Venezuela Petro (PTR): To buy or not to buy?

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Cryptos and Sovereignity

Last week Venezuelan Government announced that their first national crypto, the PETRO, was a full success. Even when you may not support Venezuela political stand, there is something bigger laying behind this "debt" issue backed up with oil barrels.

For those who missed the announcement, this started last year around December, when Maduro stated that the country was looking at a blockchain national backed crypto-currency. After a few months of speculation and rumors. The official launch was on Feb. 20th, the moment when the coin was ready to be claimed by future buyers in the international markets. According to Maduro's officials, got a total of $735 MM in USD. (this amount is not confirmed and also represents only a "declaration of intention" by possible buyers).

The amount was announced by Maduro's Twitter account;

A grandes problemas, ¡grandes soluciones! Desde el primer minuto el juego arrancó bien, y arrancamos ganando: 4.777 millones de yuanes o 735 millones de dólares es el resultado inicial de las operaciones de intención de compra del Petro. #AlFuturoConElPetro pic.twitter.com/LoaDgj4rr1

— Nicolás Maduro (@NicolasMaduro) February 21, 2018

Two days later he was claiming that the previous number raised to over 1 BN USD. According to other sources (RT Spanish edition).

What is Petro

This coin is understood to be backed up by the Venezuelan oil reserves. Still, it does not mean, that as USD were before 1971 backed by the gold standard, one would be able to trade them directly for oil barrels. This new crypto issued debt is more closely related to an indexed instrument. This means it follows the international price of the Venezuelan oil at a given time.

According to the official website, they are backed as mentioned before, by the wealth of the Venezuelan oil reserves, it uses apparently the state of the art crypto technologies, and most of all, it provides Venezuela with "true financial and economic independence."
The only correct part is the last; many tech experts are aware of the many faults of the Petro as a crypto asset. Also; there is a consensus that the mentioned backing of oil reserves means nothing since there is no legal tenure on the crypto itself against any existent or future actual oil.

The perk is mainly on the nature of the crypto, recognized by Venezuela as an exchange value "currency," you may buy oil with Petros, only because the government says so. Same as in other countries currencies have a value backed by Central Banks, with Petros you can do whatever the govt. says you can. And the independence from international watchdogs is in the very nature of cryptos, harder to track, and quickly transferable without the use of any Bank.

When like Venezuela, you face hyper-inflation, you know is time to look for extra measures. Apparently, for countries like the beforementioned, volatility means nothing, when compared to the hard hit of constant devaluation. So, if the laymen can buy some cryptos and store for months the value of his work, securing it against depreciation, we have a winner. This is the critical point for citizens; there are hopes that ordinary people will be included soon to receive Petros or maybe even another new coin. Until recently it was illegal to mine Bitcoin, with a cheap energy supply as Venezuela has, this was a tough cookie, many tried to cover themselves using state-subsidized energy to mine coins. After starting to analyze the use of coins by the Government, rules need to change, now, you can mine and "help the revolution" by mining Petros.

International Sanctions

Same as companies or start-ups instead of raising debt in the old traditional ways (equities, bonds, etc.) now governments are trying to do the same raising national funds through debt-free crypto assets. One may see the "scam" from miles, but still, for many, this will be a way to give Venezuela a second chance. Be careful, though, if you are a citizen or resident from a country which has issued sanctions against Venezuela if the "watchdogs" confirm that you hold any Petros you may be subject to hefty fines or even jail time. US Treasury Sanctions

I am sure that this new problem it could make nervous to the US and allies, which makes harsh Venezuela from raising funds in the international money markets. We agree that is hard to support a dictatorship in any way, but also, we have to keep in mind the thousands of people who are close to starvation due to the lack of resources. We see it right here in Steemit where many steemers come from Venezuela and tell us first-hand of how difficult has become life and what a struggle is to survive a day.

Criticism

After receiving some feedback (thanks @minnowbootcamp) I wanted to include also the main critic points received from blockchain players regarding this "ICO".

• The Oil industry in Venezuela is on its lowest production capacity, one of the main reasons is that there is no personnel to keep up with the tasks or the minimum maintenance needed to the Oil refinery factories. As seen in the chart below, the country is barely recovering from a 10-year production low. Far away from the 3M barrels a day, mainly due to a lack of resources and management which can be easily blamed on the economical crisis after Hugo Chavez dead.

source TradingEconomics.com
With those perspectives who could trust into buying this ICO?

• Not fulfilling the Crypto key components, and when I mean that I refer to TRUST, so if a corrupt government tells you to trust there is a barrel of Venezuelan oil backing up your Petro, should you actually believe them? With Venezuela regime international reputation for doing business, I would say no.

• Censorship from a regime, which is not too willing to provide transparency, could be another major issue to the release of a crypto, which on its core represents the need for public data and transparency.

• Do you get a barrel? what is the purpose to have it backed on Oil barrels if those may not even exist? That is another question investors do themselves. With the lack of an actual contract, there are no guarantees that the token represents thin air. In the traditional finance world when a party issues debt there is a large contract which guarantees that in case of default, the buyer will have at least the possibility of accessing the legal justice to protect his rights.

• Coping with a growing demand for mining farms will be a tough cookie without the knowledge or a sustainable energetic matrix. We should keep in mind electricity shortage is normal over there. There are though, claims that the regime has launched a campaign to bring crypto to the masses via training on the basics, and even mining! Source Cryptorama.com

Final thoughts

**Petro represents a new paradigm and could turn quickly into a crypto paradox.** The Blockchain is supposed to be trustless, decentralized, and many other features that impulse freedom in many ways. Now, how that applies to the Venezuela case? **Is hard to reply without falling into a political or philosophical discussion.** To me, Blockchain should be free in its many applications, without paying an ethical fee, this means, we should not care about the use it has since by default provides freedom to the users. Same as with guns is not the gun itself the cause of many evils, Blockchain serves a similar purpose, which gives a high power to those who know how to profit from it. In the Venezuela case, it may be a second chance for the Government to stop the internal economical bleeding and a humanitarian crisis that is taking the country to the brink of extinction.

I hope this post has given you a little perspective on the subject dilemma. I will not make a closing statement due to the fact that I have not yet found an answer to my internal questions. Is good to keep a close eye on the issue, I will keep updating you on any development, as will also cover other countries which are trying to follow the same pattern, like Iran and Turkey, to mention a few. Also, I will cover the apparent issue of gold-backed coin by Maduro's government.