Venezuelan leader Nicolas Maduro recently announced the introduction of a new fiat currency, the Sovereign Bolívar (Bolivar Soberano,) which is the same as the old Bolívar Fuerte, but with five fewer zeros as a way to counter the current hyperinflation existing in the nation. The Sovereign Bolívar is, according to the Venezuelan government, backed by the existence of a cryptocurrency called “Petro.” The Petro (PTR) is worth approximately $66, which is the price of a barrel of Venezuelan oil.
However, there is legitimate concern about the Petro’s ability to sustain a quickly diminishing Venezuelan economy which is a testimony of a broader crisis. Reuters sent reporters to the nation, specifically to the Atapirire hamlet, the center of the place that is supposed to provide the nearly 5 billion barrels that the regime needs to back the Petro.
A Ghost Currency
So far, the Petro is a ghost currency. It is not available on any platform or exchange, nor is it accepted in any store or business. Yet, Venezuelan authorities claim that its existence and development can fuel a substantial rise in the minimum wages decided in the middle of a hyper-inflationary reality.
The worst thing about the Petro’s outlook is that, according to the Reuters report, the Atapirire village and the so-called oil reserves don’t look capable of handling such a significant volume of petroleum production capacity. Energy expert, Francisco Monaldi, explained to Reuters that the existing infrastructure is insufficient to extract the mentioned reserves, starting with the current state of the roads and including other things such as pipelines and power generation facilities.
Worse yet, the government hasn’t assigned any amount of money to improve the area’s conditions. Reuters’ reporters say that there aren’t many indications of oil-extracting activity in Atapirire and its surroundings.
Petro’s Sustainability (or Lack Thereof)
Former Oil Minister Rafael Ramirez has been a vocal detractor of Petro and its sustainability. He states that PDVSA, which is the state-owned oil enterprise, is drowning in debt and doesn’t have the financial muscle to fund the area’s revival, an estimated investment of $20 billion.
The new cryptocurrency’s starting price is arbitrary, says Ramirez, and only exits “in the government’s imagination.” Additionally, the US government has been clashing with Venezuelan officials for quite some time now, and this has caused the Petro to be banned by numerous cryptocurrency exchange platforms throughout the world.
Only a handful of minor exchanges supposedly support Petro trade, but Reuters could only identify one that has publicly stated their listing of the controversial token: Coinsecure, based in India.
Maduro recently assured that the new token had raised more than $3 billion. NEM tokens are the preliminary coins for Petro. The ICO was announced in late February, and the Venezuelan government, managing a NEM account, issued more than 80 million tokens.
Of those coins, more than 2,000 were transferred to unknown, anonymous accounts in May, accounting for nearly $150,000 according to Reuters. A different scenario presented itself in April, this time with the one NEM account issuing 13 million tokens to 12 accounts, for an approximate total of $850 million.
Prominent investors were said to be targeted in the mass issuance of tokens, but so far, no major figure in finance or any field has said that he, or she, made a significant investment in Petro. The level of transaction activity is extremely low.
Despite the Venezuelan authorities’ claims, there is no evidence of any activity or transactions made involving the Petro. Therefore, the Venezuelan and international crypto community has started to back off the cryptocurrency that is said to support a collapsing governmental structure.
By Andrés Chávez