When the Petro was unveiled to the world by Venezuela’s President Nicolas Maduro, he led the cheering squad about what a groundbreaking and successful idea it would be. A government-backed, oil-pegged, cryptocurrency that would aid the ailing Venezuelan nation in their time of crisis with a hyper-inflated currency.
However, the pomp and promise of the Petro has quickly been dissected and seen through as the feeling coming from those in Venezuela, as well as those who have been exiled or left on their own accord, see the Petro as one big scam.
Maduro continues to plug and push his digital currency, inviting OPEC countries to join in and beginning the presale. But, as the rest of the world and especially the US, continue their tirade against it, it is important to see how it is going down among the Venezuelan community.
It is important to understand the political and socio-economic situation in Venezuela before delving into a purely financial and economic outlook, especially based around cryptocurrencies; state-backed or otherwise. Politically, it is very complicated, but essentially, there are two factions in Venezuela, the Chavistas, the name given to the followers of the socialist policies of the late President Hugo Chavez, and those who cannot wait to see an end to the 18 years in power of his United Socialist Party.
Maduro follows the socialist policies and the spirit of his predecessor but has not been able to hold sway like Chavez, leading to a bubbling undercurrent of discontent. Thus besides the economic collapse and hyperinflation, the country resides in permanent political crisis for several years. Many have reported on how this crisis has seen a stepping up in cryptocurrency usage to counteract the failing currency and also shown a boom in mining, but according to the those who are there or have witnessed the collapse, cryptocurrencies are only available for a small minority.
Limited crypto opportunity
Ostensibly there is a trend of support for the Petro. However, there are many who are calling this a paid-for propaganda campaign on platforms like Twitter. The hashtag #AlFuturoConElPetro, which means ‘To the Future With Petro’ has been used by governmental agencies and supporters alike, including the President.
Speaking to Cointelegraph, ‘Ricardo’ who admits he has recently been exiled from Venezuela explains that cryptocurrencies and those making it work in the country with digital currencies account for small percentage:
“Nowadays, at least 80 percent of the population lives under the poverty line. Only a very small percentage of the population may possess the economic resources needed to use a crypto as a currency for everyday transactions; to have access to a smartphone, at least, and an even smaller percentage from the previous group possess the technical savviness to actually understand and use a cryptocurrency. Therefore, as a substitute for the failed Bolivar, this is far from being a solution for the people.”
However, with this small group that is trying anything to make it work, Ricardo can see them taking the plunge with the Petro is there is any chance of turning a profit. “You bet they will [invest / speculate with the Petro], as long as they see a decent chance for profit,” Ricardo explained, but also reiterating that it is a tiny portion of the population that will have a chance to do so:
“Venezuelans may take sides when it comes to politics, and nowadays the great majority of the country rejects the Maduro regime. However, Venezuelans are spontaneous opportunists when it comes to prospects for personal benefit, especially economic. Add to that cultural trait the fact that the country is undergoing the worst economic, social, and political crisis of its entire modern history, and you got a catalyst for a very appealing use case of the Petro for regular Venezuelans.”
Ricardo goes on to explain that within this tiny subset of crypto users in Venezuela, those who do decide to have a go with the Petro will not be putting all their efforts into this cryptocurrency.
“By no means they will put all of their assets into the Petro. If there is something that the majority of the country knows by now, is that the Maduro regime has the only intention of eternalizing power through any means. And along that way, we have seen it all already, the high-volume propaganda, the archaic economic measures, currency controls, and financial schemes that have served only to enrich high-ranking government officials, while controlling the masses through hunger and fear.”
Following on from what Ricardo said, another Venezuelan who spoke to Cointelegraph, ‘Luis,’ reiterated the point that there is not enough of a youthful, tech-savvy population left to be buying into the Petro:
“There’s not much word in the streets at all. Given the huge exodus, anyone who has a degree or is young enough already left. What you will see in the streets are the 'left behind' people, these are not very tech-savvy.”
However, the reports have been that Venezuela was a mining mecca because of its cheap electricity and because of the need for cryptocurrencies to replace their failing local currency. But, according to Luis, the cryptocurrency miners have faced some dire times.
“You can check that Antmain used to sell a huge gap of their gear to Venezuelans. It all went wrong when the police started tracking down and arresting, robbing, kidnapping the ones that would have mining farms.”
Venezuela has seen reports of miners being arrested since 2016, but with the announcement of the Petro, there was a dramatic U-turn in those policies as the country’s newly-dubbed ‘cryptocurrency superintendent’ Carlos Vargas confirmed that citizens mining Bitcoin and other cryptocurrencies were not breaking the law. But, according to Luis, this is not the case, and he even admits that he had contracts himself to search mining farms:
“I had contracts myself to search farms for army officials, dangerous business... I’m not proud, but here you either smile and do it, or get shot. Maduro said he would support miners, but it got even worse. There's are tweets from his supporters denouncing cryptocurrencies like Bitcoin to the public. Then came the Petro. It’s all now about the Petro; there’s no word about cryptos in general. Their propaganda only says they are bigger than Bitcoin.”
Another Venezuelan, ‘Rómulo’ believes that the Petro is just another way to avoid the sanctions which have dogged the oil-rich country for so long, a tool in the hands of corrupt officials:
“The Petro is a way of running away from economic sanctions and to in debt to country. It is not transparent; it is not decentralized, nobody knows what the total supply is. How anybody can say that this is a cryptocurrency if does not comply with this main characteristics?”
A lot of the issues facing the people of Venezuela come down to the political strife and policies. As mentioned before, there is a real divide, and the opposing side is getting bigger and louder. ‘Alemacgo’ has aimed at Maduro and his policies in this state-backed cryptocurrency procurement.
“I am appalled at the fact that some in the crypto community appear to be taking the word of a totalitarian dictator and helping him fund the oppression of my fellow citizens. Venezuelans are starving because of Maduro's communist policies. For those that think that this can be an opportunity to shift the economy around, the government has been in power for 20 years, and all they've done is leave us poor and hungry.“
Some of the citizens have even taken a hard look at the makeup of the coin, putting in context of the creators, the under-fire government, questioned its so-called oil pegging. “Alexander’ explains:
“This Petro news and all the trash that comes with it... baked on oil for example, which is not true, has no relation with China, Russia or other governments in the world. It has nothing to do with Venezuelan people, and nothing to do with oil or precious metals...these guys just need this money to keep the fallacy of socialism alive and stay in power to continue stealing. Just read the whitepaper and you will find a lot of inconsistencies, and remember that what starts badly never ends well.”