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Venezuala launches Petro cryptocurrency to become first nation to release its own version of Bitcoin

jasper hamill

Venezuela becomes first nation to launch its own version of Bitcoin
Can cryptocurrencies overturn the capitalist world order? (Photo: Wil Riera/ Bloomberg via Getty Images)

Venezuela has become the first country to launch its own version of Bitcoin.

Officials say the so-called Petro is backed by Venezuela’s crude oil reserves, the largest in the world.

Socialist President Nicolas Maduro late last year announced he was creating the digital currency to outmanoeuvre US sanctions preventing cash-strapped Venezuela from issuing new debt.

But the US Treasury Department has thrown a damper on the release, telling American citizens and companies who buy the petro that they could be violating sanctions.

Many also doubt the government’s commitment to transparency.

Venezuela becomes first nation to launch its own version of Bitcoin
Venezuela’s President Nicolas Maduro at a press conference to launch Petro (Photo: AFP/ Getty Images)

‘My advice would be to tread very carefully with this – especially considering the track record of the Venezuelan government,’ said Federico Bond, co-founder of Signatura, a digital currency startup based in Argentina.

‘They are not in a good position to obtain financing in any other way, so this could be seen as a desperate move,’ he added.

In total, Venezuela plans to issue 100 million digital tokens, starting with a pre-sale of 38.4 million that starts Tuesday and whose reference price is the current cost of a barrel of oil, or around $60.

Maduro has also touted the Petro as the fulfilment of the late Hugo Chavez’s dream of upending global capitalism away from the dominance of the dollar and Wall Street.

‘Petro will be an instrument for Venezuela’s economic stability and financial independence, coupled with an ambitious and global vision for the creation of a freer, more balanced and fairer international financial system,’ the government said in a 22-page white paper, translated into English, outlining its plans.

Venezuela becomes first nation to launch its own version of Bitcoin
The logo of the new cryptocurrency

But critics point out that for now sale of the petro will only be in dollars – a sign of how much Venezuela’s own currency, the bolivar, has melted under four-digit inflation.

Some bitcoin enthusiasts also question the whole concept of Venezuela, or any government, promoting a digital currency when such instruments were originally created to circumvent the controlling role of the state.

Bitcoin and other digital tokens are already widely used in Venezuela as a hedge against hyperinflation and an easy-to-use mechanism for paying for everything from doctors’ visits to honeymoons in a country where obtaining hard currency requires transactions in the illegal black market.

The use of computers for bitcoin mining has also taken off, spurred by some of the world’s cheapest electricity rates and widespread desperation prompted by a recession deeper than the U.S. Great Depression.

MORE: You can now buy a house in Britain using the cryptocurrency Bitcoin

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