The Government of the Bolivarian Republic of Venezuela, led by its executive leader Nicolás Maduro, announced the issuance of the first 100 million units of Petros, the Venezuelan cryptocurrency backed by the oil reserves of the Caribbean country.
People who wish to acquire the cryptocurrency must register in the Digital Mining Single Registry before January 21 of this year. Since the month of December this cryptocurrency has generated debate. Never spoke so much of a currency that has not even quoted; neither of Ethereum, nor of Litecoin, perhaps of Bitcoin Cash. The main reason is because perhaps it is not well known what Petro is, or rather, it is not understood.
A centralized cryptocurrency
Petro does not have the main feature that gave Bitcoin popularity; decentralization. The Venezuelan cryptocurrency will be totally controlled by the government, both in its emission and in its mining. The Single Registry of Digital Mining (RUMD) will be in charge of controlling and distributing the miners among the population, so that each person can operate the system in a controlled manner.
Why is the petro created?
When Maduro announced the creation of the petroleum in early December 2017, he said in his statement that the cryptocurrency would help combat the “effects of the blockade and economic war” that his country suffers from the United States. Said in this way, it sounds like an escape but it can also be interpreted as an attack on the dollar.
Venezuela intends, in the words of its own president, “to obtain new means of international financing”. Financing to be carried out in Petros or some other cryptocurrency, instead of dollars as is done internationally since the Bretton Woods Agreements in 1944, although China has only traded in yuan for some time.
The Petro is also a measure to control other problems that were being seen in the country because of the altcoins. Venezuela is one of the countries with the most economic electricity in the world, a determining factor to increase the profits of cryptocurrency mining. As if that were not enough, the crisis would change from the bolivar, the country’s fiat currency, to the US dollar, making mining profits ridiculously high when exchanging Venezuelan currency.
Many people began to take advantage disproportionately of these factors to enrich themselves with the mining of altcoins. That is why when the government began to detect excessive consumption in certain apparently uninhabited places, they sent police squads to check the area. The results confirmed the suspicions.
On January 27, 2017, more than 11,000 bitcoin mining RIGs were seized in the state of Carabobo in the north of the country, and more recently we reported the seizure of 21 miners in Lara state. Both cases detected by excessive energy consumption. The RUMD seeks to control mining and that each citizen may have a limited number of miners in their homes.
A cryptocurrency backed
The Petro, unlike all the altcoins, is backed by something physical; 5 billion barrels of extra-heavy crude oil from field 1 of the Ayacucho Block of the Orinoco Petrolifera Belt located to the east of the country. This oil belt is the largest in the world and it is estimated that it has enough oil to supply the world a couple of centuries more.
Many detractors economists attack the bitcoin for being a purely speculative commodity, there is nothing that supports or supports it. The Petro would eliminate that argument and it would be a fully backed cryptocurrency. In addition, when their emission is controlled, the units will adjust to the demand to make it less volatile.
If the Venezuelan project works, it would undoubtedly give confidence to other nations that have already planned to create or adopt their own cryptocurrency, such as Russia and China, which are international economic powers. If this happens, would it be the beginning of a global cryptoeconomy that unseats the dollar as an international currency? For now it is rushed to give a verdict, but after the surprises that the BTC gave in 2017 it would not be unreasonable to start thinking about possibilities.