In February, President Nicolas Maduro, Venezuela, announced the next great entry into cryptocurrency, Petro. President Maduro believes that Petro will revitalize Venezuela’s economy.
Venezuela’s economy in crisis, when oil plummeted in price, in 2014, it sent Venezuela spiraling. With next to no other exports to speak of and the government’s proclivity for printing money hyperinflation gripped the nation. Prices have been doubling on a monthly basis leaving Venezuelans struggling to even afford the very basics. Schools, hospitals, and basic infrastructure are collapsing and the people are starving. With the country in a state of emergency, President Maduro looked to the ground for an answer and that answer was Petro.
Where it Began
It all started in the sleepy town of Atapirire, located in the center of the country. The 1300 inhabitants of Atapirire, much to their surprise, have been sat atop a sea of oil. The government claims 5 billion barrels of petroleum lay beneath this humble town and that it would provide the backbone for their financial revolution Venezuela. Maduro’s new innovation in cryptocurrency, Petro, it was announced, would be backed by this new found oil. Petro and humble Atapirire are to be the foundation for the Venezuelan recovery.
This is where the magic begins because it appears nobody but Maduro knows where the oil is. Reuters interviewed residents of Atapirire who had no knowledge of the revolutionary elixir beneath their feet. There had been no sighting of government officials in the area nor any development towards extracting the oil. A pump jack stands alone, rusted and worn down barely able to operate under its own steam, and certainly not capable of producing the billions of barrels Maduro promised. Experts predict it would cost up to 20 billion in investment alone to extract the reserves, making Maduro’s estimate all the more baffling.
What Maduro Conceals with One Hand he Reveals with the Other.
It turns out, Petro, is just as elusive as the oil that backs it. Petro is not traded on any major cryptocurrency exchange and there are very few people claiming to have invested. Maduro stated that currency was certified and being traded on 16 exchanges. Reuters, however, struggled to confirm the existence of seven of these exchanges and seven others ignored requests for comment. One currency exchange that did respond, however, stated clearly and definitively that they did not manage nor sell Petro.
If Petro were being traded it would present another problem. Petro is not the first cryptocurrency to be backed by physical assets but it is the first to be traded without those physical assets actually available for trade. Even if the amount of oil Maduro claims really lies beneath Atapirire, it is trapped there with no potential for trade. Petro effectively is backed by Maduro’s imagination.
Where’s the Money?
Maduro claims Petro has brought in a staggering $3.3 billion, yet, one of his cabinet ministers tells Reuters that the coin is still in development. And expert analysts struggle to ascertain whether or not any investment has actually taken place due to the poor digital records attached to the coin. This leaves no evidence of anyone having actually received any Petro nor any evidence it has been traded at all.
As the people of Venezuela struggle to feed themselves, Maduro tries to conjure up magic to feed them. But like magic, it is all just a trick.