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Venezuela Creates National Cryptocurrency in an Attempt to escape US Sanctions

Dec 07, 2017 Posted /  6261 Views

Venezuela Creates National Cryptocurrency in an Attempt to escape US Sanctions

Venezuela’s New National cryptocurrency

On Sunday the president of Venezuela, Nicolas Madura announced that the country is to create a national cryptocurrency tagged named Petro. The main goal of the Petro will be to fight back against what President Maduro referred to as the financial blockade brought about by the sanctions by the United States on the country. The president continued to explain that the new currency will be backed by the country’s vast oil, gold, gas, and diamond reserves. Mr. Maduro was quoted by a local news agency saying,

“I would like to make all Venezuelans know that Venezuela will implement a new cryptocurrency system based on the oil reserves. We need advancement in terms of monetary sovereignty so that our country can move towards new forms of international financing for our socio economic development”

Following this announcement, the finance minister added that the new cryptocurrency system is much necessary to maintain financial transactions and provide an option for financing. However, the president’s announcement of a new cryptocurrency in Venezuela is receiving negative reactions from the members of the opposition party.

Jose Guerra who is a member of parliament from the opposition and an Economic scholar commented on the claim the president has made as having no credibility referring to the president Nicholas Madura as a clown leading Venezuela to an unknown future.

The country is hit with Hyperinflation, Bitcoin to save the situation

Venezuela national currency, the Bolivar has lost most of its value recently due to the poor economic performance of the country losing about 57% of its value in the past month alone. Minimum wage in Venezuela became worth just $4.30 a month throwing many people into absolute poverty and struggles to feed themselves daily. The exchange rate for a dollar in the black market rose to 103000 bolivars ten times more than the exchange rate in July. The IMF acknowledged that the country’s economy is shrinking by 12% this year and the annual rate of inflation expected to exceed 2300$ by next year.

The economic crisis in Venezuela has driven a multitude of its citizens into bitcoin mining so as they can afford the basic necessities of life in the economically stricken country. The level of inflation in the country has rendered the country’s currency unusable providing a good stage for a full deployment of Bitcoin in the country as a mainstream currency Exchange. The country has low-cost electricity which can be utilized to mine Bitcoin on an industrial scale.  A Bitcoin economist who has been following the development in the country was quoted saying,

“Venezuela simply has no alternative than to make 'El Petro' crypto work. Just by announcing this plan reduces the faith in cash and showing how desperate the government is. There are 31 million people in Venezuela who are looking for a better life. If 'El Petro' is the answer, it will be a model for many other more stable countries to follow and/or improve on the implementation. Venezuela is in debt $196 billion, unable to pay any other way than crypto. If the bondholders agree to accepting this form of payment, it will surely pave the way for legitimizing crypto as a whole, ensuring that the new crypto has any form of value. Otherwise, this crypto will be nothing more than chaff and dust in the wind, and send them even further into debacle.”


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Tags: Venezuela National Cryptocurrency Nicholás Maduro Petro

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