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Venezuela Launches Cryptocurrency ‘The Petro’ – Here Is The Manual

"Petro (PTR) has its origin in the idea of president Hugo Chavez"...

You know, it’s hard to know where to start when it comes to lampooning this crazy shit, but suffice to say that Venezuela has finally launched its own cryptocurrency (“the petro”), a desperate move to try and capitalize off the global crypto craze on the way to staving off economic catastrophe.

This boondoggle has been in the works for months and we profiled it back in early December. For those interested in the backstory you can read it here.

Last night, Maduro announced that the government was set to publish “the manual for acquiring and commercializing the petro cryptocurrency” at midnight.  

 

Here he is, dressed in his favorite Sopranos-style track suit, announcing the publication of the manual:

 

That guy to his left is VP Tareck El Aissami, the OFAC-designated drug trafficker, who Maduro hilariously put in charge of restructuring the nation’s debt late last year, an effort that culminated in a literal pancake breakfast at Palacio Blanco.

El Aissami was in charge of publishing the petro manual because why the fuck not, right? There’s something that just seems “right” about a known blow trafficker publishing the bible for a cryptocurrency.

Last week, Venezuela’s “crypto superintendent” Carlos Vargas claimed the country will get investments from Turkey, Qatar, the U.S. and Europe. Ok, Carlos.

Obviously no one takes this seriously. This is Maduro trying to figure out a way around U.S. sanctions and keep the country from imploding entirely at a time when hyperinflation is driving the cost of a cup of coffee up at an annualized 448,000%:

ConLeche

“Venezuela has been known for misappropriation of assets in the past and the central bank has just created hyperinflation so I imagine there’ll be trust and transparency issues [with the petro]”, Harry Colvin, director and senior economist at Longview Economics, told CNBC ahead of the cryptocurrency’s launch.

As a reminder, the petro is supposed to be backed by oil. Given how poorly the country has managed its massive reserves, it might inspire more confidence if they just backed each coin by an ounce of El Aissami’s finest Colombian coke.

Anyway, we’ll have more on this later, but for now we’ll just leave you with the white paper (released earlier this month) and the manual, both of which are all kinds of hilarious. Note this from the white paper:

Petro (PTR) has its origin in the idea of president Hugo Chavez.

Manual

White paper

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1 comment on “Venezuela Launches Cryptocurrency ‘The Petro’ – Here Is The Manual

  1. If indeed the plan is to back the Petro, partly or in whole, with “oil reserves” (“proven or otherwise), it will fail. Real money is a current liability of its issuer, with a maturity of zero, like bank deposits that are payable on demand. This applies whether or not the money is actually redeemable. The problem with oil reserves as an asset for backing money is that they are notoriously illiquid and their valuation is arbitrary, wholly dependent on complex accounting and tax conventions. When demand for this Petro falls, and the exchange rate drops below the price of oil, the issuer must be prepared to reduce the amount in circulation, which requires they have the wherewithal to buy some, maybe a lot, of it back. At that point, the insolvency of the issuer is exposed – the fact that the market value of their assets, the amount that can realized in a timely fashion, is insufficient to buy back the money. The prospects for this issuer, who is insolvent to begin with, are poor. The Oilcoin scheme being proposed in the US is little better. Portions of their proposed asset portfolio would be comprised of petroleum futures products and also some cryptocurrency balances. All are a set-up for asset portfolio dropping too much for liabilities to remain at parity with spot oil, i.e, issuer insolvency. The only safe way to back a token tied to oil price is to hold a 100% reserve of actual physical above-ground petroleum products. But that would be excessively expensive to store and potentially disruptive to oil production and supply chain. For a commodity backed money, oil – a bulky and consumed commodity – is the wrong choice.

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