Venezuela – no water, no food, but with the Petro – the oil-backed official cryptocurrency

Venezuela is struggling very hard at the moment, experiencing both economic and political meltdowns. Amidst a crisis that is “living” among Venezuelans in so many ways, including their daily and social lives, the Venezuelan government has introduced its second official cryptocurrency, in addition to the bolivar fuerte, the petro – an oil-backed cryptocurrency.

While Venezuela has faced numerous issues, the latest one comes from the apparent water shortage in the capital of the country – Caracas, where above 70% of the population do no have access to usable and drinkable water.

Another major concern for Venezuelans is their political leader that got re-elected in May, 2018 – Nicolas Maduro. His being elected was perceived with a lot of negativism on possible fraudulent and unfair election.

With the rising water issue, the most serious repercussion seems to be the fact that diseases that were thought to be extinct are rising, such as diphtheria.

To counteract to some extent the collapse of Venezuela, the President Maduro introduced the cryptocurrency called petro to the country in the winter of 2017, when the spike of cryptocurrencies’ prices was going only up (Bitcoin hitting $20,000 regularly).

With the native currency depreciating, the monetary value is now being placed in the petro, which is essentially backed up by the country’s oil and mineral reserves.

The major purpose of the petro, however, will probably be to boost the economy by “going around” the US sanctions imposed on Venezuela, as well as to receive access to international funding and opportunities.

In addition, in the winter of 2018, President Maduro announced the launch of the petro gold, a cryptocurrency that is allegedly backed up by gold. However, it is not yet clear what actually backs up the digital coin, gold, some mineral reserves, etc.

The exchange and market price of the petro will be determined on the market principle. And each coin will be backed up by one barrel of oil, which may be reassuring to some investors as to what volatility and turn the new official Venezuelan currency will take next.



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