January 1, 2018 - Venezuela's announcement of the creation of a digital currency placed the country at the forefront of global technology and finance, according to experts in the field.
Petro aroused enthusiasm in the kryptonite investor community and generated different expectations about how the international financial system will evolve.
According to a report published on Telesur's website, David Jaramillo, a computer science engineer and blockchain entrepreneur, said that Venezuela was intelligent and understood one of the main needs in the world of digital assets: to offer a guarantee on natural resources, which implies that the price of Petro will not be linked to the whims and speculation of the market, but will be associated with the value of real assets such as gold, gas, diamond and oil.
He mentioned that new perspectives are opening up to obtain non-conventional sources of financing, to avoid blockades and sanctions from countries such as the United States, as well as to be able to counteract the tensions of inflation and business shortages.
Why Venezuela is at the forefront of cryptomoney. What is the impact of El Petro's certification on our oil reserves, is there another case of cryptomoney backed up? Actual value of El Petro.
The Petro. This cryptomoney is a state creation. It is backed to date by 5 billion barrels of crude oil, and will progressively increase its support level with gold, diamond and gas reserves. Initially, it will be exclusively mined by the Venezuelan State to guarantee its control in an initial issue of 100 million Petros. It will have an initial value associated with the price of Venezuelan crude oil calculated in yuan and will be implemented through Blockchain to make operations transparent and secure. It is launched in the framework of a financial response by the Venezuelan State to strong conditioning factors (US financial sanctions) in its economy.
Avoidance of financial sanctions. At the expense of the White House sanctions against the Venezuelan economy, which severely limit the capacity for financial relations and the use of international banking services for the country, Petro emerges with the potential to consolidate itself in the medium term as a system and mechanism to proceed with the income and expenditure of the Republic, precisely because of the attribute of cryptomoney, to be able to facilitate exchanges of digital assets with exchange value in conventional currencies, without the intermediation of banks.
The measure of the Venezuelan economic directory is clearly exceptional, precisely because it is an exceptional economic circumstance. Consequently the launch of Petro has a high sense of opportunity, audacity, creativity and daring. Venezuela is one of the first States to formally assume this mechanism.
Entry of new currencies through unconventional mechanisms. Carlos Vargas, main responsible for the development of Petro in Venezuela, has pointed out that with the issuance of this cryptoactive and the regularization of the digital mining activity in Venezuela, it is possible to generate between 20 million and 200 million dollars per month, for a period of two years. Revenues that, it is worth saying, are extremely significant for Venezuela once there has been a significant drop in oil prices since 2014.
Reference for the exchange rate. The Venezuelan authorities foresee that the consolidation of the Petro in the medium term could turn it into a reference point for the monetary exchange rate. The Venezuelan real economy is strongly influenced by the parallel exchange rate positioned from the Dollar Today scoreboard, an openly anti-Chávez website that operates from the US. In essence, the chaos in Venezuela's pricing systems, which have pushed the country into hyperinflation, is clearly related to the behavior of this rate.
The Petro as a potential monetary reference resource will be expressed in the exchange value of this digital currency for purchases and payments of goods and services that can be made with it, and that traditionally have been made by the country, in dollars.
Petro opens up space for many Venezuelans who, in the face of the sharp devaluation of the bolivar, have turned to buying dollars at exorbitant parallel rates. They could hide their bolivars in the Petro, a digital asset that may well increase in value, just as many investors around the world do with Bitcoin to avoid the turbulence of the U.S. dollar. Venezuela could even activate a remittance mechanism based on Petro.
Carlos Vargas has insisted that Petro's progress in the economy opens the possibility that, in the medium term, this could be an instrument for the payment of goods and services in the real economy, replacing operations with bolivars, but above all de-dollarizing the price systems in the economy and taking it to relative spaces of stability, containing the effects of the parallel dollar.
