Petro: the nonsense cryptocurrency

The scene was almost surreal: some of the greatest supporters of the validity of the Venezuelan crytpovaluta were presented at the Central Bank of Venezuela and began to illustrate the virtues of digital currencies emphasizing how these could be able to revive the fate of the disastrous Venezuelan economy .

The Venezuelan government has always been rather "original" in its decisions, but in this case we can say that it has surpassed itself: the creation of the first "sovereign" digital currency able to solve - this according to the Venezuelan government's plans ... - the problems of the nation helping it, above all, to circumvent the US sanctions that in fact exclude Caracas from the global financial system.

A couple of weeks before the Venezuelan president Nicolas Maduro (in the image ) made a surprise announcement through state television: his socialist government was ready to introduce Petro , or the digital currency supported by the Venezuelan Petroleum and on this occasion the same supporters of digital currencies that would later enter the premises of the Central Bank of Venezuela jumped in front of the cameras to support the goodness of cryptocurrencies.

The irony of this situation is undeniable: the supporters of blockchain against any form of control mix and hold the parties to the bureaucrats who represent one of the most repressive governments in the world ...

The event was attended by Miko Matsumura (founder of the Evercoin exchange ), Carol Van Cleef (legal expert in digital currencies) and Nick Spanos (founder of Bitcoin Center NYC, in the image below): the trio praised the idea of "Open money" representing cryptocurrencies and the importance of a transparent market. The meeting continued with statements of this content but, surprisingly, the three advocates of digital currencies discontinued their activities before signing approval for the specific technical specifications of the government designed specifically for Petro , the digital currency inserted in a context much wider and described in detail in a"White paper" circulated among the leading exponents of the Maduro government, which assumes, however, the aspect of a real political document of socialist indoctrination.

At Bloomberg's request for a comment on the incident, Spanos's reaction was unclear: he did not openly support the "Petro project" , but merely stated that any nation that embraces the ideas of the free market will be in able to see their wealth increase ( Matsamura and Van Cleef have not commented).

About two months have passed since Spanos & Co found themselves in Venezuela and now Caracas is ready to present Petro to the world and make it available with the aim to collect billions of dollars from foreign investors (the official launch of the Petro digital currency took place on February 20, but it will take months before knowing if the product will be able to return the desired result).

In some statements released in January, Nicolas Maduro referred to a Petro price of $ 60 (basically the current value of a barrel of Oil ), but some members of the team of developers showed strong disagreement asserting that it was too high and that, due to the extreme initial volatility typical of these products, the first investors could have faced large losses; this inconvenience has been solved by placing the product on the market with a series of "decreasing discounts": basically only 24 million Petro (out of a total of 100 million pieces) were placed on the market at full price, while the remaining part will be placed at a "subsidized" price.

In order to support the request, the government has already declared that with Petro it will be possible to pay taxes and carry out other operations.

"We have found the key to give birth to a new monetary and financial era for Venezuela - explains Maduro - and this key is Petro; we will use it in the pension funds of state workers, in programs dedicated to young people and the middle class and in other sectors ".

Not everyone, however, sees the Petro with a good eye and many believe that the digital token is no more than an illegal way to raise funds by circumventing US sanctions; currently Petro 40 million (out of a total of 100 million) have been placed through confidential negotiations.

After the publication of the previous article about euphoria for cryptocurrencies recently shown by Venezuela a reader - in the comments expressed on social media - responded by inserting the link to an article published by a well-known newspaper in the which emphasized how Petro would not have been able to save Venezuela from the deep economic crisis in which it collapsed. Given the interest aroused by the topic, I have chosen to propose to you this analysis prepared by Matt Levine and published recently in the Bloomberg columns.

In his analysis, Levine emphasizes that Petro is essentially the opposite of what is the philosophy of digital currencies, more precisely: if you buy a cryptocurrency , you do it because you trust what is the content of its open source code and not because a government says to do it and it is precisely in this sense that Petro is the exact opposite of a classic digital currency!

First of all, it is not possible to trust such a code, because even in the rooms of the power of Caracas the ideas seem to be clear enough and investors who decide to buy this digital currency will necessarily have to ignore the confusion that reigns sovereign: the White Paper says that Petro is "built" on the basis of Ethereum , while the guide published by the government claims that it is based on Nem ...

Now we come to another detail: Petro should be able to "promote well-being", too bad it is not possible to buy it with the Venezuelan bolivars ... Why? Obviously: because Petro is not a currency (not even digital ...), but it is simply a means of acquiring foreign currency at a time that sees Venezuela literally paralyzed by US sanctions and therefore unable to access global financial markets.

The Petro is just a way to hide a new international debt behind the thin protective screen provided by the blockchain !
Firstly, it means that you have to trust the Venezuelan government to exchange Oil with the Petro which, of course, provide no guarantee of any kind in relation to Oil , which is why Maduro cryptocurrency is a sort of debt indexed to Oil and absolutely not guaranteed and issued by a nation that is slipping towards default and has been excluded from global debt markets ...

It's not bad, is it?

Now the pot, but first we remember what the Venezuelan government told us about the possible uses of Petro :

"The Republic of Venezuela guarantees that it will accept Petro as a form of payment of national taxes, contributions and public services, taking as a reference the price of the barrel of the Venezuelan basket of the previous day with a percentage discount".

All clear? Well: at this point imagine that someone comes to you and, without using words like crypto or blockchain, tell you that Venezuela is developing the issue of an unsecured debt, with zero coupon, that could be used to pay the taxes on the spot and tied to the price of the barrel, but that, as for a strange alchemical phenomenon, the Venezuelans themselves will not be able to buy this debt ... I believe that at this point you would already have your eyes wide open!

The Venezuelans, who could use the debt to pay taxes, can not acquire this debt with their bolivars , but foreigners? Of course: they can do it, but they will not get anything from it because the Petro (which is the debt we are talking about) does not pay interest and objectively can not be converted into currency.

The Petro is a kind of joke generated by the mind of Maduro , a product not for the few, but for anyone!