Venezuela has a long-standing relationship with cryptocurrencies. Its government was the first government in the world to issue a cryptocurrency: the Petro. It was initially created to overcome the heavy sanctions imposed on it by its neighbour the United States of America, and the European Union.
These sanctions have had a very unfortunate effect on Venezuela’s economy, the annual inflation was expected to reach 10,000,000% in 2019 according to the International Monetary Fund (IMF). This has led citizens to use Bitcoin as an alternative way to hedge against this hyperinflation; which has set BTC trading records at times.
During the summer of 2019, president Maduro had given the order to Venezuela’s largest bank, Bank of Venezuela (BoV) to make the cryptocurrency, Petro, available to the public. Thus far, this order did not result in the expected effect it seems.
The Petro was initially meant to be backed by a part Venezuela’s huge oil reserves and to be worth the price of an oil barrel. President Maduro has once again given an order in regards to this matter, this time the state-run firm Petroleum of Venezuela (PDVSA). The order is to sell, immediately, 4.5M barrels of oil for Petro, from the certified 30M barrels reserve. Followed by a sale of 50,000 barrels per day as an “exploration mechanism”, with an ultimate objective of selling all oil productions in Petros.
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