The Petro — A Revolutionary Future for Venezuela or an Exit Scam for Maduro

October 4, 2018 / by Ronald Tichenor

This week, Venezuelan President Nicolas Maduro announced the official launch of the Petro cryptocurrency created earlier this year. Venezuela suffers from a collapsing economy, political strife, international sanctions, an estimated one million percent inflation this year, and all the civil unrest that comes with that. It is easy to understand how a government might look for an innovative solution.

A cryptocurrency makes sense whatever you may think of Maduro’s intentions, whether you think he has a grand vision or this is a grandscam to enrich himself and his friends. Economists and even crypto experts have said that if done right, an asset-backed currency could work. Originally backed by oil, the latest announcement and white paper updates say the Petro will be backed by 50 percent oil, 20 percent gold, 20 percent iron, and 10 percent diamonds.

This is a sound idea. But this is Venezuela — and the Maduro government has so terribly mismanaged the existing currency and economy. Why would anyone expect it would handle a cryptocurrency any better?

If Maduro’s intentions are entirely selfish, as most suspect, the Petro as a scam makes perfect sense. A casual look at the Petro’s short history shows that it’s a giant shell game. It has all the hallmarks of an ICO scam.

The original white paper earlier this year claimed the Petro would be built on Ethereum, but by the pre-sale, it was switched to NEM at the last minute and supposedly raised nearly $800 million. However, as of Oct. 1, the new white paper shows that the Petro’s blockchain is essentially a Dash clone. This is either a completely inept launch or the kind of deliberate sleight of hand that would accompany a 2017 ICO scam.

As reported by Reuters on Aug. 30, journalists on the ground in Venezuela confirmed that there is no oil development at all in the region Maduro claims will be backing the Petro. If even Maduro’s claims are proven baseless, who can guarantee the Petro will be backed by anything?

There is no sign of any government infrastructure for the cryptocurrency, and no plans for an independent audit of the assets backing the currency. Maduro has claimed several times that the Petro has been and is currently being traded on top exchanges. But as of today, there is no sign of the Petro trading anywhere.

We have said from the beginning that this was a scam upon the people of Venezuela and the international community. It may be the first state-sponsored cryptocurrency, but it looks more like an exit scam for Maduro than a revolutionary revival of Venezuela’s economy. Given the rapidly deteriorating situation in Venezuela, this can’t end well for the Petro or Maduro.