Venezuela’s cryptocurrency will launch within days and be backed by 5.3 billion barrels of oil worth $267 billion, in a bid to offset a deep financial crisis, the socialist government announced Thursday.
President Nicolas Maduro surprised many earlier this month when he announced the “petro” cryptocurrency, to be backed by OPEC member Venezuela’s oil, gas, gold and diamond reserves.
Despite the skepticism of cryptocurrency experts who do not think Venezuela has the wherewithal to pull it off, communications minister Jorge Rodriguez said the first petro offering would come within days.
“Camp one of the Ayacucho block will form the initial backing of this cryptocurrency,” Rodriguez told reporters, referring to part of Venezuela’s southern Orinoco Belt.
“It contains 5.342 billion certified barrels of oil. We’re talking about backing of $267 billion,” said Rodriguez, adding that that differentiated the petro from other cryptocurrencies such as Bitcoin.
Miners were already lined up, he said, without giving more details. Cryptocurrencies are obtained by users setting up computers to do complex mathematical calculations in a process known as mining.
Cryptocurrencies are decentralized and their success relies on transparency, clear rules and equal treatment of all involved. Venezuela gave no technical details about the petro.
The government appears to be hoping the petro will offset a collapse in Venezuela’s currency – 97 percent in one year against the U.S. dollar on the black market – and isolate the country from the U.S. dollar and Washington.
Rodriguez also hopes to use the petro as part of a mechanism to pay international providers, many of whom have stopped supplying to Venezuela given its inability to pay its debts.
With Venezuela’s 30 million people suffering shortages, runaway prices and a fourth year of recession, Maduro has long blamed the U.S. government for an “economic war” against it. Critics say incompetent policies are to blame for Venezuela’s economic mess.
Earlier on Thursday, Maduro blamed U.S. pressure on Portugal for blocking imports of pork leading to a shortage over Christmas in Venezuela.
U.S. President Donald Trump’s administration has imposed various political and financial sanctions on Maduro’s government, accusing senior officials of rights abuses and corruption.
“It will be materially impossible for the dictatorial financial centers of the world to intervene against this initiative,” said Rodriguez, citing the Portugal case.
“It will allow us to overcome any financial blockade.”
Cryptocurrencies have grabbed global attention partly because of the remarkable rise in the price of Bitcoin, making millionaires of many early investors, including some in Venezuela who used Bitcoin and other cryptocurrencies to shield themselves from strict foreign exchange controls which economists blame for the crisis.