Eduardo Prospero

Freelance writer. Self-published author. Rapper. Venezuelan in exile. Digital nomad.

A Complete Guide to Petro - Venezuela’s Cryptocurrency Driven Attempt to Attain An Edge

The Venezuelan cryptocurrency is a question mark, an oddity, a riddle wrapped up in an enigma. Up to this day virtually every article about it, and there are a lot, refers to the Petro’s mysterious quality in one way or another. Maybe they’re covering their bases and I probably am too, but that doesn’t make the Petro any less mysterious. Or controversial. Or prohibited by Trump, who via an executive order dated March 19, 2018 declared: “All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.
On the other side of the fence, as last year came to a close, Maduro said about his hopes for the Petro to be used in international petroleum commerce: “In 2019 we have a chronogram for it to be sold in Petros and in this way to continue freeing ourselves from a currency used by the Washington elite.” And in a tweet from about that time he doubled down on the idea that the cryptocurrency would “break the blockade imposed by the imperialism.” Using the same social network, Venezuela’s other president Juan Guaidó, attacked: “Maduro says the Petro will be backed by the oil belt, so it isn’t Crypto Currency, it might be an electronic bond with backing or some fraud nobody will believe. Definitely a Scam-Currency.” Clearly, a polarizing topic on which credible information is hard to come by.
The Petro’s white paper was heavily criticized as soon as it hit the web. Alex Van de Sande from the Ethereum Foundation took special offense to the idea that the coin was Chávez’s brainchild: “First of all it was inspired by Chavez, the first person in history to think that currencies should be backed by things. Screw capitalist pig Satoshi, Chavez basically invented crypto.” But lo and behold, there’s video evidence to back that up. On March 30th, 2009, Chávez said to the press: “We have the idea, and I’m going to talk about it publicly for the first time, of an international currency, and the mere idea excites me: The Petro. Petro coin. Mainly based in the huge oil reserves that some countries like ours have. Just like in another time, to emit currency, said emission had to be sustained in gold. And the US is the culprit to have broken the reference to the gold standard. And that’s when the debacle started.
(Quote starts at 4:06)
I tried to contact both SUNACRIP (Superintendencia Nacional de Criptoactivos) and the superintendent Joselit Ramírez via social media for months to no avail. They promote social media as their main channel of communication, so I insisted. Nothing. I tried calling 0800-SUNACRIP and the responder refused to put me through to the department of communications, he interrogated me about my intentions and finally said I had to come in person or write an e-mail. I asked if someone with answering power was going to meet me there, he declined to respond. I wrote the e-mail, the address wasn’t available on the website so maybe someone would answer my polite questions. Nothing. I couldn’t get the official point of view.
In the meantime, I found the next best thing: Asonacrip. A private association with ties to the government, on their official history they talk about “going to the battle of ideas and discussion putting together their first proposal to advance in the construction of a CriptoNation.” One of the founders made said proposal to “Dante Rivas (a key figure in the implementation of technological platforms for the Venezuelan government), who invites him to organize a  symposium on the BCV”. The Banco Central de Venezuela is the central bank of the country and controls its monetary policy. So, Asonacrip plays in the big leagues from the start.

The organization did respond to my request, provided an email and received the questions. They confirmed their participation and promised the answers for the next few days. Then, radio silence. I insisted by all possible channels for weeks and didn’t even got a reason for the disappearance. Nothing. I couldn’t get the official point of view indirectly either. Since my questions could’ve been the problem, I asked them to just send me a statement on the state of the Petro. Silence. So much for “going to the battle of ideas and discussion.” Still, since I’m tenacious, let’s quote the founder José Angel Alvarez’s latest article, in which he defines the Petro as a stablecoin and declares: “... today we’re on a really important phase for the Petro, everything is starting to make sense, and we’re talking about the relationship created between the Petro and Bitcoin’s value.” But... is it starting to make sense?
I interviewed four cryptocurrency enthusiasts from different walks of life to get their take on the elusive Petro.
  • Mariana Lizardo: An economist with postgraduate studies in Project Management and Oil International Politics and Commerce. She is a professor of both Pre and Postgraduate studies at the UCAB and serves as a consultant in planning, budget and project management for private companies. Follow her on Twitter.
