Venezuela Doubles Down on Petro, Stakes Five Billion Barrels of Oil on It
Around three weeks or so ago, we first heard about the petro, a new state-sponsored cryptocurrency from the badly beleaguered nation of Venezuela, where right now, people are starving to death. There were plenty of reports that said the petro was essentially the produce of a clown’s insane but all too vivid dreams. Now, new reports say the petro is just days from release, and it even comes with a more stable backup: five billion barrels of oil.
Word from Jorge Rodriguez—the country’s information minister—says that the country is just days away from announcing the first issuance of the petro, a move that’s said to be geared toward helping the country get better access to liquidity despite several measures placed on the country by the international finance system.
While previously, the petro was backed by an indeterminate quantity of oil as well as diamonds and other hard assets, there’s now a more certain backing: five billion barrels of Venezuelan oil will now be behind the petro. That’s about $267 billion worth of support, which actually beats bitcoin’s current market cap of $246 billion by a healthy margin.
Skepticism is already out in force; Legal & General Investment Management Ltd strategist Simon Quijano-Evans notes that the collateral in question was supposed to be backing the current currency, as well as bond releases. Given that those processes have since crumbled, the notion that a backed cryptocurrency would suddenly provide value where its currency and bonds have failed to is sort of a long shot.
The question is, will anyone take the petro seriously? In a world where bitcoin could go from $1,000 at the start of the year to almost $20,000 by the end, anything’s possible. But given that it might not even be technically legal to buy into the petro in the United States given the sheer number of sanctions on the country—new ones were going up as late as November 2017—it might not be the kind of thing people want to mess with. Plus, Venezuela hasn’t exactly been what you’d call a great credit risk either.
Only time will tell how the petro ultimately works out, but Venezuela’s money-making scheme isn’t likely to pan out well.