Crypto Frontline

February 21^st 2018 was the day Venezuela launched its own cryptocurrency, “El Petro”, opening the road for a new approach in terms of cryptocurrencies, being the first digital coin which is backed by oil. At that time the news coming from the mouth of Venezuelan President, Maduro, suggested that $735 million had been raised in the pre-sale, with investors from Russia, Saudi Arabia, France, Germany and the United States among many others.

Some lawmakers do not agree with Maduro

According to Coindesk, Asamblea Nacional, a group of politicians that are assumed to be at odds with the President, declared the newly-created cryptocurrency to be unconstitutional. Also, they claimed that El Petro could be a treat to all investors, raising concerns whether the coin will turn out to be a scam, like many other cryptocurrencies.

The issue, as the group said, is the fact that the government will make businesses and retirement accounts to accept the newly created cryptocurrency. Venezuela’s economy had gone through a profound depression in the last few year, recording inflation of more than 100% on a yearly basis.

Due to that fact, the current national currency, the Bolivar had lost most of its value. The current move with the cryptocurrency is assumed to be just a scheme used by the government to replace the already-depreciated currency with an oil-backed digital coin.

Foreign analysts are skeptical about the cryptocurrency, due to the high level of corruption seen in the country. However, we cannot deny that Venezuela own huge amounts of oil reserves. Since El Petro is backed by oil, investors have the possibility to buy a digital currency that is backed by a commodity. Also, its price won’t be influenced by the supply/demand fluctuations, which can be seen currently in the case of the other cryptocurrencies.

It will be interesting to watch if the cryptocurrency will turn out to be a reliable one. Since the government will force companies and people to accept it as payment, the most likely scenario is that we will assist to a situation in which the government will praise a cryptocurrency implemented by force.