How exactly wil government owned crypto work?

[Ucy]

In the news today:
Venezuela's President Announces 'Petro' Token Pre-Sale

— Seems the so called "Petro" token will be tied to the price of Oil? 1 Petro = 1 barrel of Oil ?

— But Cryptocurrencies are meant to be deflationary?

— What happens when a Petro token goes up in price?  A barrel of oil(or maybe a barrel of Venezuela oil?) goes up too?

— Or will the government artificially control the prize of Petro to keep it stable.

— What then will people gain from investing in Petro.


Government involvement in Cryptocurrency is dangerously corrupting it just like they are ruining the World with so much power and rascality.

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[d5000]

There are already cryptocurrencies that are operating in a similar way than the Petro. The most well-known example is Tether. How they maintain the peg? Well, most likely like Tether does it: if there are more barrels created, then the government "prints" new Petros.

Now what would be really interesting - and what I would still need to investigate - is what exactly is pegged to the Petro. The news articles say there is a 1:1 peg (1 barrel = 1 Petro). From my uninformed point of view, that would only be sustainable as long as the oil production is at least stable (or growing). What happens if the reserves decrease so oil production must be decreased, too? Could the government "burn" Petros? Would there be a kind of demurrage (like in Freicoin)? Or would they operate a fractional reserve?

An increase of the Petro's value with respect to the barrel is pretty unlikely and would be corrected fast because it would be a pretty safe bet for short-sellers (like it happens with Tether).

I don't consider "government cryptos" really dangerous but for me they are pretty pointless. They could as well establish a traditional, centralized e-money system (think of a "government-run PayPal") pegging the token to the petroleum price. So I'm suspecting that Maduro is only trying to jump (a bit late) on the "crypto train" to get more attention for the project than it deserves.

[cynical]

There are already cryptocurrencies that are operating in a similar way than the Petro. The most well-known example is Tether. How they maintain the peg? Well, most likely like Tether does it: if there are more barrels created, then the government "prints" new Petros.

Now what would be really interesting - and what I would still need to investigate - is what exactly is pegged to the Petro. The news articles say there is a 1:1 peg (1 barrel = 1 Petro). From my uninformed point of view, that would only be sustainable as long as the oil production is at least stable (or growing). What happens if the reserves decrease so oil production must be decreased, too? Could the government "burn" Petros? Would there be a kind of demurrage (like in Freicoin)? Or would they operate a fractional reserve?

An increase of the Petro's value with respect to the barrel is pretty unlikely and would be corrected fast because it would be a pretty safe bet for short-sellers (like it happens with Tether).

I don't consider "government cryptos" really dangerous but for me they are pretty pointless. They could as well establish a traditional, centralized e-money system (think of a "government-run PayPal") pegging the token to the petroleum price. So I'm suspecting that Maduro is only trying to jump (a bit late) on the "crypto train" to get more attention for the project than it deserves.

I agree, I wouldnt have regarded regulated and centralised cryptos as dangerous,
no more than FIAT is to our crypto we use here.

I am not sure why they would peg their crypto to Oil though,
especially at a time when most countries are trying to reduce their dependence on fossil fuels etc. ?

Anyway to answer the question of the thread title, any government is free to set up their own crypto and regulate and control it as they see fit!
this is my very simplified view on it,
but lets not start a panic now because our crypto will still be decentralised as it is now.

[Murloc]

In the news today:
Venezuela's President Announces 'Petro' Token Pre-Sale
— Seems the so called "Petro" token will be tied to the price of Oil? 1 Petro = 1 barrel of Oil ?

Doesn't matter.

— But Cryptocurrencies are meant to be deflationary?

World can run out of oil and the coin will deflated Just don't take it serious. Think again about the concept of the coin. if it is backed by the oil then there should be a concidered amount of oil stored in reserves that back your coin. I don't think that this gona happen. So if they sell too much oil then there won't be enough to back coins = they stole the value of your oil coin.

— What happens when a Petro token goes up in price?  A barrel of oil(or maybe a barrel of Venezuela oil?) goes up too?

Petrocoin price = Oil price. I think it means that you won't be able to influence on the price while buying / dumping the coin. It is like tether but much worse.

— What then will people gain from investing in Petro.
 

They won't. Petrocoin will lose its value faster than bolivar and tether combined. Naive investors will only lose their money. If you want to trade oil then do it through the forex broker and you will be safe.

[Nakaba]

There are already cryptocurrencies that are operating in a similar way than the Petro. The most well-known example is Tether. How they maintain the peg? Well, most likely like Tether does it: if there are more barrels created, then the government "prints" new Petros.

