Venezuela on Tuesday became the first country to launch its own cryptocurrency. Within hours on the market, investors bought petro worth $735 million (approximately Rs 4,889 crore), said President Nicolas Maduro, according to AP.
The country’s crude oil reserves – the largest in the world – back the petro. Each coin will be valued at and backed by a barrel of Venezuelan crude oil, Maduro said. “We have taken a giant step into the 21st Century,” Maduro said at the launch. “We are on the world’s technological vanguard.”
The official website for the petro on Tuesday uploaded a guide to set up a virtual wallet to hold the digital currency. The petro goes public next month, Reuters reported.
In December 2017, Maduro had announced his government’s plans to launch the petro to counter the sanctions that the United States imposed on Venezuela after the president won an election that was widely believed to be rigged. The sanctions sent the already crippled Venezuelan economy spiralling even further – inflation soared, food shortages worsened and the value of the bolivar to the US dollar plunged.
Here’s an explainer on why the Venezuelan government turned to cryptocurrency to revive its crumbling economy:
The launch comes at a time the Indian government and its central bank has warned against dealing in bitcoin, the most-preferred cryptocurrency worldwide. So far, virtual currencies have no legal or government backing.
Although the Venezuelan government has warned that the petro is safe, it has yet to release much details on its workings. The Maduro administration said Venezuelans will be able to pay taxes and for public services using petros.
In the first year, the Venezuelan government will release 100 million petros, according to the AP report. The initial 38.4 million went on sale Tuesday at $60 per coin. If investors buy all the initial petros on sale, it could rake in several billion dollars into the cash-strapped government.
Last week, Venezuelan Cryptocurrency Superintendent Carlos Vargas said the government was expecting to attract investors from Turkey, Qatar, the US and Europe, Reuters reported.