Venezuela has adopted the Petro as their national cryptocurrency and pegged its value of their new fiat currency, the Sovereign Bolivar. Each Petro is supposed to be backed by a barrel of oil, and if this was true the Venezuelan Bolivar would be backed by oil which would make it stable and end the hyperinflation crisis. However, a Reuters investigation finds that the Petro is backed by nothing, in addition to being impossible to trade.

Venezuela says the Petro is backed by 5.3 billion barrels of oil in a reserve near the town of Atapirire. While these reserves might exist theoretically, Reuters investigated on the ground and found that there is practically no oil infrastructure besides some abandoned test wells. Locals report that the government is not making any efforts to tap the oil in the ground in the region and that there are more viable oil reserves elsewhere in Venezuela that would be mined before Atapirire. It is apparently hard to even locate where these supposed oil reserves are, and it will take further surveys to pinpoint the reserves. Essentially this means the Petro is backed by oil that probably won’t be extracted for years, and therefore the Petro is backed by nothing.

It gets worse, Reuters investigated the digital trail of the Petro, and found little evidence of its use or even existence. Apparently, the best evidence for the existence of the Petro is an initial coin offering (ICO) conducted through the NEM platform. A NEM account that claims to be owned by the Venezuelan government created 84.2 million Petro, and only 2,300 of these were actually sold, equaling about USD 150,000. The government says Petro raised USD 3.3 billion in its ICO, which would have been true if all of these tokens were sold, but the data shows the demand was minuscule and Venezuela was not able to sell most Petro tokens.

Some users on Bitcointalk say they successfully purchased Petro during this ICO, but can’t use these tokens since the Petro isn’t traded anywhere. One user says the Petro ICO is a scam, another user blames the United States government for making the Petro illegal. Regardless, the Petro is completely untradeable since it is not accepted on any exchange in the world. Coinsecure was supposed to develop Petro’s trading infrastructure but got hacked into oblivion shortly after they began working with the Venezuelan government. Venezuela launched 16 crypto exchanges, most of them were unreachable, but Reuters talked to at least one of them and found that they don’t offer Petro trading.

Another NEM account claiming to be from the Venezuelan government issued 13 million tokens in a 2nd phase of the ICO aimed at big investors, which would be USD 850 million, but Reuters found no evidence to support that any big investors actually purchased Petro.

Aside from that, there is zero evidence that the Petro is available in Venezuela. The Venezuelan Blockchain Observatory confirms that the Petro is not a functioning cryptocurrency. The NEM tokens are supposed to be exchanged for actual Petro once the Petro blockchain launched, but it appears Petro’s blockchain technology is yet to be released and is not fully developed. It seems really crazy, for a lack of a better word, that Venezuela has pegged the Bolivar to a cryptocurrency that doesn’t exist yet.

To make a long tale of controversy and intrigue short, evidence suggests the Petro isn’t backed by anything and isn’t even a live cryptocurrency, at best it might be launched in the future and still won’t be backed by oil. This makes Petro equivalent to an ICO scam, and makes the United States’ decision to make Petro illegal very appropriate. Effectively, this means the Sovereign Bolivar is backed by nothing, and hyperinflation in Venezuela will continue to accelerate.

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