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    Venezuela's President Maduro speaks during the kick-off event for the international trading of Petro, the Venezuelan cryptocurrency in Caracas. | Photo: Reuters

Published 31 October 2018

This state-issued cryptocurrency is backed by diverse natural assets

The government of the Bolivarian Republic of Venezuela launched a pre-sale of The Petro, the first cryptocurrency issued by a state and backed by natural resources such as oil, gold, iron, and diamond.

RELATED:
Venezuela Formalizes its Oil-Backed Crypto Currency, Petro

The sale of Petros began on Monday for those who wish to acquire them. Companies and individuals can buy Petros either using currencies such as euros, dollars, yuan, rubles, and rupees; or employing cryptocurrencies such as bitcoin or litecoin. These purchases can be made through the National Treasury of Crytoassets’ web page or exchange houses.

As reported by the National Superintendence of Cryptoassets and Related Activities (Sunacrip), this Venezuelan cryptocurrency can be used as a means of payment for financial transactions of any magnitude.

"The economic future of the world is in the cryptoasset, and this Monday Venezuela enters that future," Joselit Ramírez, Superintendent of Criptoassets, told the Venezuelan News Agency (AVN).

A cryptocurrency is a digital medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled.

From Nov. 5 on, the launching of the Petro will experience a second milestone as the state-issued cryptocurrency could be purchased in sovereign bolivars. This entails a further development of an independent, transparent and open digital economy available for the direct participation of citizens.

“The State of Venezuela will promote and encourage the use of the Petro, to make it a fundamental investment option, savings mechanism and means of exchange with State services, industry, commerce, trading, common people and the whole world”, The Treasury of Cryptoassets stated.

The Venezuelan cryptocurrency is part of a new plan for economic recovery, which aims to control the devaluation of the currency due to economic sanctions and war by the United States and its allies through pegging the new bolivars to the Petro. Seen from a broader perspective, the Petro will change the global crypto economy with a new form of trade, finance, and monetary exchange.

According to authorities in Venezuela, the “Petro is an instrument to consolidate Venezuela’s economic stability and financial independence, coupled with an ambitious and global vision for the creation of a freer, more balanced and fairer international financial system.”

However, the Petro´s birth has not been void of resistance. As part of its economic blockade on the South American country, the Trump administration prohibited U.S. dealings with any digital currency, coin, or token issued by Venezuela.

So far, nevertheless, the signing of contracts for purchases in Petros exceeded US$500 million, as has been advanced by the Venezuelan government.


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