maduro regime’s plans to use cryptocurrencies to evade U.S. sanctions."

“Maduro has proven that he will use every tool at his disposal to perpetuate his authoritarian objectives, including financial lifelines from Russia and China. As such, we are concerned that a cryptocurrency could provide Maduro a mechanism by which to make payments to foreign lenders and bondholders in the United States, actions that would clearly thwart the intent of U.S.-imposed sanctions,” the Senators wrote.

According to Reuters, the Petro has already attracted investments from Turkey, Qatar, Europe and even the US, according to the country’s cryptocurrency regulator (obviously not the most reliable source when it comes to this).

Tsvetana Paraskova, an analyst at oilprice.com, said few expect the Petro to bring real benefits either to Venezuela’s ravaged economy or its people, who are still suffering from a shortage of basic necessities, as the IMF expects inflation to rise 13,000% this year.


shocktherapy Coinista Tue, 02/20/2018 - 18:00 Permalink

 cryptocurrency is being held to a higher standard for "clean money" than fiat, at least the physical version. Very few people are reading serial numbers on dollar bills. (To be fair, the comparison isn't apples-to-apples, since you can't zap a briefcase full of banknotes across the globe.)

Satoshi created bitcoin so people who don't trust each other could transact over the internet. Exposing all transactions on the blockchain was the price paid for trust in the system, and he (or she, or they) thought pseudonymous addresses would mitigate the privacy leak.

Radical transparency is often touted as a feature of blockchain technology, which it may well be for enterprises and governments.

In reply to by Coinista

MEFOBILLS shocktherapy Tue, 02/20/2018 - 19:25 Permalink

ZH is supposed to be a monetary blog.  

The Petro is money, not commodity.  The Petro became money the minute Maduro made it good for taxes.  Goods and Services will be priced in Petro's.  Most likely there will be stores taking Petro's for those who take their salary in that unit.

Government workers will be the first to have salary paid in Petro's.  

Bitcoins are commodity in that they are mined into existence (from nothing) and their limited volume makes them attractive to buy.  Therefore they have a price, not an exchange rate.  The value of bitcoin's and other crypto's is their ability to protect purchasing power from national money units.

Petro volume in money supply will be held to price of oil.  In other words, oil reserves are anchor for Petro price.  The discount discussed in article is so early adopters can buy Petro's and still make money on spread between discount and barrel price.

Early adopters will be buying Petro's with dollars, or Euro's, so external debts denominated in dollars can be paid.  Dollars will come into Venezuala, then leave to pay external debts, which will then help anchor Bolivar.

Blockchain adds transparency, so Petro has good chance to be moral legal money.  

I'll make this prediction right now, it will work.  Other nations in Caribbean and Latin America will also jump on Petro bandwagon.  Mammon, now occupying Washington, London, and Tel-Aviv will not be happy.   

In reply to by shocktherapy

MEFOBILLS cheech_wizard Tue, 02/20/2018 - 23:17 Permalink

What would you expect from someone who actually believes the following

" Bitcoins are commodity in that they are mined into existence "


Bitcoins are mined into existence using special software and computers.  That is pretty basic Crypto 101.  

Once they are in existence they add to total bitcoin supply.  They then have a price in dollars or whatever is chasing it.  

Yes I believe what I said because it is obviously true.  

In reply to by cheech_wizard

stacking12321 MEFOBILLS Tue, 02/20/2018 - 21:53 Permalink

I predict you'll be wrong about that, mefo

If there's one thing I expect from maduro, it's that he doesn't have the discipline to not create more Petros than he has oil to back it up, the temptation will be too great, and he is too arrogant.

And the article seems to suggest the 3 crypto guys he got to come look, none wanted to give their stamp of approval, they know what's up.

In reply to by MEFOBILLS

gallistic MEFOBILLS Tue, 02/20/2018 - 23:35 Permalink

MEFOBILLS, that is a very bold prediction on the Petro. I am glad somebody is actually contributing something to the conversation instead of the typical "but soushalism!" knee-jerk reaction.

