Venezuela needs to look away from cryptocurrency, expert warns

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.”

Credit: Pixabay

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.”

Credit: Marko Verch ( https://www.flickr.com/photos/160866001@N07/48278102527 )

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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