NICOLAS Maduro may have survived 2019 – but he will need to shift his dependence on cryptocurrency if Venezuela’s economy wants to thrive, a leading expert has warned.
Petro – a cryptocurrency launched last August and backed by the country’s vast oil reserves – was tentatively seen as a method to circumvent Venezuela’s hyper-inflation.
On a social level, Petro was said to be more trusted than the spiralling Bolivar, as every transaction is transparent and accessible.
Clem Chambers, a cryptocurrency expert and financial journalist, told Redaction News that Venezuela cannot continue to rely on Petro.
He said: “There is insufficient connectivity in any country for digital currency or for that matter online banking to replace ‘fiat’ currency.
“In a collapsing economy that situation would only worsen, so Crypto is not a cure for the day to day demands for currency.”
Petro hasn’t been widely adopted – only 400 Venezuelan businesses accept the cryptocurrency.
However, there is evidence that Maduro’s government will continue to promote its adoption.
On Christmas Day the Venezuelan President dropped 0.5 Petro – the equivalent of $30 – into everyone’s account.
He has also ordered it be used for State Pension payments.
Steven Malca, president of NGO South America Initiative, said: “There is a lot of cryptocurrency going on, but it’s not very open, like you would have in the United States and other countries.
“The [Venezuelan] government hasn’t outlawed cryptocurrency per se, but they prefer people to use something they call the petro.
“In Venezuela, the average internet connection is a quarter of a megabyte or one megabyte at the most.
“People still don’t have access to this type of information and they are afraid to use something that is not tangible.”
Crypto experts agree, however, that until Maduro regains the full trust of his people, Petro will continue to be marginalised and more importantly, distrusted.
The currency has been a flashpoint between Washington and Moscow, with the US Treasury sanctioning Evrofinance Mosnarbank for allegedly financing Petro.
It started as a way to dig Venezuela out of an economic black hole they still haven’t recovered from – but Petro is also a monetary rebellion against the power of the US Dollar.
However, unless it is stringently regulated, trusted and part of a wider uptick in cryptocurrency adoption, Petro may be a failed fiscal throw of the dice for Maduro’s government.
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