Under normal circumstances you would be right, but I have been following this closely for many years, and do not underestimate the US's determination to sabotage and economically strangle Venezuela.

This is petro-dollar-serious shit here, and other countries have been destroyed for fucking with the petro-dollar.

There is a distinct possibility that the US Cybercommand would hack or otherwise attack the Petro or its platform, and then, of course, blame those dirty Russians or the evil North Koreans. Little Marco Rubio is already screaming and crying about how we are going to respond to this "Petro threat". Tillerson spent a whole week in Latin America lining up our stooges to try to finish KOing Venezuela's economy. They, and several others, have called for the Venezuelan military to stage a good ol' fashioned coup, and vassal states like Colombia, Brazil, Peru, and Argentina are putting even more pressure on Venezuela, talking about oil embargoes in support of US policy and all other kinds of nasty stuff.

The mighty Wurlitzer is already cranked up to 11 on "humanitarian disaster" and "refugee crisis" propaganda themes. Of course, this same media conveniently omits the fact that anywhere from 5 to 6 million Colombians are refugees in Venezuela, and Colombia is one of the countries with the most displaced refugees in the world. Millions of Venezuelans would have to move to Colombia to bring the net level back to zero. In any case, the upcoming OAS meeting in Lima will be very interesting, to say the least. 

The article is factually incorrect in several points.

"According to Bloomberg, it'll be a few weeks - if not months - before we know anything about the cryptocurrency."

" the sale is the culmination of months of work, much of it done quietly by top bureaucrats loyal to Maduro"

"...technical specs for the Petro, enshrined in a white paper that has circulated among the top levels of Maduro’s government and has, over time, become more and more a political document infused with socialist doctrine"



The Venezuelan government has been openly discussing and providing concrete details, timelines, and updates on the implementation progress for many months. Just because Fox, CNN, Bloomberg, or ZH haven't told us about it does not mean it has not occurred. There is a lot of very detailed and specific information readily available.

For example, the white paper drafts have been publicly available, and anyone who wants to read the current version of the whitepaper can read it here (in Spanish of course) and determine for themselves if it is "a political document infused with socialist doctrine" or not. I have read it and I do not subscribe at all to that characterization.

There will be a fixed number of 100 Million Petros backed by the certified oil reserves from field 1 of the Ayacucho block of the Orinoco oil belt, which consist of at least 5,342,000,000 barrels. Venezuela is doing a pre-sale right now of 38.4%. The main IPO is slated for April and will involve 44%, or the bulk of the Petros. 17.6% will be retained by SUPCACVEN (Superintendencia de Criptomonedas y Actividades Conexas Venezolana) and distributed according to the plan laid out in the white paper.

More Info-

Petro Website with several key documents- http://www.elpetro.gob.ve/index.html 

Venezuelan Blockchain Observatory- https://blockchain.gob.ve/

SUPCACVEN Twitter feed- https://twitter.com/SupCriptoVe 

In reply to by MEFOBILLS

techpriest Algo Rhythm Tue, 02/20/2018 - 21:48 Permalink

The Mark of the Beast is a specific case of a general curtailment of liberty: if you don't play by the rules, you are cut off from commerce.

In ancient Rome I have read that there were literal "trade marks," and you couldn't trade in certain markets without them.

In China, you have a work permit (hukou) that limits your movements and employment. If your old boss doesn't release it or new boss doesn't accept it, you can't change jobs. Not legally anyway.

In the USA, we have something like it in that politically incorrect speech will get you fired. Also, lets not forget cases where the IRS takes all of your bank accounts and then says you can sue them to get the money back, except you now have no money.

In all cases, we are looking at economic restrictions as a means of control.

In reply to by Algo Rhythm

RedBaron616 Coinista Tue, 02/20/2018 - 20:43 Permalink

Sure, let me buy something that has no value whatsoever in and of itself. And if you tell me about scarcity, I would refer to the Franklin Mint collectibles which were also scarce, but that didn't make the value of them soar, did it? Sorry you bought at the top, sucker, but you, like everyone else here, will tell us how you bought early on and are a millionaire too.

In reply to by Coinista