Venezuela's national cryptocurrency is officially up for sale

Venezuela's national cryptocurrency is officially up for sale

Venezuelan President Nicolás Maduro said that the petro aims to infuse his cash-strapped economy with around $6 billion in sales from the initial cryptocurrency offering.

The petro is different from almost all other cryptocurrencies in that it has the enthusiastic support of the state; Russian Federation reportedly also has considered creating its own cryptocurrency to skirt global sanctions.

Skeptics say that concerns about Venezuela's financial solvency will likely limit investor interest, and the US Treasury Department has warned the Petro may violate sanctions against the OPEC (Organization of Petroleum Exporting Countries) nation. The short answer is: "It simply can't".

But the USA administration might not stop at sanctions, the expert warned.

Cryptocurrencies by design are decentralised financial systems, so one created by a government runs contrary to that spirit and creates an opportunity for manipulation, said Mr. Leidenz. "I do think that part of this is about getting investors from non-traditional lenders, from Russian Federation and China, to put in some more money, to lend fresh cash".

In August, the Trump administration hit the Maduro regime with financial sanctions that prevent any bondholders with business in the United States from buying new Venezuelan government bonds. "The main reason Venezuela can't raise financing is that macroeconomic finance is a s-- show".

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Venezuela has become the first country in the world to launch its own cryptocurrency.

Productivity at the nationalized oil company PDVSA, the country's main source of foreign income, is at historic lows.

Venezuela is in the midst of an economic meltdown, with annual inflation predicted by the International Monetary Fund to hit 13,000 per cent by the end of this year. Currently, one USA dollar would fetch 235,000 bolivars on the black market, according to the Financial Times. And the petro will quickly run into problems that will hamper its effective use in worldwide transactions.

Bobby Ong, the co-founder of CoinGecko, a cryptocurrency ranking website, said the sale of the petro fits into a growing trend of asset-backed cryptocurrencies as investors look for digital coins backed by real-world assets.

Economic mismanagement in the country has led to what some call a humanitarian crisis. A study from several universities and aid organizations show that almost 75 percent of the country lost at least 20 pounds in 2016. The Venezuelan leader, however, provided no details about the first investors in the "petro", which is backed by the country's oil, gas, gold and diamond reserves.

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