Less than one month after announcing the development of a natural resource-backed cryptocurrency, Venezuelan authorities are reportedly set to launch a criptomoneda dubbed the "Petro."
According to Venezuela's communications minister, Jorge Rodriguez, the Petro will be backed by 5.3 billion barrels of oil – equivalent to approximately $267 billion. For comparison's sake, at the time of publication, the market cap of bitcoin is approximately $248 billion.
Rodriguez explained, "Camp one of the Ayacucho block will form the initial backing of this cryptocurrency." The Ayacucho block is located within the southern Orinoco Belt, which overlies the largest deposits of petroleum in the world.
While the most popular cryptocurrencies are based purely on social value, the Petro is an asset-backed cryptocurrency – though the circumstances of the state-owned company allocating the oil might be suspect. As the New York Times reported in late November, Venezuelan president Nicolás Maduro recently appointed a general with no energy experience to lead Petróleos de Venezuela, S.A. (PDVSA).
To make matters more troubling, few – if any – technical details have been provided about how the Petro will actually function.
Which blockchain will it operate on? What sort of settlement mechanisms are in place? And, more pressingly, what happens if the country fails to pull off this feat?
Nonetheless, Rodriguez claimed that miners are already lined up – even after the governmental crackdown on mining of bitcoin and other non-fiat cryptocurrencies.
"It will be materially impossible for the dictatorial financial centers of the world to intervene against this initiative," said Rodriguez. The Petro "will allow us to overcome any financial blockade."
Despite his optimism, earlier this month opposition legislators decried the Petro. Politician Angel Alvarado said, "It's Maduro being a clown. This has no credibility." Fellow opposition legislator Jose Guerra agreed, saying "I see no future in this."