In another attempt to save a bankrupt Venezuelan economy, a petro-backed national currency is to be launched next month. The petro is itself an oil-backed cryptocurrency, and the new currency is to launch on August 20th. The petro was launched in February 2018.
Oil to Petro to Fiat
According to a local news outlet, President Nicolas Maduro has claimed that a new petro-backed currency, called the Sovereign Bolivar, is going to take five zeros away from the Bolivar. Instead of trying out something new (and obviously superior), Venezuela seems to be intent on doing the exact same thing, with a ‘new’ currency, called the ‘sovereign’ Bolivar. Tied, of course, to oil. They do say that history repeats itself –
“The economic reconversion will start on August 20 definitively with the circulation and issuance of the new Sovereign Bolivar, the new monetary cone [sic] that is going to have a new method of anchoring the Petro.”
Paradoxically, while tying the ‘new’ currency to oil, President Maduro states –
“Venezuela has been trapped during these years by two fundamental variables: the exhaustion of the oil model …and the establishment of a mechanism of economic warfare, as part of a political strategy. The oil-dependent model has come to an end and it will not return, Venezuela needs to continue making great efforts to build a new economic model, diversified, productive, relevant, advanced.”
Supporting an oil-based model while critiquing it does not make much sense. There could be nothing more supportive of an oil-based model than modeling a national currency on the price of oil. Presumably, the oil model is corrupted on the basis that the price of oil is dominated by Western powers.
Why not use an actual cryptocurrency?
While the petro is a cryptocurrency, the concept of a state-backed cryptocurrency is itself self-defeating. The primary aim of cryptocurrency is to decentralize power away from centralized governance structures. But what Venezuela is doing seems even more pointless, with a crypto tied to oil and a fiat tied to crypto, essentially just an oil-backed currency. They might as well have just created an oil-backed currency without the petro intermediary.
Better yet, they could adopt and endorse an actual cryptocurrency as the national currency. This would stabilize the economy while also accelerating the demise of Western powers, with currencies intrinsically tied to oil, though officially unpegged to anything.
There are lots of proven cryptocurrencies which just need adoption, with wonderful architectures and teams of free and experienced developers who have done all the work. Nano has already been used to alleviate the suffering, inflicted in the area by a combination of terrible socialist policies and US sanctions.
Digital Nomad with an interest in Zen and Blockchain technology.
Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.