Update on cryptocurrency in Venezuela: El Petro pre-sale officially launched.

Last week we published an article on Bitcoin’s trading volume reaching new highs amidst the massive fall in the Bolivar’s value.

This week, Venezuelan President, Nicolas Maduro, stated that there will be a pre-sale of the Petro digital currency. According to Maduro, Petro raised $735m in its first pre-sale day, with the currency being backed by oil, gas, gold and diamonds. The currency is meant to help overcome sanctions by the US and EU.

Petros will be “pre-mined”, meaning the government would produce and control it. Venezuela has allocated five billion barrels of oil to back the new digital currency, which will be tied to the cost of a barrel of Venezuelan oil.

Initially, the petro will be sold in hard currency and other cryptocurrencies, not in the local bolivar currency.

“The presale and initial offer will be made in hard currencies and in cryptocurrencies,” Carlos Vargas, the government cryptocurrency superintendent, told state television earlier this year. Vargas also said that after the initial sale, the petro could be sold in exchange for the bolivar.

Each petro will be backed by a barrel of oil and will be sold at the same price, according to the government. Prior to the launch, government advisers recommended that 38.4 percent of the petros should be sold in a pre-sale private auction at a discount of 60%. The cryptocurrency superintendent said that each petro could be exchanged through the virtual exchange houses,

“but in addition to that, there will be many merchants providing goods and services where you can go with your petro or any crypto currency to exchange it for a service”.

With the surrounding hype, the question of whether the Petro will help Venezuela out of its economic crisis still looms. At current prices ($62 a barrel) 100 million petros could help raise around $6bn. The government argues this could help Venezuela pay part of the country’s obligations.

The Venezuelan Minister of Foreign Trade, Jose Vielma Mora, announced that Venezuela would pay for imports from Brazil using the Petro cryptocurrency. as a group of Brazilian companies have agreed to receive payment for the sale of food to Venezuela, through petro, starting on February 20, when the pre-sale of the cryptocurrency commences.

Some parties, however, are against the launch of the digital currency. The opposition-controlled National Assembly has opposed the idea of the petro, calling it illegal. US President Donald Trump signed an executive order barring any US-based financial transactions involving Venezuela’s new Petro cryptocurrency, as US officials warned that it was a “scam” by President Nicolas Maduro’s government to further undermine democracy in the OPEC country.

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