  • José Lanz: a lawyer with an economy and strategic planning background, Lanz started dealing with cryptocurrencies as a hobby in 2016. By the next year, he was trading full time and covering the industry’s coming and goings for Ethereum World News, CryptoCrimson and Decrypt Media. Follow him on Twitter or add him on LinkedIn.
  • Arturo Castro: Venezuelan based in Buenos Aires, he’s the host of “Cyber Booth” at Radio Capital Argentina. A weekly chat show in which he discusses technological topics with experts and leaders of the industry. Follow him on Twitter or Instagram.
  • Luis Carlos Díaz:  both a journalist specialized on the Internet and a cyberactivist, he’s been writing about the net and teaching people how to use it for more than a decade. He’s also a radio personality, a podcaster, and a speaker. Follow him on Twitter and support him on Patreon.
  • Let’s start with Mariana Lizardo’s take on the current state of the project: “It didn’t accomplish what it announced. It hasn’t captured any interest or capital interested in buying it. There’s no way to verify the relationship between the currency and the reserves that are supposed to back it up. The fact that the government assigned and updated the value of the coin at will has made it a non-appealing active for investors.”
    Raising similar concerns, Arturo Castro is worried about the opacity of the project: “There is no data, benchmarks or reliable information about the true reach and figures of the project. Even though some values are supposed to have been defined, they’re not connected or subject to anything real. The formula posed in the whitepaper to calculate the Petro’s value doesn’t mean anything if you take into account that, in spite of the fluctuating values of the implicated factors, the price gets set by the “head of state” in a nationwide broadcast.” 
    José Lanz will get more positive as the report progresses, but: “For what I see is a greatly manipulated project right now, which is reducing its credibility. Technologically it’s ready, but I think the authorities don’t have the political determination to work with a stablecoin, can’t handle the monetary policy with a non-inflationary token, plus they’re selling the Petro like something it’s not.” What does he mean by that?
    Let’s go back in time for a clear vision: On August 30, 2018, Reuters published a detailed investigation on the existence of the Petro, it concluded: “It turns out that Venezuela’s petro is hard to spot almost anywhere. Over a period of four months, Reuters spoke with a dozen experts on cryptocurrencies and oil-field valuation, traveled to the site of the pledged oil reserves and scoured the coin’s digital transaction records in an effort to learn more. The hunt turned up little evidence of a thriving petro trade. The coin is not sold on any major cryptocurrency exchange. No shops are known to accept it.
    Nevertheless, on Abri 20th of the following year, with a little experiment, José Antonio Lanz confirmed the coin exists and informed: “Venezuelans are slowing beginning to trade petros. They’re doing it on state-sanctioned exchanges and informally among themselves. And they’re doing it for reasons ranging from the practical to the political.” In our own interview, about this death and resurrection show, Lanz said: “I see it as getting more useful every day. There’s more speculation and trading volume around the token. There are exchanges that are trading it, there are online stores and businesses that accept it. Everything is still underground but I see it taking flight. Nevertheless, politics still influence this token’s market a lot.
    At the end of his report for Decryptmedia, Lanz denounces: “... sudden and inexplicable changes to its whitepaper; unfulfilled promises of major listings on top exchanges; and unexplained shutdowns of the platform have all done more to damage the petro’s credibility than any critic of the president ever could.” And that leads us to the whitepapers. Let’s be clear, the world is complicated and the only constant is change, projects have the right to alter their initial plans. But they also have to face the consequences that to do so brings, and a big one is the loss of trust.
    On the original Petro whitepaper, released in January 2018, they announce: “The Pre-sale will start on February 20, 2018, and will consist of the creation and sale of an ERC20 token on the blockchain Ethereum platform. This process will promote and guarantee demand for Petro’s Initial offering, which will be carried out later.” And then they promise that the amount of Petro created for said Initial Offering will be fixed, and “The Venezuelan State will not be able to make new emissions Petro.
    The revised whitepaper, released on October 2018, doesn’t mention tokens, declares that it’ll have “its own BlockChain” and the promise of a fixed amount is fuzzier: “The Petro will have as many emissions as there is place in relation to the fixed reserves as the main backup, in a ten years lapse. Each emission will have a finite quantity to issue, therefore, Petro is finite”. On the first one, the coin is backed by 5,342 million barrels from a specific oil field, on the second one, it’s supported by a basket constituted by oil, gold, iron, and diamond. There are substantial and fundamental differences between the documents. 
