Venezuela is in 4-digit hyperinflation and its population is starving. President Maduro is trying to circumvent US-imposed sanctions on countries buying oil from Venezuela, and on Venezuela issuing more debt, by creating the first government-issued cryptocurrency – the Petro.
Petro is a pre-mined, ERC-20 (running on Ethereum), crude oil-backed (an innovation in the world of crypto), cryptocurrency. There will be 100 million tokens emitted, each one supposedly backed by a barrel of crude oil (which is currently around $60). The pre-ICO will start on 20 February.
Since it will be a private blockchain, centralized and run by the corrupt socialist dictatorship government of Venezuela, and their government will be able to raise the hard cap if they wanted to, I don’t think this can be classified as a real cryptocurrency, so I am not too enthusiastic about it. It could have been a nice use case attempt for cryptocurrency and blockchain technology had it been implemented correctly though.
Youtube commenters are extremely negative, pessimistic and bearish on the outcome of this project, there are many concerns regarding the reaction from the US, and the way the money will be used by Maduro, who has a reputation as a liar. Petro has been called a “scam” and a “pump and dump operation by the desperate government.”
Even though I would love to believe that this ICO will help the people of Venezuela, it is almost certainly doomed to fail. There’s even the possibility that a country might even invade Venezuela over this. Maduro will likely fail to put the money to good use and the private offering that is going to offer steep discounts could lead to post-ICO selloff by the whales which could hurt the price.
Petro’s price cannot rise multifold because its price is tied to the price of oil, so speculating with it wouldn’t make sense.
People are very negative toward the idea (and almost laughing about it). They mainly view investing in Petro as supporting a dictator and nobody is naive enough to think that they will be helping the Venezuelan people by buying Petro.
Read the extended piece here.