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Can Venezuela’s cryptocurrency get the country out of economic crisis?

Can Venezuela’s cryptocurrency get the country out of economic crisis?

As Venezuela slips further into economic and social crisis, President Nicolás Maduro has launched Venezuela’s cryptocurrency, named Petros.

Under the leadership of Hugo Chavez, Venezuela thrived. Its economy was strong thanks to a high price of crude oil that Chavez used to fund the Bolivian Missions which provided impactful social programmes, food subsidies and other public services. The ability to thrive has since waned, however, as oil prices have dropped significantly and the money flowing into Venezuela dropping also.

The funds provided by the income of oil stunted the growth and investment in other significant areas of development and manufacturing. As Chavez left office, he left a nation unable to provide for itself.  The situation has not been helped by the economic sanctions put in place by previous US President, Barack Obama, who put these sanctions in place in response to the mistreatment of protestors, citing human rights violations.

This is where we find Venezuela today, and this is the problem that Maduro is trying to solve.

As reported by the BBC, Maduro has said that Venezuela’s cryptocurrency will be backed by the wealth the country holds in oil, gas, gold and diamonds. President Maduro referenced the US sanctions, describing them as a ‘blockade’, but also suggesting that cryptocurrency may be a workaround for imports. Cryptocurrency in the USA is currently unregulated federally and not recognised as legal currency.

However, despite President Maduro’s fervor, Venezuela’s cryptocurrency came under attack immediately. An opposition law maker, Ángel Alvarado, said: “It’s Maduro being a clown. This has no credibility.” They suggested that it would need backing by the country’s national assembly which they doubt will ever happen.

President Maduro has unfortunately not provided any detail on when the cryptocurrency will be launched, making it seem something of a pipe dream.

The scepticism is certainly justified but knowing the value and impact that cryptocurrency can make we certainly hope it will be a success.

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