Venezuelan president Nicolas Maduro has announced that payments for all oil exports will eventually only be payable via the nation’s cryptocurrency, the Petro, further fueling concerns about the economic prospects of the already financially ravaged country. Media outlet teleSUR also announced that the change is likely to occur as early as March 2019 and will remove Venezuela from the US dollar-denominated hydrocarbon market, presenting another way to sidestep US sanctions. The announcement came after Maduro met with Russian president Vladimir Putin to discuss trade options.
“Total Success” or Abject Failure?
The Petro has led an interesting existence since it was announced in December of 2017. The Ethereum-based cryptocurrency, backed by the country’s oil, gas, gold and diamond reserves, has been lauded as a “total success” by Maduro, but behind the scenes it seems anything but. In August, with the ICO still months away, Maduro mandated that the Petro would be the country’s official currency in an attempt to curb hyperinflation of the Bolivar. Maduro more or less invalidated this claim earlier in December however by devaluing the Bolivar, making it 150% more expensive to buy the Petro. The Petro remains extremely hard to buy, more or less impossible for those without an internet connection, and very few outlets accept it, despite Maduro’s demands.
Alternative Cryptos Reign Supreme
It’s no surprise that use of alternative cryptocurrencies is rampant in Venezuela, where the sovereign currency is hyperinflated by almost 1,000,000% and the replacement digital currency is hard to buy, near impossible to use and can go up and down at the whims of the president. Dash has gained a major foothold in Venezuela, where many more stores, including chain retailers, are accepting it, alongside Bitcoin and Bitcoin Cash. Even multinationals are getting in on the act, following the announcement that KFC outlets in Venezuela will start accepting Dash as payment. It remains to be seen if the Petro can succeed as a currency, but the way it is being abused at present suggests that it won’t start anytime soon.