By Lewin Granados.
The Petro was to be the cryptocurrency with which Venezuela was going to face “the financial blockade,” according to Nicolas Maduro. It was in 2017, amid the Bitcoin fever, and sanctions were starting to bite: the Petro crypto sounded like the solution.
Three years after its creation, however, the Petro has not been widely embraced: In Venezuela, gas stations and some government offices take it when you need to pay $100 to renew a passport, and that is about it. For economists and experts, the real situation of the cryptocurrency is unknown. Street-level impact on the everyday economy of Venezuela has been next to zero, as the devaluation of the Bolivar national currency continues, the Republic has defaulted on sovereign debt, and hyperinflation has now entered its fourth year.
The foundation stone of the Petro laid on December 8, 2017, with a public announcement on live television by Maduro and intense social media work, and the government created a special superintendency.
Presidential Decree No. 3,196 got published in the Extraordinary Official Gazette No. 6,346, creating the Superintendence of Crypto-Assets and Related Activities (Sunacrip is its Spanish acronym).
“This Venezuelan cryptocurrency, the Petro, backed by Venezuelan oil prices quoted in the Opec basket, as well as other commodities, among them gold, diamond, coltan, and gas,” reads Article 4 of the decree.
Aaron Olmos, economist, and expert in crypto-currencies explained that although the Maduro government qualified the Petro as a crypto-currency, the instrument is a broader concept.
El Pitazo talked to experts and tried to come up with several keys to understand the crypto. Following is a brief summation:
- Centralized. Unlike other virtual currencies, such as Bitcoin, Ethereum, Dogecoin, Petro emerged as a centralized government project: the initial, central tenet of anonymity got abandoned, as the crypto became a PR stunt for the ailing Maduro regime. Its white paper defines that Petro will issue 100 million units that are the Venezuelan State abrogates the approval of a finite amount in the market. “It is assumed as a crypto-asset that cannot be undermined, a multifunctional token, which only makes sense in the internal market,” said Olmos. However, the market saw Petro as too centralized and under one, dubious commander: Maduro.
- No international presence. Currently, Petro is absent from all the large crypto exchanges or international exchange houses or digital platforms such as Binance or Coinbase, where users buy and sell bitcoins, ethers, or any of the more than 2,300 crypto-currencies that exist in the market.
- Local exchange. Juan Blanco, an advisor in crypto-currency investments and founder and CEO of BitData Venezuela, says that a volume of purchase and sale of Petro registered, verifiable in the transactions of the more than 12 legal exchange houses that operate with this asset in the country, like Antwerp Coin. But it seems that most of the adoption has taken place in Venezuela.
- Low adoption. According to the Maduro regime, more than 27,000 businesses have joined in accepting Petro as a means of payment, among them Traki, Clap Stores, Burger Zone, although its use is not yet close to being massive.
- Discretionary use. Olmos assured that the directional strategy for the Petro stems from the Miraflores Presidential Palace and not the citizens themselves. Mainly that is why most of the instances that use this crypto are connected somehow to Maduro or his regime.
- Distortion of the economy. Olmos said that using oil as a vehicle to correct problems of inflation has not worked but has distorted it more. Excess liquidity, discretionary expenditures by the Maduro regime, hyperinflation, and constant devaluations are proof of that. Pensioners that received Petros, as a result of a massive cash crunch, could not freely exchange or spend their crypto. “Many pensioners never knew what to do with it, and the Bank of Venezuela was practically out of liquidity,” he said. According to the firm Sintesis Financiera, around 2.85 million Petros have not been spent and remain in the hands of workers and retirees.
- Means of investment. Financial advisor Juan Blanco said that recently Petro had a greater demand by investors and businessmen, mainly, as a refuge asset to protect themselves from hyperinflation and the overwhelming increase of the parallel dollar. “My recommendation to people is to leave their half Petro (the amount pensioners, retirees, and others automatically get) as savings, as part of an investment portfolio,” he said.