Venezuela is a heavily-sanctioned country from its neighbour, the United States of America as well as the European Union. This has had a major economic impact on the country even though it has the biggest oil reserves in the world. Venezuela’s inflation sky-rocketed to numbers unheard of even in the volatile cryptocurrency market, the annual inflation is expected to reach 10,000,000% according to the International Monetary Fund (IMF). As a result, the national currency became almost worthless and citizens had to start using Bitcoins to avoid the risk of devaluation and combat inflation.
To help overcome these sanctions, the Venezuelan government released its own cryptocurrency: Petro. President Maduro’s comment at the time was: “Petro is born, and we are going to have a total success for the welfare of Venezuela”. The cryptocurrency is backed by oil and will have an equal cost to a barrel of oil. Although the economic and political meltdown came with the arrival of the latest president Nicolas Maduro, the main idea behind Petro, a currency back by raw materials, was initially thought of by the late Hugo Chavez according to Petro’s whitepaper. Unfortunately, the current solution is not backed by barrels of oil but rather by subterranean reserves.
The announcement of Petro was not warmly welcomed by the international community, especially the US who sanctioned the cryptocurrency by direct order from president Trump. Moreover, it was not put to use by the Venezuelans as they had already adapted to other cryptocurrencies. To encourage its use and increase its availability, president Maduro gave a direct order to Venezuela’s largest bank, Bank of Venezuela (BoV) to make the cryptocurrency, Petro, available to the public.
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