What Is Petro Cryptocurrency?
Petro (PTR) is the latest coin to join the cryptocurrency bandwagon. It’s the world’s first sovereign cryptocurrency as it will be produced and controlled by the Venezuelan government.
Though it was announced in December 2017, it was officially launched on February 20, 2018. “Petro is born and we are going to have a total success for the welfare of Venezuela,” said Venezuelan President Nicolás Maduro at the launch. (Source: “What is Venezuela’s new petro cryptocurrency?,” Al Jazeera, February 20, 2018.)
According to President Maduro, Petro is intended to supplement the Venezuelan bolívar fuerte (VEF) currency. Currently, Venezuela is reeling under U.S. government-led sanctions that make moving money through international banks difficult. President Maduro believes a government-backed cryptocurrency will allow the Venezuelan government to regain control over its finances and help overcome U.S. sanctions.
While that answers the question, “What is Petro cryptocurrency (Petro coin)?” there are some things to know about this latest entrant into the cryptocurrency ecosystem.
Petros will be “pre-mined,” meaning the government will produce and control it. The digital currency will be backed by five billion barrels of oil allocated by Venezuela. The price of the Petro cryptocurrency will be tied to the price of a barrel of Venezuelan oil.
Venezuelan Petro Cryptocurrency Pre-Sale
The pre-sale and initial offer of the Petro currency will be made in hard currencies and in cryptocurrencies, not the Venezuelan bolivar. Once the initial stage is completed, there might be the option of exchanging Petros for bolivars.
The government also announced the creation of a “blockchain observatory”—a software platform for buying and selling virtual currency—around the same time when it begins a private sale of the token next month. The full use of the token is expected to begin in April.
For full details, one can refer to the “Per Telesur,” a user manual that is available in several different languages.
To further support the project, the Venezuelan government details its plans and expectations for Petro in a new web site built for the cryptocurrency. Launched on the same day as the cryptocurrency’s pre-sale, the web site is hosted and maintained by the country’s leading tech university: Ministerio del Poder Popular para Educación Universitaria, Ciencia y Tecnología (MPPEUCT).
What Is the Petro Supply Limit?
Petro mining commenced in the second week of January and the cut-off time was February 21. Though President Maduro previously announced that they would be issuing 100 million tokens, currently there are only 82.4 million units available. (Source: “82.4 Million Tokens: Venezuela Officially Launches ‘Petro’ Cryptocurrency Pre-Sale,” CCN, February 20, 2018.)
While one might wonder whether the Petro currency supply limit will ever reach the 100-million mark, the more important question should be: How does Petro work?
How Does Petro Work?
The Petro currency will act as a form of legal tender that can be used to pay taxes, fees, and other public needs. Each Petro will be backed by a barrel of oil and will be sold at the same price, according to the government. Petro tokens could be exchanged through virtual exchange houses. Soon, there will also be many merchants providing goods and services, where you can go with your Petro and exchange it for a product or service.
According to Venezuelan Cryptocurrency Superintendent Carlos Vargas, Venezuela would pay for imports from Brazil using the Petro cryptocurrency. In fact, a few Brazilian companies have agreed to sell food in Venezuela in exchange for Petros starting on February 20.
Exchanges That Support Petro
Unfortunately, as of now, there are not too many exchanges that support Petro. As Petro is still in its early stages, PTR is only available on the official blockchain observatory. As for storage, the Petro currency wallet will have a GUI version that is easy to use and can be installed on “Windows,” “Mac OSX,” “Android,” and “iOS.”
Petro Cryptocurrency Future Potential
This is a tough one. From whichever angle one looks at it, the entire project is mired in controversy.
One of the big selling points of cryptocurrencies is that they are free from the control of any state or central bank. That’s obviously not the case here, as every aspect of the cryptocurrency is overseen by the government.
Petro is part of the Venezuelan government’s initiative to overcome the U.S.’s economic blockade against Venezuela. Not surprisingly, the U.S. Treasury has warned investors to steer clear of it.
Venezuela’s own opposition party has called the project a corrupt forward sale of Venezuelan oil. If President Maduro does not win the next election, there is every chance of Petro being nullified.
According to Harry Colvin, director of Longview Economics Ltd, given that Venezuela has been known for misappropriation of assets in the past, there’ll be major trust and transparency issues.
Steve Hanke, an economics professor at Johns Hopkins University, was even more brutal in his assessment of the Petro cryptocurrency potential, saying, “Anyone who would waste money on such an obvious sham is a fool. Maduro’s ‘petro’ is just another elaborate pump-and-dump scheme.” (Source: “Twitter Post,” @steve_hank, February 18, 2018.)
All things considered, it is still too early to determine Petro’s future potential. Even if President Maduro wins the next election (and is still optimistic about his big project) and other exchanges support the cryptocurrency, Petro may still be the cause for a lot of controversies.