The Petro or petromoneda was launched in February 2018, but a few months later appears to no longer function as a course. It was falsely assumed that national oil and mineral reserves would support it. He was also intended as an addition to Venezuela’s sharply falling bolivar fuerte currency. This allows us to bypass American sanctions and gain access to international financing. The bolívar soberano (Sovereign Bolivar) was introduced on 20 August 2018, with the government declaring that it would be linked to the value of the petro-currency.
Venezuelan President Nicolás Maduro announced the petro on December 3, 2017. He stated that Venezuela’s reserves of oil, gasoline, gold and diamonds would support the crypto currency. The petro allowed Venezuela to “make progress on issues of monetary sovereignty”. He would make “new forms of international financing” available to the country. Opposition leaders were skeptical because of the economic turmoil in Venezuela. Pointing to the falling value of the Venezuelan bolivar, the fiat currency and $ 140 billion in foreign debt.
According to Maduro, on January 5, 2018, Venezuela would issue 100 million tokens from the petro. This brings the value of the total issue to just over $ 6 billion. The cryptocurrency VIBE advisory group had to act as “an institutional, political and legal basis” to launch the petro.
In January, in response to the petro, the National Assembly of Venezuela declared the petro to be an illegal debt issue by a government desperately seeking cash, and said it would not recognize the petro.
In a document leaked and reviewed by Reuters, VIBE recommended that the government sell $ 2.3 billion worth of petros in a private offer with a discount of up to 60%. This indicates that “Maduro’s appreciation of the budding petro is confronted with great market skepticism”. A month later, petros were offered to the public for $ 2.7 billion. The rest was “shared between the government and VIBE”. It also suggested that the government accept tax payments in petros and that PDVSA, the state-owned oil company in the state, allows it to include cryptocurrencies in its dealings with foreign companies.
The pre-sale of the petro started on February 20, 2018 and ended on March 19, 2018. 4 million tokens were made available. The government stated that the presale increased US $ 3.3 billion, although according to Steve Hanke no independent audits were conducted to verify this claim.
The petro’s technological identity was confusing from its inception. Petro’s white paper initially stated that the currency would be on the Ethereum platform, but the white paper was changed at launch and the platform would become NEM. However, even after the launch, the white papers in different languages still provided conflicting information about the platform of which the petro was a part. The white paper was revised again in October 2018 and an Ethereum core developer, Joey Zhou, stated that the new petro-white paper clearly plagiarized from Dash’s GitHub repository. The latest version of the white paper revealed that petro was a clone, in fact a fork, of the cryptocurrency Dash, theoretically exposing the idea that petro was built on a separate blockchain platform.
Due to the unorganized launch by the Venezuelan government, scammers were able to set up their own “petro” currencies on different cryptocurrency platforms, although these schemes were not very successful.
The second phase of the petro launch includes a public sale of 44 million tokens.
On February 21, 2018, petro gold, a cryptocurrency with a golden back, was announced in a television speech by Venezuelan President Nicolás Maduro. It was unclear whether the gold supporting the tokens would be real gold reserves or a sort of part of the country’s untapped wealth.
In August 2018, the Maduro government implemented a currency reform aimed at replacing the old bolivar fuerte currency with the bolívar soberano. One bolívar soberano is worth a hundred thousand bolivar fuerte. Under the country’s fixed exchange rate against the US dollar, the new currency is devalued by about 95% compared to the old bolivar fuerte. In addition, the new bolívar soberano has a fixed exchange rate for the petro, with a speed of 3,600 bolívares soberanos for one petro. The fixed exchange of petros with barrels of oil is one on one (the market value was around US $ 60 at the time of the reforms). As part of the reforms, Venezuelans will be paid at least 0.5 petros per month.
After the reform, Reuters examined the petro six months after his ICO. During a visit to the headquarters of the Venezuelan Ministry of Finance in Caracas, it turned out that the chief inspector of Cryptocurrencies had no office there. Their promoted website did not exist. The Atapirire parish, where President Maduro had announced that the value of the petro would be linked to the oil reserves in the area, has not seen any petroleum-related activities. The oil platforms in the area seemed small, old and deserted. Experts in the economy argued that it was impossible to link the petro to the bolívar soberano because nobody knows its legitimate value. Although “reservations” were sold by the Venezuelan government to obtain petros, no petros were released by the Venezuelan government.
