Crude Oil to Support Venezuela’s Petro Cryptocurrency

Venezuela’s first state-run cryptocurrency will be backed by three of the country’s major natural resources.

Venezuela previously announced their intention to step into the crypto spotlight by creating their own digital currency, the Petro. The country’s president, Nicolás Maduro, noted that the creation of the state-controlled crypto is a way to “innovate toward new forms of international finance for the economic and social development of the country.”

Sidestepping Those Sanctions

It could also be due to the fact that the crypto industry has grown exponentially in Venezuela on the back of the country’s economy suffering high levels of inflation and the introduction of US-led financial sanctions. Maduro made reference to the latter, stating that the purpose of the Petro is to “advance the country’s monetary sovereignty, to carry out financial transactions and to defeat the financial blockade against the country.”

Backed by Liquid Gold And, Well, Real Gold

According to RT, Maduro has now confirmed that Venezuela’s first cryptocurrency will be backed by five billion barrels of crude oil. While holding a folder during a speech on the country’s national television network, Maduro announced:

Here’s the document formalizing the provision of the certified Ayacucho oil field No.1 in the Orinoco Petroleum Belt for the support of El Petro cryptocurrency.

According to the president, this specific field’s reserves amount to approximately five billion barrels of oil.

Maduro went on to add:

Every single Petro will be backed by a barrel of oil. We will set up a special team of cryptocurrency specialists so they will be engaged in mining in all states and municipalities of our country.

In addition to oil, Maduro has stated that gold deposits from the Arco Minero del Orinoco belt, as well as diamonds from the country’s natural reserve, will also be supporting the digital currency.

Countries Getting in on the Crypto Craze

Venezuela is not alone in their quest to benefit from the advantages of digital currencies. Russia has announced plans to create their state-operated CryptoRuble, while Israel has plans of their own, recently declaring their intent to develop their own digital shekel. Dubai is also on board the blockchain train through the development of their state-run emCash cryptocurrency.

A Centralized Decentralized Currency?

The term ‘state-controlled crypto’ is an oxymoron in itself in that one of the main aims of digital currencies is that they are decentralized and not run by a single entity, like the government.

However, 2017 has shown that cryptocurrencies are set on their path to disrupting the status quo, and perhaps governments are seeing that they can either be a part of the digital revolution, somehow, or lose their well-established hold on their countries’ economies.

Do you think the introduction of the Petro will affect cryptocurrency usage in Venezuela? Let us know in the comments below!

Images courtesy of VTV, Reuters/Jorge Silva