Venezuela’s president Nicolas Maduro is hoping to win back its entrepreneurs and stabilize his country’s financial status by introducing a new form of cryptocurrency called the Petro. President Nicolaas Maduro announced that he will work with his government’s leaders to create a cryptocurrency that can serve to save the financial situation in Venezuela.
The announcement was made at a very interesting time. Maduro explained his plan on national television during a Chrismas spectacular broadcast over the weekend.
The officials noted the formal statement, “Venezuela will create a cryptocurrency to advance monetary sovereignty, as it will help to overcome the financial blockade and thus move towards new forms of international financing for the economic and social development of the country.”
He blamed the “financial blockade” of United States sanction on his country. Those sanctions have caused an interruption in the international trade and transferring of funds between Venezuelan companies and international banks. The sanctions were an add-up to Venezuela’s overall debt of $114 billion. The government and its state-run oil company defaulted on bonds in November, making the country to default over $56 billion to bondholders. This added more damage to the already crumbling financial status of the company.
It was the financial state of the country that drove the country’s entrepreneurs to cryptocurrencies in recent years. However, the process has not been easy since the Maduro’s government was not very supportive. On the other hand, strict currency standards also pushed some entrepreneurs in Venezuela into Bitcoin. In order to get those companies back, the government is offering to introduce its own cryptocurrency ‘Petro’ as an alternative.
This move into cryptocurrency came at a very critical time in the life of Bitcoins, which reached the milestone of $10,000 in value recently. Before the announcement, Maduro held very harsh policies for those interested in Bitcoin mining. He called the people who mined for Bitcoin ‘capitalist parasites.’ Under the policies set by Maduro, police in Venezuela started arresting mine operators under different charges. The charges involved energy theft or possession of contrabands. All equipment was stripped from a miner and kept under custody. However, trading Bitcoin was acceptable.
The Atlantic writer Rene Chun writes, “it is as if Maduro realizes that cryptocurrency is one of the few things holding the country together.” A miner told Chun that “mining ETH or Bitcoin is pretty much the same principle: using free electricity to generate cash. But ETH mining is more affordable. All you need is a free software and a PC with a video card. Any police officer can be fooled into thinking that your ETH miner is just a regular computer.”
The biggest question for Venezuela government is now how this financial plan will be implemented. An opposition lawmaker and economist Angel Alvarado said in an interview with Reuters, “It is Maduro being a clown. This has no credibility.” added another opposition legislator Jose Guerra “I see no future in this.”
The announcement also came right after the Bolivar sank in value as compared to other international currencies. The Venezuela government even introduced a 100,000 Bolivar note.