Venezuela's Petro: The Decline of a State-Backed Crypto

Unveiling the issues surrounding Venezuela's oil-backed coin.

Venezuela's Petro: The Decline of a State-Backed Crypto

Venezuela’s oil-backed coin “Petro”, which launched in February 2018 and made the headlines with claims of being the first state-backed crypto asset, is likely seeing its end, marking the downfall of Venezuela’s crypto dream.

According to the government, the coin was backed by oil, albeit reserves that still had to be drilled. While the state-run agency, which was behind the coin's design, claimed that it would become a major tool for trade and transactions.

Although after March, when a major crackdown on corruption happened, the state crypto agency was disbanded, and once ambitious plans for the crypto industry shattered.

El Pais reported on irregular behavior patterns noticed by the users of the Petro blockchain ever since May, while PetroApp, a state-issued platform, is now reportedly crammed with flaws. This suggests that little to no development or maintenance was devoted to the blockchain and the app.

Moreover, the recent crackdown on crypto mining has also impaired a sector that once included the units of the nation’s army.

In the press, it was written that the highest-profile victim of the crackdown was Joselit Ramírez. He was the president of Superintendencia Nacional de Criptoactivos (SUNACRIP), and now is serving his sentence in jail. Furthermore, the crackdown also affected the important technical staff at SUNACRIP.

While the new board has been placed in charge of the crypto operations, the body now has very different priorities.

Financial analyst, Henkel García, commented on the situation:

“The Petro is not [like] Bitcoin, which [computers] have to mine to validate transactions. It is an algorithm with a ceiling.”

While Omar Zambrano, an economist, was more pessimistic, stating:

“Cryptocurrencies have ended up becoming the instruments of a group of corrupt […] politicians who wanted to embezzle the little money that was left in the Petróleos de Venezuela (PDVSA).”

Due to international sanctions against Venezuela, the country was forced to do irregular exports of oil, as well as conduct commercial operations in the dark, said the media outlet.

But Venezuelan transactions with cryptocurrencies had made it possible for corrupt government officials to divert resources into the hands of ministers while leaving President Nicolás Maduro clueless.

As a result, from many of those crypto-keen ministers, only a few precious crypto advocates are left in the government.
According to El Pais, both SUNACRIP and the Petro are approaching their end, as acknowledged by the agency itself, expressing regrets over the gradual decline of the Petro.

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