An oil-backed cryptocurrency? Introducing Venezuela’s ‘Petro’

On December 3, 2017, Venezuelan president Nicolas Maduro announced plans to create a national cryptocurrency called the ‘Petro’ that will be backed by the country's natural resources, most notably its substantial oil reserves. Currently, Venezuela is facing US government led sanctions that make moving money through international banks difficult — and Maduro believes a government-backed cryptocurrency will allow the Venezuelan government to regain control over its finances.

Speaking during a televised broadcast held weekly, he explained that the Petro would be useful as it would allow the country to “advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.” He added: “This is going to allow us to move toward new forms of international financing for the country’s economic and social development.”

Later in December, communications minister Jorge Rodriguez further specified the proposed cryptocurrency would be tied to the value of Venezuelan oil. Stating that the first offering of the digital currency was only days away, he said: “Camp one of the Ayacucho block will form the initial backing of this cryptocurrency. It contains 5.342 billion certified barrels of oil. We’re talking about backing of $267 billion.”

The Ayacucho block is part of Venezuela’s southern Orinoco Belt of oil reserves. Venezuela is the country with the world’s largest oil reserves, according to OPEC, with a reserves of 302 billion barrels of crude oil. Further explaining the hopes that the creation of the digital currency would be instrumental in circumnavigating the US-led sanctions, Rodriguez added: “It will be materially impossible for the dictatorial financial centers of the world to intervene against this initiative. It will allow us to overcome any financial blockade.” Bravenewcoin

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