Tag Archives: Petro

Cryptocurrency, Interviews

Trump Issues An Executive Order to Ban the Venezuelan Petro

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(Dash Force News) Donald Trump has issued an executive order to ban all cryptocurrencies issued “by, for, or on behalf” of the Venezuelan government by a “United States person or within the United States”.

“All transactions related to, provision of financing for, and other dealings in, by a United States person or within the United States, any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018, are prohibited as of the effective date of this order.”

The executive order is a follow up to the sanctions that were placed on Venezuela by the US this past December since the Petro was seen as a work around by the Maduro regime. The action echos the US Treasury Department’s previous statement that advised investors to avoid the Petro, which called it “another attempt to prop up the Maduro regime, while further looting the resources of the Venezuelan people.”

[RELATED: Venezuela’s Government-Backed Petro Faces Obstacles, Scrutiny]

The Petro, pre-sale launched on February 20, was proclaimed to be backed by oil from the country and thus many saw the Petro as a de facto oil future rather than a cryptocurrency. However, the democratically elected body of Venezuela have already called the Petro illegal. In addition, many have called into question the cryptocurrency’s decentralized nature since a majority of the Petro seems to be in a few wallets and many suspect that most buyers were governmental agencies.

Fallout for other cryptocurrencies and the Venezuelan people

This move by the US President is the first major national decision by the US to ban a cryptocurrency. The executive order, which allows the president to act unilaterally, specifically mentions cryptocurrencies that are “by, for, and on behalf” of the “Government of Venezuela” so it does not appear to be an immediate threat to other cryptocurrencies.

The executive order does, however, beg the question if the same action can be extended to other more open cryptocurrencies that may be adopted by the Venezuelan government. Even if this becomes the case, the effect on Venezuelans would still be minimal, as long as the cryptocurrency is properly structured. The USD exchange price would most likely plunge, but Venezuelans will still be able to use said crypto within their country, free of governmental manipulation, and use decentralized exchanges to exchange into other cryptocurrencies when they want to trade within another country that initiated a ban.

For the time being, the Petro seems to only serve the interest of the Venezuelan government rather than the citizens of the country who use Bolivars, USD, and other cryptocurrencies. Thus the citizens of Venezuela should not suffer much from this ban since Venezuelans are utilizing other cryptocurrencies to escape the terrible policies of their government.

Dash is on the ground and improving lives in Venezuela

Dash is continuously increasing its presence within Venezuela, most recently seen in the Dash Caracus Conference, which had such a large influx of attendees that a second overflow conference was held. Then while governments place sanction on the Maduro regime in an attempt to weaken it, the Dash community is volunteering to give direct aid to Venezuelans by donating Dash. Venezuelans have seen their currency suffer from over 2,500% annual inflation and their economy destroyed by a corrupt and ignorant government. Nevertheless, Venezuelans refuse to let external factors stop them and are using Dash to provide real alternatives that better their lives.

Creative entrepreneurs are using Dash to restart their economy. Citizens are using Dash to purchase goods and services, while also maintaining the value of their currency better than the Bolivar. Each Dash Caracus Conference holds a Dash City (Ciudad Dash) to sell goods from local entrepreneurs and the most recent one had 53 vendors. This everyday use of Dash to solve real world problems leads to even greater adoption and a stronger user base, which will further contribute to Dash decreasing its volatility when compared to other cryptocurrencies.

 

Written by Justin Szilard

Blockchain, Cryptocurrency, Technology

Venezuela’s Government-Backed Petro Faces Obstacles, Scrutiny

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For years, Venezuela has been on a path of increasing economic turmoil. Suffering from one of the most notable economic collapses in modern times, the country faces mounting debt and hyperinflation, rigged elections, and weakened opposition to those in power while citizens are suffering from hunger and violence.

President Nicolás Maduro’s solution is launching the first government-backed cryptocurrency, the petro, which claims to be backed by oil and reportedly raised $735 million in its pre-sale last week. Each token is said to be backed by one barrel of oil. According to Fortune, the petro appears to be a ploy to raise money to get around sanctions placed on Venezuela, which prevent the country from issuing bonds and securities in the U.S. financial market. The Treasury Department noted that “U.S. persons that deal in the prospective Venezuelan digital currency may be exposed to U.S. sanctions risk.”

Controversy has ensued around the petro cryptocurrency from inside and outside Venezuela, with critics claiming that the petro isn’t actually a cryptocurrency. Opposition leaders have described the petro as an “illegal debt issuance that circumvents Venezuela’s majority-opposition legislature,” according to Reuters.

The Guardian reported that lawmaker Jorge Millan said that the petro “is not a cryptocurrency” but rather a “forward sale of Venezuelan oil.”

One standout issue is the discrepancies within the white papers released by the government regarding which blockchain the petro will rely on.

Leading up to the pre-sale that launched on February 20th, the pre-sale was said to “consist of the creation and sale of an ERC20 token on the [blockchain] of the ethereum platform. This process will promote and guarantee demand for the petro Initial Offer, which will be made later.” Ars Technica reported that by February 21st, “all mentions of ERC20 had been scrubbed from the white paper. A new version of the paper stated that the presale will ‘consist of the creation and sale of smart-asset on the NEM blockchain platform.'”

Another issue focuses on the reported $735 million in initial coin offering raised, which would put them in the top three valuations for Initial Coin Offerings, or ICOs. Reports indicate that all of the petros held are on three addresses and all transfers have been to one address.

“You have to be really naive to believe the government has in fact sold any petros because the blockchain shows all 100 million petros are still controlled by one address,” software designer Alejandro Machado told Florida’s WLRN Public Radio. WLRN noted that this address belongs to the Venezuelan government.

This suggests that the initial coin offering figure has been manipulated and that the petro hasn’t actually raised any funds.

It’s been noted that the petro also contradicts the very core of cryptocurrencies— decentralization— due to its attachment to the Venezuelan government; instead, it’s more of a digital token under government control that claims to be backed by oil.

As Ars Technica reported:

The Venezuelan government has portrayed petro tokens as backed by Venezuela’s vast oil reserves, but they’re not. The government is merely promising to accept tax payments in petros at a government-determined exchange rate linked to oil prices. Given the Venezuelan government’s history of manipulating exchange rates, experts say investors should be wary of this arrangement.

Chris Burniske of venture capital firm Placeholder told Bloomberg that “the petro is really a top-down hierarchically controlled asset, and it’s much more akin to a new way to tokenize oil.” Burniske added that “with the petro, we really have a new wrapper around oil.”