Venezuela becomes first country to launch its own digital currency

Violet Powell
February 22, 2018

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

About 100m tokens - worth around $6bn - were issued yesterday in the pre-sale and a limited number of people were able to buy them. According to him, the Petro would help Venezuela to overcome a financial blockade from the United States and thus move "towards new forms of worldwide financing for the economic and social development of the country". Last week, however, the Venezuelan head of the cryptocurrency project, Carlos Vargas, explained that the government is expecting investors from Turkey, Qatar, the United States and Europe.

During the presale, 82.4 million tokens were supposed to be offered.

Moreover, like any other token sale, the government has released details of the areas in which it intends to use the funds.

The annual survey, published on Wednesday by three universities, is one of the most closely-followed assessments of Venezuelans' well being amid a government information vacuum and shows a steady rise in poverty and hunger in recent years.

Readers will remember that it was the Xem token of the NEM platform that was stolen from Japanese exchange Coincheck earlier this month, although the hack used by the criminals was not related to any security vulnerability on the NEM blockchain or associated smart contracts.

Venezuela's Congress considers the Petro to be illegal.

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President Nicolas Maduro announced the pre-sale in a national television address, on stage with cryptocurrency mining machine props.

At the time, the government said the cryptocurrency would solve the country's grave economic problems, largely caused by the policies of Maduro's own government, and his predecessor Hugo Chavez.

A total of 100 million Petros will go on sale, with an initial value set at $60, based on the price of a barrel of Venezuelan crude in mid-January - but subject to change. Venezuela struggles with hyperinflation and a socialist economy that is in trouble.

Venezuela isn't the only country exploring the use of cryptocurrencies. The opposition leaders have also said the sale is an illegal debt issue that is circumventing the Venezuelan legislature, while the US Treasury Department warned that this could break the sanctions imposed a year ago.

A private industry initiative to launch an oil-backed crypto is also soon to be launched, called OilCoin.

Hugbel Roa, the Minister of Popular Power for University Education, Science and Technology, said that each Petro will be equivalent to one barrel of oil, according to the fixed price of the Venezuelan basket in the global market.

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