The new “sovereign” Bolivar and the oil-backed cryptocurrency Petro will become Venezuela’s two official government currencies by August 20, 2018.
President of Venezuela Nicolas Maduro addressed the citizens through a televised medium. He announced that the government will pay the salaries of the people working in the state-owned oil company Petroleos de Venezuela (PDVSA) in the form of the digital asset. The government of Venezuela will also issue a new compulsory accounting and pricing system pinned to the cryptocurrencies. Launched in February 2018, Petro is built on the NEM Blockchain.
The NEM technology is freely open to any individual or organization that wants to use it. The NEM Foundation abstains from political endorsements. We can confirm that the Venezuela Government is intending to use the NEM Blockchain. https://t.co/Ntl9qIIBCb
— NEM (@NEMofficial) February 21, 2018
However, the government of Venezuela has already pre-mined all the coins. Several analysts have raised concern over the tag of cryptocurrency on Petro. A major reason for this concern is the control of the State Government on it. Moreover, a financial advisory company which analyses, monitors and rates the cryptocurrencies called the coin a fiat currency.
After its launch in the Venezuela markets, the purpose of Petro was to be the helping system of the country’s fiat currency Bolivar. Venezuela is still under hyperinflation and foreign debts of approximately $140 billion even after months of Petro’s launch. Furthermore, the government is printing new sovereign bank notes of Bolivar. Its main intention will be to eliminate the 5 zeros from the Bolivar. As a result, this will reduce the number of cash required to make everyday transactions. The International Monetary Fund has estimated that Venezuela will have an approximate of 18 per cent reduction in GDP. This will eventually make its hattrick of double-digit declines. Moreover, the US President Donald Trump had prohibited American from investing in the Petro. He also claimed that it is designed to bewilder the US Sanctions.