When it comes to Venezuela and its economy, things are looking worse by the day. Hyperinflation has taken a grip of the nation’s economy and is set to hit 1 million percent by the end of the year. In order to try and save the country, its president – Nicolas Maduro – created a government-backed cryptocurrency that is allegedly tied to the value of a barrel of oil. However, in the cryptocurrency’s white paper there is no mechanism described for how this will work. According to a Reuters investigation, the area where the oil is supposedly being excavated from shows no sign of activity or life. The Petro has reportedly been used to build new homes for the homeless, but it is quickly beginning to look like one giant scam.
Is Petro a Giant Scam?
There are many factors that need to be taken into consideration when looking at the Petro. Petro doesn’t trade on any of the major crypto exchanges and this makes it hard for people to get their hands on it. In addition to this, in Venezuela there is very little sign of the Petro actually being used by locals. Most locals are turning to DASH thanks to its low transaction fees and confirmation time. Many people are starting to call the Petro a scam, and judging by token movements – it is quickly beginning to look like a house of cards waiting to fall down.
Will the Petro be Used for International Exchange?
Maduro so desperately wants to be the champion of the people with his new Petro cryptocurrency and sovereign bolivar fiat currency. Yet, the international community still has no way to access either currency. Despite making the Petro one of the country’s legal currencies a few weeks ago, no countries are interested in doing business in exchange for Petros.
El Presidente appeared on national TV over the weekend and announced that countries can now deal with Venezuela using the Petro. But, given the previous attempts at selling oil with Petros this won’t end well. Venezuela has already tried to use the Petro to sell oil to India. It offered India a whopping 30% discount if it used Petros, but India laughed in Venezuela’s face and declined the offer.
Venezuela appears to be in dire trouble, and hyperinflation won’t begin to recede until proper economic reforms are put in place. It doesn’t appear as if Maduro has the skills or knowledge to do this. Until the time comes where he is removed from power, cryptos like DASH, Bitcoin, and Ethereum will remain king of currencies in the country.