Confusion reigns supreme as Petro is nowhere to be found 22093 Petro and Venezuela flag
Rakesh Ranjan Parashar
Aug 31, 2018 at 5:20 AM

According to a report published by Reuters, Venezuela’s oil-backed cryptocurrency Petro is nowhere to be seen or found. It contradicts the claims made by President Nicolas Maduro last week, when he introduced a rebranded fiat currency- the sovereign bolivar. Petro is valued at 3,600 sovereign bolivars, or $60 – the price of one barrel of Venezuelan oil.

Atapirire, a small hamlet in central Venezuela is supposed to be brimming with 5 billion barrels of petroleum. Venezuela has pledged those reserves as the backing for a digital currency dubbed the ‘Petro’, which Maduro launched in February. This month he reiterated the fact that it would put the crisis-stricken nation on the path to recovery.

Speaking to Reuters, Venezuelan-born energy policy expert Francisco Monaldi said that the allegedly oil-rich territory lacks the crucial infrastructure – including roads, pipelines and power generation facilities – to extract the reserves.

He also noted that “there is no investment plan for this area and no reason to think it would be developed before other fields with better conditions.”

The curious case of missing petro

The investigative report completely contradicts the claims made by the government. There’s no sign of Petro or a thriving Petro trade on the ground and no shops are known to accept it. It’s not even listed on the leading exchanges.

As Reuters notes, the Petro does not currently trade on any of the major international crypto exchanges. Hong Kong-based Bitfinex told Reuters that it officially banned the token from its platform in the wake of U.S. sanctions. Other exchanges – including Coinbase, Bittrex and Kraken – reportedly declined to comment as to why they have chosen not to list the Petro.

The digital asset is backed by oil barrels produced by Venezuela’s state-run oil giant PDVSA. But PDVSA has its own problems. According to the Wired report, the company is struggling under debts worth around $45 billion.

Government issued 82.4 million tokens as ICO

According to Petro’s “white paper,” the principal platform for the coin is NEM - a decentralized blockchain network. Owners of NEM accounts are anonymous, but can disclose their identities in the description of their coins if they wish.

In March, a NEM account claiming to be operated by the Venezuelan government issued 82.4 million tokens as part of an ICO associated with a digital coin described as the petro.

Around 2,300 of those tokens were transferred to 200 anonymous accounts in small quantities in early May, NEM records show. The sale of those tokens could have raised about $850 million at official prices. But there is no way to verify that those were sales.

Cabinet Minister Hugbel Roa reportedly told Reuters last week that the technology behind the coin is still in development and that “nobody has been able to make use of the Petro...nor have any resources been received.”

The state of the Venezuelan economy is in shambles and it’s only going one way and that is down. Oil is the heart of Venezuela and by backing its Petro with oil, the country has joined a growing list cryptocurrency issuers who have linked their tokens to physical commodities. But the fact remains that no matter how much oil the place holds, the area lacks basic infrastructure to get it out of the woods.

See Also: Venezuela breaks Bitcoin trading records by surpassing 500 million bolivars

Petro cryptocurrency springs, attains the same status as Venezuelan Bolívar

Image via Shutterstock

Join our Telegram group