In December, Venezuelan president Nicolas Maduro announced that the nation’s crypto-currency “Petro” would be backed by both oil and gold. This came only moths after Venezuela announced that it would no longer be pricing its oil in dollars but would be instead publish its oil basket price in terms of the Chinese RMB (Yuan) currency. [1]
This is no doubt the reason for President Donald Trump’s harsh words towards Venezuela. In August, shortly before the announcement of the pricing change, Trump said the following:
“We have many options for Venezuela, and by the way, I am not going to rule out a military option.” [2]
It would not be far-fetched to say that a US military presence in Venezuela may be seen in the near future. I would remind the reader that the Saddam Hussein regime in Iraq ended with a US military invasion in 2003 just after Hussein had announced that the country would no longer be accepting US dollars for oil payments.
Venezuela currently has the world’s largest amount of oil reserves on the planet according to the US Department of Energy at 300 billion barrels. [3] US foreign policy has a notorious history of destabilizing and overthrowing 3rd world governments with dictators such as Iraq, Libya, and Syria. All three of which were disclosed as targets by General Wesley Clark (Syria and Libya were disclosed ahead of time by Clark). See Youtube below.
It is unsure at this moment how Venezuela will be tying its natural-resource reserves to the currency, and those affected by policy in that respect should be skeptical. However, this trend of governments issuing their own crypto-currencies will continue along with the trend of nations rejecting the US dollar as a payment used in global trade. Since the Dollar is the world’s reserve currency, and used to settle global trade payments, a new infrastructure will need to be set up in order to circumvent the current system. It would make sense that the new crypto-currency payment system be the basis of the next world reserve and be used to settle trade payments between countries.
China has created its own crypto-currency. As of right now there is no gold backing to it, but expect them to announce this in the future. [4]
Notes:
[1] https://www.zerohedge.com/news/2017-12-28/venezuela-will-back-its-cryptocurrency-5-billion-barrels-oil-gold-deposits
[2] https://www.nytimes.com/2017/08/12/world/americas/trump-venezuela-military.html
[3] https://www.eia.gov/beta/international/data/browser/#/?pa=0000000000000000000008&c=ruvvvvvfvtvnvv1urvvvvfvvvvvvfvvvou20evvvvvvvvvnvvuvo&ct=0&tl_id=5-A&vs=INTL.57-6-AFG-BB.A&cy=2016&vo=0&v=H
[4] https://www.bloomberg.com/news/articles/2017-02-23/pboc-is-going-digital-as-mobile-payments-boom-transforms-economy