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Venezuela launches its controversial oil-backed cryptocurrency, the petro

21 February 2018

Chartists say that the Petro is a desperate step to ensure cash in the terms of the unprecedented economic crisis caused by Maduro's socialist politics.

Cryptocurrencies by design are decentralized financial systems, so one created by a government runs contrary to that spirit and creates an opportunity for manipulation, said Leidenz.

Since then, however, Trump's administration has slapped new sanctions on Venezuela, on top of those imposed by the preceding Obama and Bush governments, citing opposition allegations of fraud in several elections past year. The government is trying to sell $2.3 billion worth. Venezuela is calling the Petro the world's "first state-issued cryptoasset".

The digital currency is promised to be supported by oil found in one of the country's major natural reserves that makes it critically different from the traditional cryptocurrencies such as Bitcoin or Litecoin because it is backed by a valid product.

Though the Petro's value is tied to crude oil, it doesn't actually translate to ownership of any concrete assets.

Some investors say it's innovative nonetheless, and could draw investment from Middle East, Europe and Asia.

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Falling oil prices - in a country reliant on its exports of the commodity - and economic mismanagement have led to a shortage of food, medicine, and dollars to pay its bills.

Venezuela owes bondholders, oil companies, airlines, China, Russia and other creditors about $141 billion, according to a report last fall by Moody's Investor Service.

President Nicolas Maduro has said each tokens will be backed by a barrel of Venezuelan crude.

To fuel demand for the Petro, it will be accepted as payment for local taxes.

But the US Treasury Department has warned potential investors that buying the petro may be in violation of sanctions that stop US banks from buying debt from Venezuela.

The designers hope the Petro will raise the hard currency value and also act as a payment media for foreign suppliers at the present moment when most of the deals are suspended by US sanctions imposed on the Venezuelan financial market in 2017. "I announce as a proposal that I will take to the pertinent instances, to call, on the day of the Presidential elections, elections for the National Assembly also to fill that void”, Cabello said during a live interview on state televisión network. In fact, rather than a cryptocurrency it is really an Ethereum-based token like many others we are seeing in the ICO ecosystem". They can't buy it with Venezuela's official currency, the bolivar, which is worth almost nothing because of hyperinflation. Also on Tuesday, speaking from a United Nations forum on human rights in Geneva focusing on the Venezuelan crisis, Organization of American States Secretary General Luis Almagro demanded “broader and stronger” sanctions against the Maduro regime, which he again accused of being “a threat for worldwide peace and security”.

Venezuela launches its controversial oil-backed cryptocurrency, the petro