In the wake of recent months of debate, clamour and popularity of cryptocurrency in the South American Republic of Venezuela, with a publicly proclaimed introduction of its own cryptocurency named PETRO in February 2018; the Venezuelan President Nicolas Maduro had over the weekend announced series of major economic changes all aimed at reviving the nation’s failing economy and increasing support for its cryptocurrency.
Highlights of these new economic changes by the President include;
– A 95% devaluation of the Venezuelan currency (known formerly as the Bolivar now renamed “Sovereign Bolivar”).
– An increase in the Bolivar’s exchange rate against the US dollar from 250,000 per USD to 6 million.
– Pegging of the Sovereign Bolivar to the government’s cryptocurrency (Petro) and specifying that the Bolivar will change in line with the Petro’s value which is linked to changes in oil prices.
– Re-denomination of the Sovereign Bolivar.
– A 3000% increase in the country’s minimum wage and;
– Valuation of the Petro (Venezuelan cryptocurrency) at $60 equivalent of 3,600 Sovereign Bolivars among other changes.
In his televised broadcast, Mr Maduro mandated with immediate effect the adoption of his Petro crypto which is backed by the NEM blockchain as the nation’s second official currency.
In his words, he stated;
They’ve dollarized our prices. I am petrolizing salaries and petrolizing prices. We are going to convert the Petro into a reference that pegs the entire economy’s movement.
This full blown adoption of its own cryptocurrency by the Venezuelan government comes on the heels of a huge economic downturn; with hyperinflation set to hit a negative rate of 1,000,000% by year end of 2018. Even as the US dollar continues to strengthen over the Venezuelan Bolivar and President Trump’s ban against the utility or investment in the Petro by US citizens still stands.
In like pattern and as consequent of US sanctions amid their respective currencies depreciating value, both Venezuela and Turkey have in recent times experienced a huge focus by government and citizens towards the utility of cryptocurrency and other stores of value (E.g Gold) as they look to circumvent this economic backdrop with a “post-fiat” breakout looking more possible by the day.
However, in the heat of the President’s order, most analysts question the feasibility of Maduro’s policies and intentions. With questions raised on the Petro’s long term survival, its yet to be exploited oil backing and a show of little enthusiasm by countrymen as regards the Petro’s creation; even as the government looks to ensure wide spread publicity and acceptance as a means of payment. Also reports are rife that a section of Maduro’s advisers are suggesting a ban of all other cryptocurrencies in a bid to shunt possible threat or competition posed by these other cryptos though this scenario looks unlikely.
In all, enthusiasts and market experts await further announcements by the Venezuelan government as they look to determine or predict the end point of the Petro’s course either as government propaganda to forestall economic panic by its citizens or a genuine and feasible attempt at reviving the economy and launching its front foot towards the post-fiat era.