    There was a time there, in between the two whitepapers, when the Petro tokens were going to be hosted in the NEM platform instead of Ethereum, but that phase was short-lived. For a direct report, let’s quote the Reuters investigation: “In March, a NEM account claiming to be operated by the Venezuelan government issued 82.4 million tokens as part of an ICO associated with a digital coin described as the petro. Those appeared to correspond to a set of “preliminary” coins described in the white paper that buyers could later swap for petros once the ICO was complete.
    Around 2,300 of those tokens were transferred to 200 anonymous accounts in small quantities in early May, NEM records show. (...) If sold at the price set by Maduro based on oil prices at the time, the sale of those tokens could have raised about $150,000, according to Reuters’ calculations.
    According to Maduro, though, the presale generated 735 million Dollars. An extraordinary amount that would make it one of the most successful ICOs in history. Suspicious, opposition mouthpiece Caracascronicles responded: “The NEM blockchain (the network for transferring PTR) allows anyone to see the full record of transactions, and there have been zero —  all petros are controlled by one address. So how exactly did they raise that much money?” As it usually happens regarding the Venezuelan situation, it’s hard to know who to believe, where the truth lies, on which side the ball is. Especially considering that, since then, Maduro claimed the crypto asset has raised $5 billion.
    Nowadays, the operation has its own blockchain up and running, as José Lanz confirmed: “I wanted to verify that the Petros effectively were tokens running on a blockchain or if they simply were seats on a database. I downloaded a Petro-compatible-wallet even though it wasn’t available in the Play Store. This wallet generated an address and my friend sent me some tokens he’d already bought. The transaction went through and I could see the Petros both in my address and in the block explorer.
    The experiment continued: “Then I wanted to test if the ones for sale in the government’s official site were real. I opened an account, sent some Bitcoins that were exchanged for Petros, which I sent to my unofficial wallet and once again could audit the transaction in the explorer. Then I sent them to a reporter that wanted to run a similar test and got the same results.
    That reporter works for Criptonewsz, which through a deposit re-confirmed that it’s possible to send and receive Petros. They also noticed: “Through the NEM based application, several other aspects also got unfolded. It looks that the oil-backed cryptocurrency highly resembles ‘Dash.’ Talking about the similarities, Petro too like Dash, has thirty-four characters. It also uses the upper and the lower case letters including numbers.” The similarities with Dash were first spotted by Ethereum’s developer Joey Zhou and are hard to ignore, the report continues: “For anyone familiar with the Dash altcoin, they know its main features – instant sending, master nodes, the X11 mining algorithm, etc. These are some of the features that it seems that the Venezuelan government decided to include in their own whitepaper.
    Furthermore, Criptonewsz found another interesting thing out: “This discovery also led to further revelations about other 5000 PTR transactions with their addresses on the blockchain. These other transactions are active and are earning tokens. However, the worth of these 5000 PTR is still not very clear because different Venezuelan entities offer a totally different rate”. So the coin is out there and probably spreading. 
    But if we’re trying to evaluate its success, let’s focus on the initial $735 million: shouldn’t that amount have a direct positive impact on a country’s economy? Knowing that for sure is well above my paygrade. It seems like it probably should, but I can’t be sure. One thing’s for certain, though: it hasn’t, Venezuela’s collapse keeps breaking all kinds of records. And hearts. Also, there has not been an official announcement about that money’s destiny. On April 2018, Maduro said about $1 billion were going to be deposited in the central bank as reserves, but did it happen? There were no public plans to begin with, the whitepaper discusses ample funds to keep developing the project but they all come from within it. The earnings, the spoils of war, are not mentioned. 
    SIDEBAR -> Cryptocurrency as a concept:
    For a simple explanation we quote the Oxford Dictionary, cryptocurrency is: “A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.” For a more complicated/ complete one we go the now mythic “A Letter to Jamie Dimon”, Adam Ludwin defines them as: “a new asset class that enables decentralized applications.” 
    That one leads to a couple of questions. To explain what an asset class is, Ludwin provides these useful examples: “Corporate equities serve companies/ Government bonds serve nations, states, municipalities/ Mortgages serve property owners/ And now: Crypto assets serve decentralized applications.” And he defines decentralized applications as: “a way to create a service that no single entity operatesand alsoa new form of organization and a new form of software. Theyre a new model for creating, financing, and operating software services in a way that is decentralized top-to-bottom.”
