Venezuela's government is embattled, doubling down on its Petro cryptocurrency

08 Jan, 2019
by Arthur Sillers
Venezuela's government is embattled, doubling down on its Petro cryptocurrency

Venezuela's government, and its state-backed cryptocurrency the Petro are all the more embattled, but they are doubling down on the token for use in public housing.

  1. According to Reuters not only has the leader of the opposition publically declared President Maduro illegitimate and Christian Zerpa a Supreme Court Justice has fled to the United States after declaring the recent election illegitimate. Maduro will be inaugurated Thursday, but tensions appear to be an all time high in a country which has been in the depths of a disastrous inflation stemming from either poor government policies, the lack of diversity in an economy relying entirely on oil exportation, or some combination of both depending on who you ask.

In response to the monetary crisis, Maduro's government has been attempting to implement the Petro, a cryptocurrency based on the country's oil reserves, as an alternate currency to combat inflation. The government has mandated its use for pension payments and made a number of measures to promote its circulation. Most recently, according to Bitcoin News the government has urged construction companies to take the currency while announcing its use for a large scale public housing infrastructure effort.
The Petro cryptocurrency has been compared directly to a 'scam,' and by Forbes to a 'joke,' and foreign actors like China and Russia have been slow to accept the cryptocurrency for trade. Venezuela's hyperinflation stems directly from its significant trade imbalances, and its ability to trade is hampered by sanctions from the US and its allies. The Petro was hopefully supposed to increase production and stimulate the local economy while helping pay off foreign debts through increased bilateral trade- but it doesn't look like either leg of the plan is working out.

The government has put a lot of stake into Petro, and its unlikely able to back down at this point. As the cryptocurrency gets rolled out and mandated for more financial transactions, it will likely become a point of contention for a populace which is increasingly frustrated by its government.

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