Venezuela Launched Cryptocurrency ‘Petro’

IAS Prelims 2023

Venezuelan President Nicolas Maduro has launched the digital currency to circumvent U.S.-led financial sanctions.

He launched the cryptocurrency “petro” backed by oil reserves to shore up a collapsed economy. It is backed by oil, gas, gold and diamond reserves.

The ‘petro’ would help Venezuela advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.

Ironically, Venezuela’s currency controls in recent years have spurred a bitcoin fad among tech-savvy Venezuelans looking to bypass controls to obtain dollars or make internet purchases.

Currency controls and excessive money printing have led to a 57 percent depreciation of the bolivar against the dollar. That has dragged down the monthly minimum wage to a mere $4.30.

As mentioned above, cryptocurrencies are helping the people of Venezuela circumvent the government’s restrictions. With bitcoin and dash, for example, it’s possible to buy gift cards and use them on online marketplaces like Amazon to buy goods from abroad.