(21 Feb 2018) Cash-strapped Venezuela on Tuesday became the first country to launch its own version of bitcoin, a move President Nicolas Maduro celebrated as putting his country on the world’s technological forefront.
In its first hours on the market, Maduro said the so-called petro raked in 735 million US dollars worth in purchases, without providing details.
The petro is backed by Venezuela’s crude oil reserves, the largest in the world, yet it hit the market as the socialist country sinks deeper into an economic crisis marked by soaring inflation and food shortages that force residents to queue for hours to buy common products.
The president also authorised payments in cryptocurrency for Venezuela’s consulate services and fuel on the border, saying it is just the “kryptonite” Venezuela needs to take on Superman – code for the United States.
Venezuelan officials, however, have released few of the nitty-gritty details of how it will work, ensuring investors that it is safe.
Venezuela-watchers offered potential investors fair warning.
Maduro late last year announced he was creating the digital currency to outmanoeuvre US sanctions preventing cash-strapped Venezuela from issuing new debt.
In a white paper, the government said it will release 100 million digital petro coins during the first year, with the initial 38.4 million expected to go on sale on Tuesday at a value of roughly 60 dollars per token.
If all the initial coins offered for sale are grabbed by investors, it could potentially bring several billion dollars into a government mired by cash shortfalls and skyrocketing inflation.
The government has promised that Venezuelans will be able to use the coins to pay taxes and public services.
But with the Venezuelan minimum wage hovering around 3 dollars a month, it’s unlikely citizens will buy in large amounts.
The US Treasury Department has warned US citizens and companies that buying the petro would mean violating sanctions, putting another damper on the release.
Cryptocurrency experts are looking at Venezuela’s foray into digital currencies with a mix of intrigue and suspicion, excited by the prospect of a government willing to accept cryptocurrency for payments like taxes but also concerned about the potential lack of oversight.
Maduro has touted the petro as fulfilling the late Hugo Chavez’s dream of upending global capitalism away from the dominance of the US dollar and Wall Street.
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