The Case Of The Disappearing Petro, Venezuela’s National Cryptocurrency

When Venezuela’s petro was launched in February this year, the country’s president Nicolas Maduro had great hopes for it. “Today, a cryptocurrency is being born that can take on Superman,” he said, in a reference to the U.S. sanctions which crippled Venezuela’s economy. The petro would presumably help the South American nation circumvent sanctions by enabling another unit for international trade, instead of the commonly-accepted US dollar, for the country.

But Maduro’s expected future has not come to pass.

The Venezuelan economy continued its tailspin into disaster and, approximately six months later, is beset is skyrocketing inflation and widespread poverty. Backed by a strong economy and low unemployment rates, the US dollar has risen in value against other currencies.

Meanwhile, the petro seems to have vanished.

Last month, Maduro devalued Venezuela’s currency and pegged it to the petro. “They’ve dollarized our prices. “I am petrolizing salaries and petrolizing prices..We are going to convert the petro into the reference that pegs the entire economy’s movements,” he said. But the move has baffled economists and country experts because the petro is yet to be traded on a cryptocurrency exchange or international markets.

A National Cryptocurrency That Seems To Have Disappeared

According to a recent Reuters report, there are very few users of the cryptocurrency within the country. The publication was able to locate only two buyers of the petro. One claimed to have been “scammed” into the purchase while the other buyer, who did not disclose his name, was scared of “persecution” by the US government. There is no record of other buyers for the cryptocurrency because Venezuela did not provide a purchase registry for the token on its blockchain.

Each petro token is backed by a barrel of oil from crude reserves at Atapirire in Venezuela. But the Reuters journalists who visited the region found little there to suggest efforts to extract or survey for oil. Based on the journalists’ description, it seems to be a region of barren landscapes surrounded by impoverished villages and stray cattle.

During the petro’s launch, Venezuelan president Nicolas Maduro  claimed that the cryptocurrency had raised $735 million in a presale offering. The fundraising estimates were revised to $3.3 billion subsequently and the country’s cryptocurrency superintendent Carlos Vargas hoped that it would attract investment from the likes of Qatar, Turkey, the United States, and Europe.

Based on an analysis of accounts on the NEM blockchain, Reuters, concluded that a sale of around 13 million tokens could have raised $850 million. “But there is no way to verify that those were sales and no large investors have admitted to taking a position in the Petro,” the publication writes.

The cryptocurrency’s existence itself is in doubt. Hugbel Roa, head of the Venezuelan Blockchain Observatory, told Reuters that the NEM transactions “early models” and would not be used. According to him, the country is developing its own blockchain for the cryptocurrency and buyers have made “reservations” to buy petros.