    On the other hand, Investopedia follows the money and leads with: “A cryptocurrency is a digital or virtual currency that uses cryptography for securityand that makes itdifficult to counterfeit”. And then they are the first ones to mention the blockchain, that other buzzword: “Many cryptocurrencies are decentralized systems based on blockchain technology, a distributed ledger enforced by a disparate network of computers.” To close it, they celebrate itsorganic natureby declaring: “it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.”
    SIDEBAR -> What is the Petro exactly?:
    For this definition, let’s go straight to the source, according to the whitepaper the Petro is: “the first digital coin promoted and issued by a state, backed by the natural wealth” and by that they mean “internationally certified Venezuelan commodities.” It’s “objective is the democratization of the economy worldwide” and it will “facilitate the commercial exchange, Venezuelan commodities acquisition, and resources generation, improve import and export, increasing the exchange and access of currency or any crypto coin.” [sic] 
    According to Investopedia the goal of the Petro is to circumvent US sanctions and “The idea was to enable transactions in currencies other than the US dollar.” In their report, Reuters informs: “Oil is the heart of Venezuela’s economy. In choosing to back its petro with petroleum, the country has joined a small but growing number of cryptocurrency issuers linking the value of their tokens to physical commodities.” To get even more details we go to Al Jazeera: “Petros will be "pre-mined", meaning the government would produce and control it” and its price “will be tied to the cost of a barrel of Venezuelan oil”. Or at least it was, at the beginning.
    SIDEBAR -> But… is the Petro a cryptocurrency?:
    If we go by the Oxford Dictionary, it seems to be. The Petro uses “encryption techniques” to regulate its functions, but to accept it as a cryptocurrency we’d have to ignore the part about being independent from a central bank. If we use Adam Ludwin's definition: “a new asset class that enables decentralized applications”, then it’s not. The Petro doesn’t support any application, which may be the reason why Bitfinex proclaimed: “We see the PTR as having limited utility.” 
    If Investopedia is to be trusted, at first glance the Petro seems to be a cryptocurrency: it’s digital, it uses cryptography and it’s hard to counterfeit. They also use the word “many”, as in “not all”, in the phrase: “Many cryptocurrencies are decentralized systems based on blockchain technology.” So far so good, but the argument falls down when they categorically claim that it shouldn’t be: “issued by any central authority.” and it should be “immune to government interference or manipulation.” The Petro is none of those things. 
    But what do our experts say? Arturo Castro is unequivocal, he feels that it isn’t: “Not only because it’s centralized. Its value doesn’t fluctuate on a free market, it is set by the issuer at their convenience. Its commercialization can’t be audited. The issued amount isn’t defined, the issuer creates them at will as in any Fiat currency.” Mariana Lizardo agrees with him: “The control the government has over the Petro undermines its credibility as a cryptocurrency”. On the other hand, José Lanz says: “The Petro’s low credibility is caused by a strong campaign against it, but I don’t think it has fewer merits than any other of the thousand altcoins with low capitalization that people support”.

    No cryptocurrency is an island

    For the Petro to prosper, it needs international support. We already established how the US feels, in fact, they’ve recently doubled down on their stance by sanctioning a Russian bank saying: “When the failed Venezuelan cryptocurrency, called the Petro, launched in 2018, Evrofinance emerged as the primary international financial institution willing to finance the Petro. Early investors in the Petro were invited to buy the cryptocurrency by wiring funds to a Venezuelan government account at Evrofinance.  Evrofinance’s involvement in the Petro demonstrated Maduro’s hope that the Petro would allow Venezuela to circumvent U.S. financial sanctions.
    The whole country, on the other hand, is not ready to commit. Despite high hopes from Maduro’s camp regarding dealings in Petro with Russia, at the end of last year, Deputy Finance Minister Sergei Storchak declared to the press: “Representatives of our tax service, the Central Bank, were there during the presentation of the cryptocurrency, which Venezuelans are now introducing. But no more than that. As for payments, there is nothing yet.” Which may be a fancy way to say no. In a previous report, the shoe was on the other foot, “Venezuela has not offered to repay part of its debts to Russia using the country’s cryptocurrency, Konstantin Vyshkovsky, head of the finance ministry’s state debt department, told reporters.
