Is the Venezuelan Cryptocurrency Real?

Venezuela’s economy is undeniably in dire straits. The South American nation is awash with crude oil, but a cocktail of severe income inequality, corruption, and international sanctions has driven inflation to extraordinary levels. Basic necessities like food and medicine are in short supply, rampant crime is the norm, and the population that hasn’t fled has grown increasingly desperate as their currency, the bolívar, has been devalued to extremes.

Crypto enthusiasts around the world have watched the resulting economic crisis for President Nicolás Maduro and his administration with great interest because they have opened the door for real world (and potentially widespread) adoption of digital currencies. Bitcoin, Dash, and others are significantly more reliable stores of value and mediums of exchange than the bolívar, with the added benefit of providing ways around the control mechanisms of Maduro’s authoritarian government.

Somewhat counterintuitively, the Maduro administration has also embraced cryptocurrency. The government created the petro, the first virtual currency ever issued by a country, as part of an attempt to generate enough income to allow the government to pay off ever-rising debts and import the basic goods its people have been deprived of, as well as to navigate around American sanctions.

The petro is backed by Venezuela’s most reliable economic resource – its vast oil reserves, specifically from a region called Atapirire – but exactly how is an open question when the area lacks the infrastructure to extract any. In fact, there are extensive questions about whether the petro really exists at all. Reuters spent four months researching the coin and found very little evidence to support its existence – the coin is not traded on major crypto exchanges, and they could find no shops that accepted it. The few buyers that reporters could track down (none of whom would identify themselves) described experiences ranging from being “scammed” to blaming US sanctions and “awful press” for weakening the petro’s launch.

Meanwhile, the government is issuing conflicting information about their digital currency. Maduro has claimed that the petro has raised $3.3 billion, which is being used to pay for imports. But a cabinet minister involved in the project, Hubbel Roa, told reporters that the coin is still being developed and is not usable at this time. The government agency in charge of the petro – the Superintendence of Cryptoassets – “does not yet have a physical presence” in their supposed office in the Finance Ministry, a receptionist there told Reuters. They lack a digital presence as well – their website is currently non-operational.

The confusion surrounding the petro seems to be an extension of the general chaos in Venezuela, with no end in sight. But despite the coin lacking a trading value, the petro continues to surface. Maduro from recently announcing that the bolívar and petro were now linked for the exchange rate, salaries, and pensions, eliciting eye rolls and consternation from experts in the country. For now, it seems that the petro is more of an idea than a functioning cryptocurrency – and a less-than-stellar investment until more information is available.   
 

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