The First Day of Venezuela's 'Petro' Token Sale Boasts $735M Raised

Fredrick Soto
February 22, 2018

The petro is different from almost all other cryptocurrencies in that it has the enthusiastic support of the state; Russian Federation reportedly also has considered creating its own cryptocurrency to skirt global sanctions.

The Petro, which Venezuela touts as the first cryptocurrency issued by a country, is now launching in pre-sale as a means to "boost monetary sovereignty", while many analysts think it is just a desperate attempt to skirt US financial sanctions. The short answer is: "It simply can't".

In total, Venezuela plans to issue 100 million digital tokens, starting with a pre-sale of 38.4 million that starts Tuesday and whose reference price is the current cost of a barrel of oil, or around US$60 (NZ$82). The government has promised that Venezuelans will be able to use the coins to pay taxes and public services. The US Treasury Department, however, warned such investments would violate sanctions levied by Washington against Caracas, which technically prevents US banks and investors from openly acquiring petro. A top official of Venezuela's ruling Socialist party yesterday proposed holding legislative elections more than two years early to coincide with a presidential vote in April.

Maduro has also touted the petro as the fulfilment of the late Hugo Chavez's dream of upending global capitalism away from the dominance of the USA dollar and Wall Street. With the idea of maintaining the value of the virtual currency, Maduro allocated 5 billion barrels of oil to its support.

The use of computers for bitcoin mining has also taken off, spurred by some of the world's cheapest electricity rates and widespread desperation prompted by a recession deeper than the U.S. Great Depression. And Venezuela's inflation rises faster in a day than that in stable countries does in a year, he said, adding that dreaming up a new currency alone isn't the answer.

Here is what we know about the new currency.

Theoretically, the petro is backed by Venezuela's reserves of precious metals like gold and crude oil. "The government has no plans of undertaking structural reform".

Announced in December 2017, the petro is meant to supplement Venezuela's bolivar fuerte (VEF) currency and help overcome United States sanctions.

"The presale and initial offer will be made in hard currencies and in cryptocurrencies", Carlos Vargas, the government cryptocurrency superintendent, told state television in late January.

Yet questions remain about which network the token will operate within, given that one document released today highlights the ethereum network, while another, constituting a buyer's guide, cites an alternative blockchain system called NEM.

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