[2018-08-20] Crypto is Taking Over Venezuela

[gentlemand]

https://www.newsbtc.com/2018/08/20/crypto-is-taking-over-venezuela-due-to-the-countrys-destroyed-fiat-system/

Some interesting titbits in this article such as the government regularly running TV ads for the Petro. Today is the day it supposedly launches. Will it become an object lesson in how creative thinking can turn things around or more ammo for the anti crypto brigade?

[Betwrong]

Actually it's understandable why do Venezuelan people ignore Petro commercials on TV and elsewhere and don't want to buy Petro although Venezuelan Bolívar is depreciating right in front of their eyes. The thing is that if the President Maduro does not win the next election it is most likely that Petro will become worthless in no time. Maybe Venezuelan people are way more interested in the animal lottery, as the article puts it, but I think that they are more interested in buying hard currencies and precious metals, although buying lottery tickets is probably still better than buying Petro.

[Harlot]

Such ashame that the government of Venezuela have set aside their own fiat currency in favor of their own cryptocurrency this is what a irresponsible government looks like they cannot even save their own fiat currency on inflation. Their money is so worthless that they are actually making bags out of it in order to sell it into more of it hoping they can buy some food in return. I think they really have brought down their own country this time. I just hope other countries would learn from their mistakes.

[cr1776]

https://www.newsbtc.com/2018/08/20/crypto-is-taking-over-venezuela-due-to-the-countrys-destroyed-fiat-system/

Some interesting titbits in this article such as the government regularly running TV ads for the Petro. Today is the day it supposedly launches. Will it become an object lesson in how creative thinking can turn things around or more ammo for the anti crypto brigade?

It will become an object lesson in how authoritarian socialist (or fascist or communist etc) regimes can't even do crypto right - a centralized crypto is as worthless as centralized fiat.  

Who in their right mind will trust the Venezuelan government to keep the value of their crypto tied to a certain amount of petro?  They couldn't even keep their fiat currency close to stable.

If the Venezuelan government really cared about their people, they would all resign, and give the people of Venezuela the freedom to use bitcoin or any other crypto or any other currency they want.  But they want power for themselves no matter the cost to the people of Venezuela.

It is a lesson in how to destroy a country by having a majority of the people vote themselves into the slavery of socialism.  There is no free lunch.

[d5000]

The Petro can only work if the government achieves credibility - that people accept the peg between a Petro and the asset which "backs" it, in this case, petroleum barrels.

I am very pessimistic here. Maduro and other PSUV officials are suspected to have stolen about $350 billion with corrupt practices from the State - or better: the Venezuelan tax payers. It's very likely that some official in charge, if not Maduro himself, would try to achieve a private profit from the Petro. So I guess the project will fail.

I consider the "Petro experiment" nevertheless interesting because it's the first state-issued crypto, but in general terms it can be well compared with our well-known ICOs and other shady crypto "investments". Paycoin, another project with a failed "peg", came into my mind.

So I pretty agree with cr1776 that "centralized cryptos are worthless". If Maduro's government was credible, they could have also realized the project with a simpler client-server architecture.

[squatter]

Some interesting titbits in this article such as the government regularly running TV ads for the Petro. Today is the day it supposedly launches. Will it become an object lesson in how creative thinking can turn things around or more ammo for the anti crypto brigade?

This last-ditch effort seems fundamentally problematic. Even if we assume the Petro will track oil prices, oil is a highly volatile commodity. People could see their wages change 10-20% from month to month.

More importantly, as d5000 points out, this is an issue of credibility. We really can't assume the Petro will track oil prices because its issued and backed by the same corrupt government that backed the dying bolívar to begin with.

[ovbokhan]

Venezuela is really crypto-crazy, making a case for a possible bitcoin use as part of national currency, Venezuella also pegged the minimum wage as half a Petro

[Aikidoka]

I really do not get it. Why is it a bad thing when you develop your own cryptocurrency and make it become the second official currency? It would actually encourage people to buy that particular cryptocurrency, thus the demand will increase, thus the price will grow. And especially when it is made by the government. But still there are many Venezuelan people who still do not know about crypto yet. So I think this is a good chance to get introduced to it.

[cr1776]

I really do not get it. Why is it a bad thing when you develop your own cryptocurrency and make it become the second official currency? It would actually encourage people to buy that particular cryptocurrency, thus the demand will increase, thus the price will grow. And especially when it is made by the government. But still there are many Venezuelan people who still do not know about crypto yet. So I think this is a good chance to get introduced to it.

It is bad because it is a crypto developed by a centralized, authoritarian, socialist dictator. This gives you no benefits over fiat because the same crooked people who enslaved and robbed  the people of Venezuela are the ones in control of this crypto. They might as well use a database but saying “crypto” gives them a buzzword to use to fool people.

The petro it is a centralized monopoly in the government and they have essentially complete control over it.  Forget worries about a 51% attack, they have essentially 100% and can change the protocol or peg at their whim.

Anyone who “invests” is asking to lose everything if they don’t get out before the other shoe drops.  The Petro can only work if the government follows through on its promises and their promises have been at root nothing except a promise to destroy Venezuela and enrich themselves by creating a "socialist utopia."

If Venezuela wanted to help people, let them use bitcoin or some other independent currency.

[squatter]

I really do not get it. Why is it a bad thing when you develop your own cryptocurrency and make it become the second official currency? It would actually encourage people to buy that particular cryptocurrency, thus the demand will increase, thus the price will grow.

I'm not sure on the official definitions, but centralized tokens issued on blockchains don't seem like cryptocurrency at all. If issuance and redemption is centralized (as ICO offerings are), there is no functional difference here between the Petro and sovereign bolívar. Both are backed only by the credibility of the Venezuelan government. Both can be drastically devalued whenever the government wants. And who even knows if the Petro supply has any real relationship with Venezuelan oil assets?

This reeks of desperation and corruption.

[Leyss]

I really do not get it. Why is it a bad thing when you develop your own cryptocurrency and make it become the second official currency? It would actually encourage people to buy that particular cryptocurrency, thus the demand will increase, thus the price will grow. And especially when it is made by the government. But still there are many Venezuelan people who still do not know about crypto yet. So I think this is a good chance to get introduced to it.

I also believe that it is necessary to give a chance to different variants of using absolutely different types of crypto currency. As a result, we do not yet know what the wide adoption of the centralized El Petro can lead to. Let the experiment. What this will lead to, it will be possible to see after many years. Ideal conditions for the development of centralized crypto currency will never be. No government is honest and without corruption.

[d5000]

If issuance and redemption is centralized (as ICO offerings are), there is no functional difference here between the Petro and sovereign bolívar. Both are backed only by the credibility of the Venezuelan government. Both can be drastically devalued whenever the government wants. And who even knows if the Petro supply has any real relationship with Venezuelan oil assets?

If they're smart (which I doubt) then they could enable a mechanism to gain trustworthiness:

- Let an independent actor (or several independent actors) estimate the oil production
- Publish these estimations at least for every week or month
- Issue Petros only for the amount of oil produced. If the total production is less than the Petro supply, then don't issue any new Petros until the relation 1 Petro = 1 barrel becomes true again.

But I doubt they would allow an independent institution estimate oil production. The most likely scenario is that they would use "official" PDVSA data - which may be (and is likely to) be corrupted.