The design of the petro by the Venezuelan government is controversial, with a white paper that changes every day, even after the petro’s sale. Petros are “preached” by the Venezuelan government, meaning that new tokens cannot be made after the issue. Members of the Venezuelan Ministry of University Education, Science and Technology allegedly, under the advice of the Russian government, designed the petro to circumvent the sanctions of the United States, with Russian President Vladimir Putin coming up with official involvement. On October 1, 2018, the cryptocurrency switched to a design based on X11 algorithms, which was copied from Dash.
During the ICO, petros could only be purchased from the Venezuelan government with Russian rubles, Bitcoin, NEM and Ethereum. The minimum investment required to acquire the crypto asset is 50 euros (or its equivalent) per digital wallet or 1,000 euros (or the equivalent thereof) per bank deposit.
Venezuela legally authorizes the use of petro and encourages it for almost every payment, including oil trade, taxes, fees, real estate, gas, flights and more. It is not really possible to buy something with petros, none have been issued; there has never been a single purchase made by someone using the petro.
Weiss Cryptocurrency Ratings states that the White Paper shows no method as to how the Venezuelan government will base the petro on oil prices, and concludes that the currency is “a worthless sign”. But according to the White Paper, the basic price of the petro is equal to the price of a single Venezuelan oil barrel: 1 petro = 1 oil barrel. The official Venezuelan oil price is determined by the Venezuelan Ministry of Oil and Mining and the current price of the petro (during the ICO) is mentioned on its webpage.
According to the official white paper, national and international recognized stock exchanges will be able to sell and exchange the petro, allowing the market to determine its price. Although there is still no mechanism for exchanging Petros for another currency, the government is expected to receive any petro which has the value of one oil vessel specifically obtained from the Atapirire parish of Anzoátegui to be exchanged for bolivares or other currency. However, President Maduro has made contradictory statements stating that the value of the petro can only be determined by market value.
The US Treasury Department warned that participation in Venezuela’s proposed initial currency offering for the petro cryptocurrency could violate US sanctions against Venezuela because it appears “an extension of the Venezuelan government’s creditworthiness”. President Donald Trump has signed an executive order prohibiting transactions in a cryptocurrency issued by the Venezuelan government by a person from the United States or within the United States, as of March 19, 2018, after claiming it was designed to impose US sanctions. disguise and obtain international access financing.
The Brookings institution stated that “it is relatively unsurprising that a dictatorship with little reserve currency … has resorted to a deceptive tool such as introducing the petro … he petro … to create foreign currency reserves from the air “to further explain that the creation of the petro has undermined the reputation of cryptocurrencies and that sanctioned countries” could follow the same fraudulent strategy as Venezuela: create a cryptocurrency linked to a government-controlled asset, raise money in violation of sanctions, and continue to manipulate the value of that cryptocurrency to maximize profit “.
The response from the cryptocurrency community was generally negative. Economist Jean Paul Leidenz expressed concern that the creation of the petro would promote further hyperinflation. Economist Steve Hanke, who studies hyperinflation in Venezuela, stated that the petro would probably end up “in the graveyard”, and later the petro said, “It doesn’t exist.” The whole is a sham, a fraud. in January, and it does not act. It is not considered by those who rate cryptocurrencies as even a cryptocurrency. “ Other analysts point to government control or centralization as the biggest weakness. Financial journalist Max Keizer expressed his support in light of the country’s hyperinflation.
According to Bloomberg, the organizations that arrange cryptocurrencies have described the petro as a “scam”, with sites such as ICOindex, ICObench, Cryptorated and ICOreview giving negative reviews or even not assessing the petro because of its status. Initially, the White Paper, which was released in January 2018, lacked some of its technology’s important information about its mechanism. After a few weeks a new version of the white paper was published in which another blockchain platform was announced on which petro would be built.
The Washington Post economic reporter Matt O’Brien said, “The petro is perhaps the most clearly horrific investment ever … The petro is about making something useless – so only foreigners can buy it, but only Venezuelans can spend it” .