    As for the OPEC, the other huge client/ partner the Venezuelan government had in mind, a search on their website with “cryptocurrency” as a keyword just produces two reports from the same event in which they comment on Minister of Petroleum of Venezuela Manuel Quevedo Fernández’s participation by saying: “He pointed to the emergence of alternative forms of payments and said that “one of the innovative things [Venezuela] has done is to explore the  creation of a new cryptocurrency.” Much work and research remains to be done in this regard, he noted.” 
    Since the international efforts have had only marginal results, Maduro’s government focused its attention on the internal market. They chained salaries to the Petro, unilaterally decided to use it to pay old-age pensions and the Christmas bonuses, more recently designated it as “mandatory payment required to register a brand or patent” and, starting November 1st, 2019, everything related to passports will have to be paid in Petros.
    Mariana Lizardo chimes in: “There can be payments to employees, pensioners and people related to public administration in Petro, but all the while that coin is not accepted, exchange to Fiat currency will always be necessary.” And Lanz thinks that if the Petro is to contribute to Venezuela facing its economic crisis, the government should: “Pay salaries in Petro and provide the option to convert them at banks or exchanges. It’s not the same to receive X Petros than receiving Bolívares with the government saying: “This equates to your Petros”.
    A few weeks after he said that to us, President Maduro ordered the country’s biggest bank - Banco de Venezuela - to “open Petro transaction desks”, which Lanz himself reported for CryptoCoinsNews. He did manage to interview ASONACRIPT’s president José Angel Alvarez, who about this said: “It is a bold and correct decision to move forward towards a hybrid economy where the fiduciary currency of a country competes face to face with cryptocurrency.” But will this “ordering” translate into mass adoption? It certainly is a strategy only a centralized-state-backed cryptocurrency can adopt, and unique case worth studying. 
    On the other side of the coin, the Venezuelan government is directly responsible for the Bolívar’s collapse. The country’s official currency is the main character in a tragicomedy like no other, in which it has lost its value over and over again. Luis Carlos Díaz explains the causes: “It was an official decision, Nicolás Maduro personally took it and assumed it in a nationwide radio and television broadcast. To cover its own deficit, the Venezuelan central bank started creating artificial money. So, the country’s budget, the government’s payments (the wages of more than 3 million public employees and more than 2 million retirees), everything that needed Bolívares wasn’t paid with our taxes (like in every other country) or with petroleum sales, which went broke because of the chavismo, but with artificial money created every week in the Banco Central de Venezuela.
    Each one of those weeks, with more bills circulating, the Bolívar was effectively devalued; Luis Carlos again: “That means, compared to all of the world’s currencies, the Bolívar lost value because even its administrators lost faith in it. That generated hyperinflation, which kills saving, planning, and a thousand other things”. If the journalist is right, can the same government be trusted to do what’s best for investors in their new experiment? And isn’t trust essential when it comes to cryptocurrencies?
    The Superintendencia Nacional de Criptomonedas or SUNACRIP recently inaugurated its headquarters, from there Maduro declared: “The Petro is legalized as a unit of account and as Venezuelan currency, and starting today, the sale of movable and immovable property in Petro should be permitted and promoted. The sale of airline tickets will also be in Petro, as well as hotel services, airport charges, and fuel for international aviation.” Will these actions be enough to jumpstart the cryptocurrency and encourage its use? Will this accomplish the desired effect? 
    On a smaller scale, as José Lanz proposes in his article: “the Petro is gaining genuine traction among Venezuelan traders, even if still in low numbers”, as an example he informs us of the Telegram group “Petro Exchange, is specifically dedicated to promoting and facilitating trades and sales in Petros.” There are online stores - like this one or this other one - that seem to be conducting business, and apparently, there are real-life stores in Venezuela that already accept it. There are two exchanges trading it, Amberes and Bancar, and the PetroApp’s web version is up and running, selling it and exchanging it.
    As for the old-age pensions, the Venezuelan retiree that agreed to talk to us chose to remain anonymous because he wasn’t sure what the angle of our article was going to explore. This is what she or he told us: “I haven’t heard of one person who they’ve paid the retirement pensions in Petros. You can’t do anything with Petros. They’ve tried to make them interchangeable with Bitcoin and other coins, but as far as I know, that hasn’t happened. So they can’t pay in Petros.

