Maduro Ties Venezuela’s Bolivar to Petro Crypto-Asset

The Bolivar, which spiked and crashed over the last few days, once again wiping out half of its value, may be tied to an even riskier crypto asset.

Venezuela is facing the possibility of tying its now practically defunct national currency to the Petro, a digital asset which is perhaps the most obscure one in the world of crypto. The Bolivar, which fell in February from $0.01 to $0.0000040, has been the chief reason for Venezuelans to turn to hard currency, but also to digital coins like Bitcoin, DogeCoin, and other assets.

But this is not the end for the Bolivar - President Nicolas Maduro has proposed to tie the value of the Bolivar to the Petro, in effect triggering a 95% further devaluation. The cryptocurrency community is rather mystified how the peg to a digital asset would happen. In theory, the Petro is tied to the value of the estimated oil found in two relatively small Venezuelan oil fields. Maduro had the ambitious plan to tie the entire country’s economy and pension system to the Petro.

The other sets of economic measures proposed by Maduro include a 3,000% correction of the minimum wage, subsidized gas prices, and a hike in corporate tax. The new minimum wage in the country would be pegged at 0.5 Petro, presumably $30.

In theory, the Petro should always equal one barrel of oil, thus making it an asset-backed digital currency. In practice, the asset may not even exist - the sale of Petro is listed as ongoing, it does not appear on any exchanges. It is still unknown if the Petro would be based on the Ethereum or the NEM platform.

https://twitter.com/MeliSMarchand/status/1030842718623293441

The crypto community and Venezuelans were dissatisfied with the idea of the new Sovereign Bolivar tied to the Petro, which would further devalue any wealth left in the country. Digital assets are also not as suitable as a store of value, especially given the volatility of last year, which saw coins rise to unprecedented heights, then crash by up to 98% compared to peak prices.

Additionally, the US embargo against Venezuela would make the ownership of the Petro problematic for US-based buyers.

Even now, nobody knows whether the Petro ICO has succeeded or failed - there is no transparency, and no status updates. Data by CryptoCompare shows that around $735 million were raised, and the ICO is listed as ongoing - but with an unknown platform. The average sale price at the Petro ICO is $16.35, lower than the $60 based on crude oil prices.