Now what would be really interesting - and what I would still need to investigate - is what exactly is pegged to the Petro. The news articles say there is a 1:1 peg (1 barrel = 1 Petro). From my uninformed point of view, that would only be sustainable as long as the oil production is at least stable (or growing). What happens if the reserves decrease so oil production must be decreased, too? Could the government "burn" Petros? Would there be a kind of demurrage (like in Freicoin)? Or would they operate a fractional reserve?

An increase of the Petro's value with respect to the barrel is pretty unlikely and would be corrected fast because it would be a pretty safe bet for short-sellers (like it happens with Tether).

I don't consider "government cryptos" really dangerous but for me they are pretty pointless. They could as well establish a traditional, centralized e-money system (think of a "government-run PayPal") pegging the token to the petroleum price. So I'm suspecting that Maduro is only trying to jump (a bit late) on the "crypto train" to get more attention for the project than it deserves.

If you think government ICO cannot be trusted, better stay out of it. But if the coin they create has a limited supply, I think it is worth the risk. But if you think this government is corrupt, better stay out of it and look a better alternative altcoin.

[Kola]

So now ppl will choose county to live/work where they can be more legit with crypto for sure,
for example Barbados looks friendly for crypto punks, look the 10 reasons to be there:

1. Our people are amazing and are welcoming. It's a fact that Barbadians will make you feel at home.

2. Our taxes for International Businesses fall under 2% for corporations. We are not a tax haven and taxes still apply.

3. There is no capital gain tax. None.

4. There are already a ton of blockchain companies establishing on the island and actively setting up their show or a service. Bitt.com, Polymath, AION, Ethos and IOHK to name a few.

5. Both sides of our government support the technology and more support to come in the form of modern legislation, regulatory sandboxes and whitelists programs.

6. Barbados is a tropical paradise with direct flights to the world's major cities. It's beautiful here and the life can be amazing on island.

7. Barbados has more double tax treaty agreements with more nations than any other in the world making us ideal for your tax optimization on international business. (This includes China and Canada!!!!!)

8. Barbados is the first nation in the world to be completely covered in fiber optics and the internet connectivity is great.

9. You have an active blockchain movement and will get support from those pushing the same agenda.

10. Our people need the jobs and they are highly skilled in the fields of finance, legal and tax. The cost of staffing locally is 1/3 of that in America or Canada and we speak English as a first language.

[rezurect]

It will work like all government owned things work, manipulated in their own favor.

[Theonethatgotaway]

This virtual token we all call bitcoin is one of the hundred coming product of the modern technology ruled and used by people with power and niche who can likely control its movement and generation. With these the government may encounter troubles in owning or adopting such sheme, starting in Japan where they are now trying to overview this crypto currency exchange in the country but there's a conflict with setting rules and laws by the authorities  regarding to the application of the new currency scheme. It may create complications to the money cycle around the world if rules are not propely set and implemented.

[GrannyC]

In the news today:
Venezuela's President Announces 'Petro' Token Pre-Sale

— Seems the so called "Petro" token will be tied to the price of Oil? 1 Petro = 1 barrel of Oil ?

— But Cryptocurrencies are meant to be deflationary?

— What happens when a Petro token goes up in price?  A barrel of oil(or maybe a barrel of Venezuela oil?) goes up too?

— Or will the government artificially control the prize of Petro to keep it stable.

— What then will people gain from investing in Petro.


Government involvement in Cryptocurrency is dangerously corrupting it just like they are ruining the World with so much power and rascality.

IMO a government crypto is not a true Crypto, just as a centralised crypto is not a crypto. By being managed by a government, the main benefits of trustless transaction, limited or fixed supply are lost, and only the speed and ubiquity of the transaction remain, making it no different from any fiat currency.

BTW not all cryptos are strictly deflationary.

[d5000]

IMO a government crypto is not a true Crypto, just as a centralised crypto is not a crypto. By being managed by a government, the main benefits of trustless transaction, limited or fixed supply are lost [...]

Your post made me think about a funny scenario. What if Venezuela launches the Petro ... and there's a community takeover?

If the Petro is a real cryptocurrency with a blockchain like we know (and it seems so), then also hard-forks are theoretically possible.

Now imagine that the government takes a measure that is not popular among users (like a "demurrage", or a higher inflation rate). Now two scenarios could happen:

1) The change is implemented as a hard fork. A group could then simply continue to use the old client, and the change would not come into effect for them.
2) The change is implemented as a soft fork, or by another mechanism not requiring a hard fork (e.g. the government has some kind of "master key" to change certain parameters). A group could then develop a "hard-forking client", like Bitcoin Cash did, and we had a "community version" of the Petro with the old parameters.

The government, obviously, in theory could use a proprietary software license to forbid forks. But even in this case the client could simply be implemented in an alternative way. So the only way to forbid forks would be laws outlawing forks - and even then, Venezuelans could use clients from developers from other countries that forked the coin.