Venezuela’s Cryptocurrency Petro Has No Users, No Investors and No Oil to Back It Up
The petro has stirred up a lot of debate among the cryptocurrency community. Some believe it is a successful example of using the technology to create resource-backed assets and bypassing financial sanctions. Others see it as a scam by a corrupt government that already inflicted economic calamities such as hyperinflation against its own citizens. A new report is unlikely to end this debate but it does help shed light on what is really going on, as reported by Reuters.
The Reuters news agency has issued a special report from Venezuela, casting serious doubts about the viability of its national oil-backed govcoin, the petro. Following a four-month investigation on the ground into the matter, the agency was unable to find any users, investors or readily recoverable resources that back up the currency. Moreover, the Maduro government appears to be unable to explain where the development process stands and its efforts to promote it are in disarray.
In contrast to statements by President Maduro that the petro has already brought in $3.3 billion and is actively being used to pay for imports, a cabinet minister revealed that the coin is not ready for prime-time just yet. Hugbel Roa, which oversees the government’s Venezuelan
Blockchain Observatory, told Reuters that the coin is still in development and that “nobody has been able to make use of the petro … nor have any resources been received.” He described the NEM-based transactions as “early models,” and explained that buyers have only made “reservations” for petro, but it has not been released.
The petro is pegged to the price of one barrel of Venezuelan oil and is supposed to be backed by oil reserves in a 380-square-kilometer bloc known as Ayacucho I which the government claims to hold 5.3 billion barrels. Whether the claim is true or not, huge investments in infrastructure will be needed to develop the remote area to access any oil it may hold and the Venezuelan government is in no position to deliver on that in its current state.
Reporters visited the town of Atapirire, located in the bloc, and only found crumbling roads, abandoned old oil pumps and residents complaining about power outages and hungry kids. And a former oil minister that served for ten years under President Hugo Chavez and now lives in exile, Rafael Ramirez, recently estimated it would cost at least $20 billion to access the promised reserves. “The petro is being set at an arbitrary value, which only exists in the government’s imagination,” Ramirez stated.