Maduro says Venezuela will issue $5.9 billion in oil-backed cryptocurrency

https://finance.yahoo.com/news/maduro-says-venezuela-issue-5-9-billion-oil-013537526–finance.html

President Nicolas Maduro said on Friday that Venezuela would issue 100 million units of its new oil-backed cryptocurrency in coming days, although it is unclear whether any investors will want to purchase the “petro” at a time when the OPEC member is going through a deep economic crisis and its leftist government has little credibility. Socialist Maduro surprised many last month when he announced the launch of the cryptocurrency, to be backed by Venezuela’s oil, gas, gold and diamond reserves, as a way to circumvent U.S. sanctions that have hurt Venezuela’s access to international banks.

Maduro specified on Friday that each unit of the currency would be pegged to Venezuela’s oil basket, which this week averaged $59.07 per barrel, according to the oil ministry. That implies the total cryptocurrency issued would be worth just over $5.9 billion.

There is much confusion, however, over how the mechanism will work. Opposition politicians have already panned the project as a fanciful idea doomed to fail and useless at getting food to the millions who are suffering from product shortages and the world’s highest inflation. Maduro says the cryptocurrency will usher in the “21st century” and boost Venezuela’s access to hard currency. “I have ordered the emission of 100 million petros with the legal sustenance of Venezuela’s certified and legalized oil wealth,” said Maduro in a state television address. “Every petro will be equal in value to Venezuela’s oil barrel.” Venezuela has the world’s largest oil reserves, according to OPEC, and makes some 95 percent of its export revenue from oil. Critics say the government has squandered wealth from a decade-long oil boom and that without reforms any influx of resources will also be burned through. Strict currency controls have forced people onto the black market, on which a dollar can buy 137,000 bolivars. The country’s strongest official rate, meanwhile, is 10 bolivars per dollar. That fall in value combined with money printing by the central bank is behind what many analysts are measuring as hyperinflation.

Local economic consultancy Ecoanalitica said prices rose more than 80 percent in December alone. Money supply, according to the central bank, was up more than 1,000 percent last year. Maduro said the cryptocurrency issuance would take place through virtual exchanges in the coming day, but did not give further details. Cryptocurrencies are decentralized and their success relies on transparency, clear rules and equal treatment of all involved.

———-

oh shit!

“Venezuela would issue 100 million units of its new oil-backed cryptocurrency in coming days, although it is unclear whether any investors will want to purchase the “petro”

well yeah..i can burn those dollars to stay warm..not buy venezuelan crypto..

“Maduro says the cryptocurrency will usher in the “21st century” and boost Venezuela’s access to hard currency. “I have ordered the emission of 100 million petros with the legal sustenance of Venezuela’s certified and legalized oil wealth,” said Maduro in a state television address.”

watch this space..

401

~ by seeker401 on January 9, 2018.

9 Responses to “Maduro says Venezuela will issue $5.9 billion in oil-backed cryptocurrency”

  1. Are there buyers for Venezuela’s goods (the diamonds, oil)? One would think, but with all the sanctions, just makes me wonder. I could peg anything to anything, but if one or the other (or both) are difficult to acquire.

    • IMF Jan. 2016 report: “The concept of VCs covers a wider array of “currencies,” ranging from simple IOUs of issuers (such as Internet or mobile coupons and airline miles), VCs backed by assets such as gold, and “cryptocurrencies” such as Bitcoin.”

      • file:///C:/Users/Owner/AppData/Local/Packages/Microsoft.MicrosoftEdge_8wekyb3d8bbwe/TempState/Downloads/_sdn1603.pdf

  2. It is spoken of as “The Crisis” quite a bit, referring to the 2008-09 financial crisis. Ever since the crisis, fintech had been on the rise, note a “proof” of the public’s interest is how much we type in our private computers “fintech keywords”, but it is much more than what we type:

    http://www.imf.org/external/pubs/ft/fandd/2017/09/griffoli.htm
    Quotes below from article IMF article titled “Banking on Change” (September 2017):

    – “Market valuations of public fintech firms have quadrupled in the decade since the global financial crisis, outperforming other financial sector firms. Meanwhile, the public has taken a keen interest, judging by the frequency of online searches for fintech keywords.”

    – Customer data is a commodity:
    “Those that remain—and many will—are likely to change the way they are organized. Much will depend on who owns and has access to customer data. Currently, large financial institutions invest heavily to obtain information on customers—such as their creditworthiness and transaction histories. That information makes it easier to offer customers tailored services, from payments to credit and investment advice. This encourages the one-stop-shop model of banking offering a variety of financial services.”

    “However, the amount of new data, and who owns it, could change that model. End users—whether individuals or firms—could own the data they generate in their transactions and business endeavors. In this scenario, customers would be much freer to switch between financial service providers and to use services of multiple providers. Another possibility is for new players to enter the financial sector. Social media, large online retailers, online entertainment companies, and Internet service providers increasingly control data about our habits and preferences, and to some extent about our wealth and transaction history. Will they partner with existing financial service providers or venture into this space themselves? It is hard to predict, but access to, and ownership of, data will give them significant leverage.”

    “Building trust, though, requires money—often lots of it. Investment in brand recognition, information technology security and stability, and regulatory compliance can be substantial and could dissuade potential players.”

  3. Wow…thanks for posting this article 401. I live nearby the company that produced the currency paper. The locals sure were not told the part about crypto currency, they would be wise to look for new jobs…. I posted it, hope they don’t yank it.

    http://www.berkshireeagle.com/stories/bad-debt-from-venezuela-frequent-footnote-in-crane-co-sale,528990

  4. ‘The petro is born’: Venezuela launches its cryptocurrency

    http://www.smh.com.au/world/the-petro-is-born-venezuela-launches-its-cryptocurrency-20180220-h0we33.html

  5. Venezuela crisis: Cereal maker Kellogg ends operations

    http://www.bbc.com/news/world-latin-america-44133905

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