What you need to know as the official launch of Venezuela's oil-backed Petro token nears
Oct 03, 2018
- On Monday, October 1st, Venezuelan president Nicolas Maduro appeared on national television to announce the official November 5th launch of a national Venezuelan oil-backed cryptocurrency, the Petro.
- The official “Petro Wallet” will be available through Google Pay while the Petro itself will be “pre-mined”, meaning the Venezuelan government will be in control of the supply of Petro tokens.
- According to the Petro’s white paper, the cryptocurrency will be backed 50% by oil, 20% by gold, 20% by iron, and 10% by diamond assets.
- President Maduro detailed in his announcement that all Venezuelan oil purchases made in and out of the country must be paid for using the Petro -- this will have a substantial impact on airline companies that fly within Venezuelan borders or stop at Venezuelan international airports to refuel during extended flights.
- Venezuela has observed hyperinflation in 2018 (see below) with the country’s inflation rate reaching 200,000% this summer -- many experts believe the Petro is simply an attempted quick fix to try and repair Venezuela’s hyperinflation problem.
- As Venezuela gears up to launch the world’s first state-backed cryptocurrency, investors will pay close attention to several factors at play, including:
- How global commodity markets will digest the oil-backed Petro.
- If Venezuelan citizens will adopt the Petro for daily use, or if citizens will continue to look towards decentralized cryptocurrencies like Bitcoin for stability.
- What strategy the Venezuelan government will take in controlling the supply of Petro tokens.
Venezuelan Bolivar 5-Year Inflation (%)