In light of an ongoing economic crisis that has wiped out sovereign wealth, the government of Venezuela has created a centralized cryptocurrency named Petro, which is backed by crude oil reserves, but this monetary policy action has come under heavy criticism for various reasons. The latest move by Venezuelan currency regulators involves forcing payment for passport services with petros as it ignores the economic plight of citizens, and this is just one of many anomalies.
Uses of Venezuela’s Digital Currency
When the new passport fees were announced, the government explained that they were part of an effort to put the new digital currency to work before it is listed on the major exchanges. The problem with these exorbitant fees is that they seem to be taking advantage of the current economic exodus; it is estimated that 5,000 are leaving Venezuela on a daily basis, and the government only recently deployed soldiers to border checkpoints for the purpose of checking passports.
Venezuela has been one of the strongest “real-world cryptocurrency markets” since 2012; this is a country where Bitcoin and Dash transactions are more common than those made in bolivars or foreign currencies such as dollars and euros, which mostly circulate in the black market. The government has sought to outlaw cryptocurrencies but has been unable to do so because of their decentralized nature.
The Future of National Crypto Coins
In theory, the Petro should work because of its backing by crude oil reserves, but cryptocurrency analysts are already concerned about manipulation and lack of transparency. A member of the Ethereum development team reviewed the Petro’s documentation and found entire sections plagiarized from the Dash blockchain white paper.