Petro Deep Dive: The World’s First Sovereign Cryptocurrency

Since its initial launch, petromoneda or commonly called petro has managed to steal the attention of cryptocurrency users. The excitement for petro is proven by a very positive sentiment among Twitter users, who are mostly pleasant by ‘petro’ keyword; shown by green marks.

Figure 1: The Sentiment of ‘Petro’ Keyword

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Data Source: Sentiment Viz

Petro is the first cryptocurrency to become the primary currency of a country, backed by Venezuela’s reserves of oil, gasoline, gold, and diamonds[1]. According to its official website, petro is an original idea of Hugo Chávez, the former President of Venezuela, of a ‘strong currency backed by raw materials.’ Nicolás Maduro stated that the petro would be the solution to Venezuela’s monetary problems and the pioneer of international financing available to the country.

Timeline of The Launch

Before its initial launch, petro was introduced on a televised address on 3 December 2017. President Nicolás Maduro received a backlash from the opposition parties, citing that the failure of bolívar, Venezuelan’s fiat currency, against American dollar and the amount of debt that Venezuela has, should have been the primary focuses instead of creating new cryptocurrency. However, only one month after that, Maduro announced that Venezuela would issue 100 million tokens of petro, which worth around $6 billion, before eventually launched it on 20 February 2018. The pre-sale, which was held between 20 February 2018 to 19 March 2018, was successfully sold 38.4 million tokens; regardless of the confusion that sparked regarding which platform the petro was part of. On 21 February 2018, President Nicolás Maduro introduced a gold-backed cryptocurrency as the second cryptocurrency, petro gold[2].

Figure 2: The Launch of Petro Timeline

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Data Source: Wikipedia

What Makes It Different?

There are a few significant points that distinguish petro with other cryptocurrencies[3].

1. It’s Backed by Mineral Resources

Daniel Peña, the secretary general of the Venezuelan Blockchain Technology Observatory, claims that petro is the safest cryptocurrency since the price of petro is backed by oil, gasoline, gold, and diamonds. This presumption is based on the fact that Venezuela has the largest oil reserves in the world, even though on the other hand, there is some evidence proving that Venezuela is facing shortages of gas. Moreover, Daniel Peña also adds that 5 thousand 342 million barrels of field 1 of the Ayacucho Block of the Orinoco Oil Belt are ready to support the virtual currency.

2. Petro is Issued and Regulated by a State

Venezuelan government plays a vital role on petro by supervising the mining and determining what exchanges can trade the petro, as explicitly mentioned in the ICO documents[4]. Petro is also used as an official accounting unit by the state oil company PDVSA. Subsequently, new salary pricing systems for goods and services will be announced to Venezuelan people[5]. According to Hermann Escarrá, one of the Venezuelan National Constituent Assembly members, Venezuela is going to launch a central bank for Cryptocurrencies. This bold action will require the government to reform the Venezuelan Constitution[6].

3. The Price Doesn’t Fluctuate

Since the price of petro follows the Venezuelan crude oil, there won’t be a dramatic change in the rate; it will just remain somewhat stable.

Figure 3: The Difference Between Petro and Other Cryptocurrencies

Data Source: Steemit

The Venezuelan government shows its thoughtfulness in making petro a solution to the economic crisis. Although petro sparks controversy and it’s alleged to have several shortcomings, there are a lot of people who support the action. Hopefully, Petro will show positive progress in the future.

[1] Ulmer, A. Buitrago, D. 2017. Enter The ‘Petro’: Venezuela to Launch Oil-Backed Cryptocurrency. []. Accessed August 19, 2018.

[2] Wikipedia. 2018. Petro (Cryptocurrency). []. Accessed August 19, 2018.

[3] Bridgette. 2018. The Petro Makes The Difference with Other Cryptocurrencies. []. Accessed August 20, 2018.

[4] Bianchi, D. 2018. Don’t Be Fooled — Venezuela’s Petro is not Really a Cryptocurrency. []. Accessed August 20, 2018.

[5] Alenxandre, A. 2018. Venezuela to Use Petro as Unit of Account for Salaries, Goods and Services. []. Accessed August 20, 2018.

[6] Armas, M. 2018. Constituyente Venezolana Trabaja en Banco Central Para Criptoactivos y Corte Superior a Tribunal Supremo. []. Accessed August 20, 2018.

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