Venezuela Reaffirms the Launch of the Central Petro Coin
Venezuela’s attitude towards digital currencies is well-known, since it is one of the world’s first countries to work on a government-backed coin, the Petro. While the coin was announced a couple of months ago, its launch has been recently reaffirmed.
The reasoning behind this might be the upcoming public sale that will take place on the 5th of November, 2018. Speaking about cryptocurrencies, Hermann Escarra, who is a member of the country’s Constituent Assembly, has stated that: “the National Constituent Assembly of Venezuela is preparing a reform to the Constitution that would include a central bank for crypto-assets and a superior court to the Supreme Court of Justice.”
So far, there is no information regarding this crypto-assets central bank, or what purpose it will serve. Technically, a crypto bank is a financial institution that provides services similar to traditional banks, yet chooses to use cryptocurrencies instead of fiat.
Despite this aspect, there are still numerous speculations on whether the Petro coin actually exists, if it’s bound to be successful and if it is backed by oil, as President Nicolas Maduro has often said. To back these claims, Alex Tapscott has commented that “the government authorities say each unit of the petro is backed by oil, but we have no proof at all. There is very little technical information about it.”
In a recent press statement, President Nicolas Maduro has once again clarified that the government has promised to back each of the petro coins, with a barrel of Venezuelan oil. For investors, it is essential for the Petro coin to be oil-backed, since Venezuela’s economy is struggling. Without this backing, as a government-controlled cryptocurrency, the Petro wouldn’t provide the market with any added value, hence failing to create any investor interest.
The issue here is that the main scope of the Petro currency is to help save the country’s economy, and is a key part of the administration’s economic recovery plan. Given the fragile nature of the Venezuelan economy, it is important for the Petro coin to succeed. As no other country has released a central bank-backed crypto, it is impossible to determine whether doing so is profitable, hence the economic model is based mostly on speculation.
Recently, the Venezuelan government has stated that soon enough, taxes for travel passports will be paid through the Petro coin.
Based on everything that has been outlined so far, once the public sale commences, the cryptocurrency market will find out whether developing countries can benefit from launching their very own digital currencies.