In 2014, oil prices in Venezuela started to plummet, triggering the worst financial crisis in the country’s history with its effects still lingering to this day. The crisis began shortly after the death of president Hugo Chavez in 2013 who was viewed as a hero in the country for drastically improving Venezuela’s economy. The downturn took full effect once Chavez’ successor, Nicholás Maduro, who has been described as a dictator, took power.
If you’ve seen any news lately on the country, you’re no doubt aware of the protests, poverty and civil unrest taking place there. The only glimmer of hope that seems to have made headlines recently is an oil-backed cryptocurrency simply known as Petro.
You might have heard about it towards the end of 2017, but as quickly as it was announced, it seemingly faded out of the news cycle.
Petro Cryptocurrency In a Flash
At its core, Petro (or El Petro as it’s known in Venezuela), is an asset-backed cryptocurrency which is supported by the country’s mineral-rich profile consisting of gold, oil, gasoline and diamonds.
The purpose of the coin was to supplement the crumbling Bolivar Fuerte, which severely depreciated after the 2014 economic crash. The Petro whitepaper initially stated that Petro was built on the Ethereum platform, but a later version stated that the coin had been switched to the NEM platform.
A major hype machine roared on during the pre-launch of Petro, and later on, Maduro claimed that $735 million had been raised for the coin.
So for the most curious among you, you’re probably wondering where this mysterious coin went.
Not Too Far
You haven’t heard much (or anything) about Petro because everything ranging from its marketing and launch to its leadership is covered behind smoke. Few people actually know what’s going on.
We’ll summarize the story in a nutshell.
- On December 3rd, 2017, President Nicolas Maduro announced the Petro coin, explaining that it would be backed by Venezuela’s resources including oil, gasoline, gold and diamonds. He claimed that it would counter the effects of Venezuela’s failing economy and rapidly devaluating Bolivar currency.
- By January 5th, 2018, Maduro announced that 100 million Petro coins would be issued, which would amount to a dollar valuation of $6 billion.
- A pre-sale for Petro began on February 20th, 2018 with an issuing of 34.8 million tokens. It ended on March 19th, 2018. Maduro claimed that this initial release raised $3.3 billion although there are no audits to confirm his claims. Maduro also mentioned that a second issuing of the Petro cryptocurrency was underway
- Just a day after on February 21st, Petro Gold was launched – a gold-backed version of the Venezuela crypto coin
- Following a currency reform in August 2018, Reuters investigated the Petro ICO and found virtually no evidence of the coin’s existence or presence. Investigators couldn’t find an office where the Superintendent of Cryptocurrencies, Carlos Vargas, worked or a credible website.
There are no records of anyone being issued a Petro and even Venezuelans themselves still have no idea where to buy the coin for themselves. The consensus regarding the coin is that it is a scam.
A Lesson Crypto Hype & Value
Unfortunately, the exciting world of cryptocurrencies and blockchain comes with a side of hype, scams, deception and confusion. There are hundreds of coins (and other blockchain applications) which have emerged over the years as non-existent, ineffective or fraudulent despite the hype they garnered. Petro seems to be another one.
It’s unfortunate because the concept of an asset-backed cryptocurrency for a country in economic turmoil seems like a beacon of hope. This especially true for an increasingly desperate population of people who deal with rising poverty.
Let Petro and other coins not worth their salt serve as a lesson to you. A valuable cryptocurrency is worth all the hype it deserves, but hype alone isn’t enough to justify a cryptocurrency’s value. So stay alert and be wary of what you invest in.