Although the move has been described by Venezuela’s opposition as having no future, this is the first time that a cryptocurrency is being backed by a government.
In a move designed to circumvent U.S. led sanctions and shore up its collapsed economy, Venezuelan President Nicolas Maduro announced the launch of the “petro” – its own cryptocurrency which will have the backing of its oil reserves.
Although Maduro offered little details on the currency during its launch, including how it will manage to pull off this feat, he declared to cheers that “the 21st century has arrived!”
“Venezuela will create a cryptocurrency,” which will have the backing of its vast gas, oil, diamond and gold reserves, said Maduro in a televised broadcast.
He expects the petro to help Venezuela “advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”
However opposition leaders have cast aspersions on the announced, which incidentally would need congressional approval. Valenzuela’s currency, the bolivar, has plummeted to a new low with the country sorely lacking in essentials such as food and medicine.
The announcement essentially highlights how the U.S. led sanctions are hurting the Venezuela’s ability to move funds through international banking channels.
Significantly, Maduro’s pivot away from the greenback comes in the wake of the recent spectacular surge in the value of the bitcoin, which is gradually gaining traction in the international mainstream investment market.
The announcement however has bewildered cryptocurrencies since normally they dont have government backing.
Describing the development, opposition lawmaker and economist Angel Alvarado said, “It’s Maduro being a clown. This has no credibility.”.
“I see no future in this,” said Jose Guerra, an opposition lawmaker.