Venezuela has begun to swap payments of old-age pensions, converting them from bolivars into the national oil-backed cryptocurrency, Petro (PTR).
According to popular politics and economics blog Caracas Chronicles, the government just took the pensioners’ monthly payments in December and automatically converted them into Petros without the consent of the recipients.
On December 7, Venezuela’s elderly residents got messages notifying them that their money was automatically withdrawn from their web fiat wallets and changed into the cryptocurrency, the publication said.
The socio-economic and political crisis that has been wreaking havoc on oil rich Venezuela since 2010, coupled with low oil prices starting from 2015, has generated hyperinflation on an enormous scale, rising to 500,000% in September 2018, and likely to reach 1,000,000% by the end of 2018. In response to its economic woes and hyperinflation, on February 20, 2018 the Venezuelan ‘Petro’ was officially born.
Usually, a pensioner receives their monthly sum in bolivars, shift the funds to a bank account, and withdraw the fiat from a local branch, the blog explained. However, the government apparently converted residents’ bolivars to petros after sending the funds.
Notably, this conversion happened after the government first sent the payments in fiat to residents’ web wallets, meaning the Venezuelan government sent pensioners their funds, withdrew them and replaced with an equivalent value of petros.
How pensioners would be able to use their unrequested petros is still unclear, as they are not generally accepted. However, it seems to be possible to convert them back to bolivars via a complex process. To make matters worse, the value of the petro relative to the bolivar is unstable, rising from 9,000 to more than 15,000 over the course of a few weeks.
That process normally goes like this: people receive the message, they go to patria.org.ve, they transfer the money to the bank, and then they spend all day at the bank trying to withdraw the money.
That webpage, patria.org.ve, is one of the most visited sites of Venezuela, only toppled by Facebook, Google, YouTube and Banesco.
Initiatives to Secure Full Control Over Citizens
The page shows a new option now: “Savings Plan”. It has a little piggybank and everything. Now you can exchange your bolivars for petros and supposedly protect them from the hyperinflation the government provokes. It seems like they were so proud of the new function, that they automatically converted people’s money to petros.
Chronicles Caracas claims both the Patria and Petro initiatives are a bid to secure “full control over citizens’ finances,” and impel them to save Petros as “protection” from the hyperinflation the government itself “provokes.”
The official sale of Petro in Venezuela started this November, with several top officials — including Maduro — purchasing it via the official website. As of press time, the currency is not yet available on any of the top-100 crypto exchanges on CoinMarketCap.
Last week, Venezuela’s President Maduro has said the nation will sidestep the U.S. dollar and phase in use of its controversial petro token for oil sales starting next year.
According to a report from state-run media network TeleSUR on Thursday, Venezuela’s President Maduro said that the move is aimed at minimizing the dollar’s dominance in the industry and diversifying the global market.
Maduro was quoted as saying to the press:
“In 2019, we have a schedule for [oil] to be sold in petros and in this way continue to free us from a currency that the elite of Washington uses.”
The Petro’s relationship to Venezuela oil assets is important for the energy community not only due to its implications concerning Venezuelan oil reserves and infrastructure, but more so because this new type of ‘currency’ might be replicated by other raw-material dependent countries. They might do so to ‘mortgage’ their natural reserves to obtain financing by the sale of a raw-material pegged cryptocurrency.
Much uncertainty accompanies the Petro and for very good reason. Hence, the aim of this paper is to present an academic analysis of the Petro. We discuss a number of critical aspects of it, including an examination and clarification of its legal status, the regulatory regime is it subject to, the nature of the Petro (a currency or a debt), its relation to the future of energy markets, and risks associated with this creative measure.
Coinbase Helping Venezuelan Families With ZCash
We already wrote of how Coinbase dedicated a day exclusively to Venezuelan crisis. Donation will also get to support GiveCrypto.org’s project in the Venezuelan border town of Santa Elena de Uairen. With that gift, the organization will put $1 USD worth of crypto directly into the crypto wallets of more than 100 families in Santa Elena every day for 3 months.
With that, recipients will be able to purchase food and basic supplies at a local store that accepts payments in crypto, subsidizing everyday expenses. Just for example, the $1 USD equivalent per day can buy 1–2 kilos of protein or 2-kilos of starches and vegetables. Recipients will come from the networks of Venezuelan families already in GiveCrypto.org’s program with Bonnum.