What can we learn from new Venezuelan cryptocurrency?

New measures in Venezuela could usher in a pro-blockchain age

At the end of 2017, Venezuelan president Nicolás Maduro announced plans to establish a national cryptocurrency called the Petro, backed by the country’s oil reserves.

Venezuela’s economy has been in a perpetual state of crisis for many years – the International Monetary Fund has tipped Venezuela’s inflation to reach 2,300% this year. The development of a state-issued cryptocurrency, in theory, would alleviate some of this pressure brought on by US sanctions. It would provide a quicker means of payments for suppliers, vendors, and investors, the president claimed.

It was a strange decision for the leader to make. Venezuela has been anything but accommodating to bitcoin and cryptocurrency. Authorities have shuttered exchanges and mining operations, arrested bitcoin users, and the government has established a register of cryptocurrency miners and their equipment to keep track of who is mining coins.

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The state’s heavily subsidised electricity services made it possible for miners to mine bitcoin in the hopes of attaining some of the digital coins to exchange for US dollars and to purchase essentials online. Venezuela’s bolívar has plummeted in value in the last few years.

Unfortunately for crypto enthusiasts in Venezuela, the authorities were having none of it. This is largely due to the decentralized nature that defines cryptocurrency and blockchain technology – no one entity controls it, and most certainly not government.

Maduro and Venezuela will not cede control of their economy too easily and deploying the Petro will be easier said than done so many are quite sceptical. Venezuela has demonstrated that it cannot run its own currency efficiently but can it run a cryptocurrency any differently?

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