    What did happen was that we started receiving messages on our phones that we had a bonus waiting on the Patria.org.ve website. It was strange because that platform is supposed to be for “Carnet de la Patria” holders and I don’t have one. But I got the message, I registered on the site and got the bonuses. In December they paid three of those, and I noticed a “Save in Petros” option. I clicked to see what that was about and ended up accepting the deal, so I now have some Petros in the vault.
    The Patria.org.ve website is a bank-like platform, a digital wallet for beneficiaries of the “Carnet de la Patria”, which is an identity document with a personalized QR code. It’s non-mandatory but, in theory, you only had access to government bonuses with it. It provides additional benefits for the holder, like access to subsidized food, fuel, and medical care. 
    To close it off, Miss Lizardo warns that the problem: “goes beyond citizen education. Cryptocurrencies as a subject is not easily understood by the common citizen, and internationally is more geared towards the financial area. The right conditions of technological infrastructure have to be given for its massification, which is non-viable at the moment because the banking sector is in shambles” On the other hand, Mr. Lanz rescues “the possibility to make transactions in a sovereign manner, without control or manipulation from third parties like the IMF, SWIFT and the US”, but is worried about in-house manipulations like: “instead of devaluing the currency, they say that now the Petro is worth more Bolívares, which is false. There’s no clear determination of the value and it has a subjective correction factor.
    The other two sound alarmed, Luis Carlos goes for the throat: “The Petro is a scam. It doesn’t work, it didn’t work, it won’t work. It’s not a cryptocurrency, it’s not a cryptoasset, it’s nothing. It’s an illusion and it failed. Or did it? It gave a lot of credit to those who got paid for its creation and marketing campaign, but as for the national economy it didn’t fix anything”. Mister Castro goes one step further: “It categorically is a fraud and the people and the country are no doubt the victims. The holders of that exchange value against the national treasure can activate it against the country and its oil/diamonds/gold resources.

    Venezuela’s last hope or the final nail in its coffin?

    The Venezuelan situation is a question mark, an oddity, a riddle wrapped up in an enigma. The country seems to be in the eye of the storm. Nobody knows what’s going on, but there’s plenty of action and not a dull day. And that’s only what’s on the surface, there’s surely a lot more intrigue going on behind the scenes. That’s where the rub’s at.
    In the middle of all the fire and lava, the Petro rises. And questions arise with it: Is it a tool to combat economic sanctions or a new way to pillage the country’s treasury? Was the project thought all the way through? Is it Venezuela’s last hope or the final nail in its coffin? Even if the intentions are good, will the plan work? Is the international community going to accept it? It’s hard to answer any of those questions, hard to predict the future for a place that doesn’t have one.
    The haphazard first stage of the Petro was disheartening, but the project seems to be ready for primetime. If the technology is there, why hasn’t it been completely released? And what’s the reason for all the secrecy? Transparency is one of the main points of blockchain technology. Not talking to a suspicious journalist like me might be justifiable, but I’m far from the only one, the whole world wants answers and all it gets are slogans and buzzwords or deafening silence.
    If the numbers provided by Maduro’s administration are right, there might be a bright future ahead for the Petro. But are they real? It’s hard to believe, but if, let’s say, a foreign power saw a way to get hold of Venezuelan natural riches for generations to come, the lottery ticket might be worth the price. And that might explain why no-one is publicly claiming to have bought Petros in large quantities, there’s no need for the general public to know until the time is right.
    Let’s take our tinfoil hat for a second and discuss the real-world implications of Venezuela’s move, What would have to happen for the Petro to save a sinking economy? José Lanz tries to be optimistic: “The Petro isn’t going to change anything by itself. Nevertheless, a stable token would help a lot because the government couldn’t make inorganic emissions of money. I think if they abandon the manipulation in regards to the Petro and educate the public, there could be more stability. And by “manipulation” I mean they have to stop “decreeing” the value and expressing different Petro prices.
