The BBC reported today that Venezuela will launch its own sovereign (national) cryptocurrency based on their petroleum reserves. This will be the first known sovereign cryptocurrency ever created, even though at least a dozen other countries are considering their own. The president of Venezuela claims that each token will be backed by one barrel (42 US gallons) of Venezuelan crude oil.
The economy of Venezuela has been in collapse which started after the death of the previous president, Hugo Chavez. Since Nicolas Madura took over in 2013 when Chavez died, the decline has accelerated. The economy is now in near free fall with one of the world’s highest inflation rates, soaring crime, few jobs and even fewer consumer goods.
This dire situation, plus rigged elections, has caused many huge anti-government protests over the recent years. Crackdowns on protests have led to many deaths and imprisonment of the protesters. These crackdowns have also lead to sanctions by the US in 2017.
The main purpose of the Venezuelan cryptocurrency will be to evade US sanctions. Venezuela faces huge debts that must soon be paid and President Madura is counting on the funds raised in its currency ICO to be enough to pay off the mounting and crippling national debt.
The government says that the total number of tokens will be limited to 100 million and it will be called the “Petro”. But due to the lack of many technical details of this currency, lack of a wallet, and lack of transparency, the cryptocurrency community has great doubt about its viability or survival.
Read the full BBC article here.
