/ Dictatorship of Venezuela To Fund Itself Through 'PETRO', First Ever Government-Issued Cryptocurrency ICO

February 22, 2018

Venezuela Government-issued Cryptocurrency ICO Petro

We were all excitedly waiting for the first government crypto projects, we just didn’t think it would be Venezuela and its mass-murder regime.

One of the most corrupt countries in the world, crisis-ridden Venezuela is launching an oil-backed crypto ICO that it hopes will help circumvent US financial sanctions and ressurect the country’s crumbling economy.

Would you invest in a cryptocurrency coming from a country that doesn’t pay their foreign debt and whose economy is hyperinflated?

Before we take off to one of the newest crypto ICOs and Venezuela’s own Bitcoin, it is important to understand the country’s current state of affairs.

Venezuela went from a rich democracy to a dictatorship on the brink of a collapse while Nicolás Maduro, the president of Venezuela, is looking to gain absolute power as his country is battered by an unprecedented economic crisis. Maduro and his supporters have total control of the government, and they are using it to toss political opponents in prison, crack down on growing street protests with lethal force and government security forces, or rewrite the country’s constitution and rig elections. 

It’s difficult to overstate how damaged Venezuela’s economic state is. The country entered a deep recession in 2014 spurred by the drop in global oil prices, and heavy regulations on its currency bolívar are helping produce skyrocketing inflation. For the US, Maduro’s increasing authoritarianism and refusal to reform his economy represents a major geopolitical and humanitarian challenge.

/ PETRO - A BARREL OF CRUDE

The token PTR will represent a barrel of oil from a specific division in the country’s Orinoco oil belt, and its price will depend on the price of a barrel of Venezuelan oil from the previous day, according to the government's website. 

“Today is the day the Petro is born. We are on the world’s financial vanguard. Our response to great problems is great solutions and good will.” President Nicolás Maduro said in a launch event held Tuesday with media and investors. He also added that the project had raised $735 million on the first day of the pre-sale for the new cryptocurrency. “The game took off successfully,” he said.

Per a roadmap published on the Petro website, Venezuela plans to launch an exchange for the token next month, when it will also begin a private sale of the token. The government also aims to complete any adjustments necessary for its network by the end of March, with full use of the token expected to begin in April.

The government also published a whitepaper, a buyer’s guide, and most recently, newly crafted rules for creating cryptocurrency exchanges within Venezuela, because who wouldn’t want that?

/ FEAR, UNCERTAINTY AND DOUBT

It is hard to trust a government that does not pay the foreign debt, with an economy in hyperinflation, yet that is not this crypto’s only problem.

As we stated in our guide on how to analyze ICOs, fundamental analysis and deep research are crucial in a successful decision-making process when investing, and Petro doesn’t look promising from the technical aspect, as it was created to give them much space for manipulation afterwards. 

I am proud to say, that it does not feel like Petro was well accepted in the investing business communities and media. Their government wants the absolute power to manipulate and adulterate the blockchain at will over petro, and that is the totally opposite of what our community stands for.

The controversial cryptocurrency has attracted its share of opponents, including members of the opposition-controlled Congress in Venezuela. In past comments to the media, one lawmaker called it “illegal” and accused it of serving as a vechile for corruption.

Deputy Rafael Guzman called the cryptocurrency "fraudulent," reiterating past arguments that it will fuel illegal activity.

"Petro is a fraudulent, illegal and invalid mechanism for the government to continue its shady business and money laundering, because it is not known where those resources will come from," he wrote.

"This is a stunt, and I don’t think of it as a cryptocurrency,” Chris Burniske of venture capital firm Placeholder told Bloomberg. “The reason I say that is cryptocurrencies need to be decentralized.”

The Petro is really a top-down hierarchically controlled asset, and its much more akin to a new way to tokenize oil,” he added, noting that when the first gold ETF appeared, they weren’t considered gold, but a different way of packaging the commodity. “With Petro, we really have a new wrapper around oil.” 


/ PETRO ORO


After even less than a week, after witnessing the success of Petro token during its ICO on Tuesday, Nicolas Maduro said in an interview:

“Next week I’m going to launch the Petro Gold, backed by gold, which is even more powerful, that will strengthen the Petro,”. 

Just like the Petro token, undoubtedly Petro oro will attract criticism from many people, especially in the crypto communities. Rather than buying Petro oro, it might be smarter to just go and buy gold. 


In the end, just remember that the base idea of crypto is decentralization and removal, or at least depreciation of such corruption on a global level. Today, we have more power and information to make that happen than ever did before, and we choose what projects we support and invest in, and we do not want to support more bloodshed and any kind of war. 

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