    On the other hand, Mariana Lizardo is a non-believer: “The problem isn’t the currency used, because if there’s no confidence in it, it might as well not exist. The damaging elements that generated the country’s economic crisis persist, and they have to be surpassed for any kind of cryptocurrency to make sense, get back up and generate the trust necessary to be demanded as a mean of payment and a store of value.” And Arturo Castro is merciless: “The Petro does not represent anything positive for the country, it’s an attempt to extend the embezzlement to the nation and thus survive the fall of the regimen and permit the ruling class to keep squeezing the national treasure.
    This is the moment an official statement from the people implementing the project would help balance things out and close the piece with all bases covered, but that’s not a possibility. Russian analyst Arseni Poyarkov, president of the Biznesdrom analytic agency, seems to agree with our experts: “the cryptocurrency doesn’t create an added value by itself, because of that, probably, the cryptocurrency could help the Venezuelan economy, but only as a last additional tool to control the monetary emission.” 
    But maybe we’re all being short-sighted, the Petro might be part of a bigger plan. An unknown Medium user may have identified something along those lines: (the) “Petro does not come alone and it is not the only unprecedented thing Venezuela is doing. At the event for the pre-sale launch, Maduro described what sounds like a large scale operation aimed to collect (and mine) as much bitcoins as possible: the government will accept bitcoins and ethereum for taxes and public services and is trying to expand the adoption of crypto in the national economy while regulating the mining process by creating a register of miners ” Both the Patria.org.ve and the Petro.gob.ve websites accept Bitcoin and Litecoin, the first one for remittances that arrive in Fiat currency and the other transforms them into Petro. Are we missing an overarching plan already in place?
      If that’s the case, we’re not the only ones. I asked two of our experts about possible solutions to the Venezuelan situation and none of them mentioned cryptocurrencies. According to Luis Carlos: “To surpass the crisis a regime change is needed. A change in the system that guarantees trusts and eliminates all those stupid controls the Venezuelan economy has. There are so many that people abroad wouldn’t understand. In Venezuela, the state controls: What you can produce. How much you can produce. Where can you distribute it to. How much can you sell. How much people can buy. How much can you import. And to all of this disorder add: militant mafias, extortion organisms like the Seniat and Sundde, the “colectivos”, the communes, community councils, the police, and the national guard. It’s impossible to have a coherent cost structure with all of this. To any product, you have to add the cost of passing through all of those filters and survive all the risks of a corrupt system. If you don’t change that, nothing changes”.
    Economist Mariana Lizardo sees a similar panorama: “For Venezuela to get out of its economic crisis it needs to overcome its political crisis. After twenty years of mistaken economic management, characterized by legal uncertainty in economic matters, excessive and nefarious controls, the suffocation of the productive apparatus, and the non-existence of economic policies per se, coherent and with a specific purpose, it’s impossible to think that a recovery process can even start. 
    Once the political stumbling-block is surpassed, radical measures that change the trajectory of the economy will have to be taken. Some of them: eliminating government controls, the reestablishment of the conditions for private investment, recovery of the technical autonomy of the Banco Central de Venezuela, a stop to the fiscal deficit. a restructuring of the public debt, a reform of the State, revision, and restructuring of subsidies for public services and gas, recovery of the oil industry, among others. It’s essential to find the path to economic growth, through the generation of a competitive industry underpinned by respect for private property.
    As I gathered information and wrote this piece, stablecoins emerged as one of the year’s most important topics in the cryptocurrency space. And people close to the Petro started referring to their product as a stablecoin. They have a case, the Petro shares some characteristics with other non-volatile coins and tokens, namely the basket of assets that backs them up, but it fails on the “stable” part of the equation. 
    The most talked-about project in this arena is facebook’s Libra, a coin that aims to become the world’s premier currency and will be backed by a basket of Dollars, Euros, Yen, Pounds and Singapore Dollars. Essentially a centralized cryptocurrency backed by a basket of assets, like the Petro. The main difference is that, instead of a State, Libra will be controlled by corporations. Another project with hard to duplicate characteristics that the world should keep an eye on. 
    This so-called “complete guide” is only an introduction. The Petro’s story is developing as you read this, and chances are it will generate headlines in the years to come. Will those be positive or negative? That’s the question.
    IMAGES CREDITS:
    1.- Parking lot prices in Petros by Bea Malavé
    2.- Whitepaper graphics greenified by the author.


Tags

More by Eduardo Prospero

Topics of interest