Venezuela’s economic situation has become very concerning for the international community.

Inflation has reached a dangerously high level in the South American country. Therefore, many were surprised when Nicolas Maduro’s government decided to create a new fiat currency called the “sovereign bolivar” and backed it up with a cryptocurrency called the “petro.”

The petro has gathered international attention. The cryptocurrency does not trade, and it is being used by the nation to mortgage its own oil reserves. Both experts and the country’s parliament have stated that the petro is illegal by its very nature.

The cryptocurrency was first announced in February. Venezuela’s president stated that each petro token would be backed by either a barrel of the country’s petroleum or other natural resources.

Even the crypto rating site ICOindex.com has stated that the petro is currently in “scam status,” meaning that “[the currency’s] technology and mechanisms to do so are not adequately explained.”

Some have even questioned the legitimacy of President Maduro’s claims about the currency.

Maduro wrote in a tweet that Venezuela has earned $735 million due to the petro’s initial coin offering, yet there has been no confirmation or proof that his statement is true.

In other measures to ease the country’s growing inflation, Maduro has stated that he will equal the country’s wages, prices, and pensions to the petro. This would be equivalent to sixty dollars or thirty-six hundred sovereign bolivars. The sovereign dollar bills will contain five fewer zeros than the previous currency. It is still if these measures will ultimately be beneficial for the country, as the International Monetary Fund recently declared that Venezuela’s inflation could reach one million percent by the end of the year.

Many people are already hypothesizing that the petro will not last long.

 

 Featured Image via Wikimedia Commons.