Venezuela, the South American country which suffers from hyperinflation, plans to issue ‘Petro’ – an oil-backed state cryptocurrency. President Maduro claimed that ‘the 21st century has arrived’ for Venezuela.
Wow. Will it replace local currency?
Too soon to judge. Although the Bitcoin adoption is quite high among people of Venezuela, and they greeted the announcement, the cryptocurrency may require the approval from Congress.
Why is it important?
Firstly, digital currency might have a real social impact here, as the country’s economy is struggling. Bolivar, the fiat currency of Venezuela, is in decline – partly due to the U.S. sanctions. According to Maduro, cryptocurrency will help the country to overcome a financial blockade.
What can we learn from it
- As Venezuela stated a very clear reason for launching a state cryptocurrency, it’s only a matter of time for other countries currently under any sort of sanctions to follow. Digital currencies in that case have an advantage to be non-regulated in quite a lot of countries.
- It’s still unclear what will happen to Bolivar – and how the government plans to actually tie a new currency to oil reserves.