Petro, the Venezuelan backed cryptocurrency is being released by the government. The government is taking the step in a volatile and unstable economic state, and it is expected that it can lead to failure.
The cryptocurrency Petro is released today by Venezuela. It is also the first ever coin that is backed by a state. According to the government, the coin is backed by the oil. The release of the coin by Venezuela is seen as a desperate step by the government. However, experts are also warning that it can lead to a more economic meltdown.
Cryptocurrency has caught a lot of attention in the last six months. The price of Bitcoin especially caught the attention of the media and the general people. However, its volatile nature has made government skeptical to accept it. Many countries including China has also banned cryptocurrency and ICO related activities.
The Venezuelan President Nicolas Maduro released his statement saying that each Petro token will be backed by one barrel of the country’s petroleum. Backing virtual tokens by a real asset is not a new concept.
He also added that 100 million Petro tokens would generate $6 billion of market value.
The step has a lot of repercussions according to experts. Also, the fact that the value of the cryptocurrency is always fluctuating adds to the instability.
The current condition in Venezuela is not good. For now, there are food shortages, and all other resources are depleting fast. It is also expected the hyperinflation can hit 13,000%.
Harry Colvin also commented on the situation. He told CNBC, “Venezuela has been known for misappropriation of assets in the past, and the central bank has just created hyperinflation, so I imagine there’ll be trust and transparency issues … If Maduro loses the election in April — or is forced out of power — then Petros would probably be made illegitimate.”