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Hyperinflation has been and remains Venezuela’s main problem. Under the Maduro regime, locals have felt particularly strongly about the rapid depreciation of the bolivar. The tense political situation with the United States and a number of other countries triggered a wave of sanctions, which added fuel to the fire, significantly raising the inflation rate. People who lack the ability to carry out commodity-market relations based on local currency, found a modern alternative that cryptocurrencies have become.
Such the state of affairs has led to a number of problems:
- The authorities have lost control over the circulation of funds in the country.
- An outflow of funds from the country began, followed by a weakening of an already unstable economy.
- Security threat has increased significantly.
Venezuela’s economy is built on oil exports. In 2016, there was a significant drop in prices, which was a decisive blow to the country’s welfare. The current export was made for dollars, which also did not contribute to prosperity. The solution was the creation of a cryptocurrency, backed by the country’s oil reserves, on the basis of which, according to the president, exports and commodity-market relations within the country were to be made. Thanks to this decision, according to Maduro, the country should receive the following advantages:
- Shifting from a dollar settlement system to counter U.S. sanctions.
- Attracting investment to the country.
- Strengthening the position of power.
Immediately after the official announcement of the readiness of the cryptocurrency and the entry into the ICO, Donald Trump hastened to ban any transactions with El Petro for the citizens of the United States..
The position of the American president is also supported by our expert. «El Petro — candy wrapper to circumvent the sanctions applied by various countries to Venezuela. I doubt that this token is capable of affecting the country’s economy on a global scale, but big politicians will be able to withdraw their money from the country. And the government does not care at all about the common population in third world countries.», — noted in an interview with BitCryptoNews cryptocurrency enthusiast, director of 2miners.com Mikhail Korolev.
Today, there are active attempts to bring El Petro to the world stage. In order to attract the public, the authorities deliberately create conditions for the transition to cryptocurrency. So, according to the latest information, the use of El-Petro as the units of account for oil gives the right to provide a discount of about 30%, which is very profitable by world standards (according to some sources, India received such a generous offer).
Another step to direct the interest of the country’s residents towards El Petro was the closure of two cryptocurrency exchanges at once, specializing in working with altcoins. However, simultaneously with this step, 16 exchanges received «good» at the start of trading a new coin.
In addition, in order to popularize cryptocurrency, by decree of the President, it was announced that it was necessary to complete part of transactions in cryptocurrency for a number of companies whose activities are focused on working with the country’s natural resources (in fact, companies that were under pressure from the authorities and had no alternatives were under attack). And in order for local residents to stop paying attention to much more advanced and attractive analogs of cryptocurrencies, in the country the practice of raids with confiscation of mining equipment has become commonplace..
With the advent of the hyperinflation problem, residents quickly switched to cryptocurrencies. By tradition, bitcoin is at the head of the system, followed by altcoins, which did not miss the opportunity to take advantage of an attractive situation for entering the market (representatives of DASH distinguished themselves with particular sagacity). All segments of the country’s population liked the new way of conducting commodity-market relations. And if in Russia it is rather difficult to imagine a grandmother converting satoshi into air, then for the residents of Venezuela this is a common thing..
BitCryptoNews managed to find out the opinion of a local resident on the issue of innovations related to cryptocurrency.
Miguel Liendo, a resident of Venezuela, told our portal what ordinary citizens of the country think about currency:
«What is the reaction of the Venezuelans to El Petro? The reaction is very positive. Many young people are developing in this area. Created mining farms. Nevertheless, there are people in Venezuela who are far from cryptocurrency, but there are not so many of them. Donald Trump, President of the United States, ruled that Venezuela’s El Petro is not legal. However, what will he do? The only way to fix it — turn off all computers in the world».
It should be noted that the country is actively promoting the transition to cryptocurrency. All media are involved, as well as popular personalities. However, contrary to most opinions, El Petro is not a decentralized financial instrument. At the heart of the cryptocurrency is a centralized emission, and the final price is formed on the basis of the current economic situation. Based on this, El Petro — nothing more than a new version of the old currency, presented to society in a modern shell. Maduro himself openly declares that the coin — the most profitable investment not only for residents of Venezuela, but also for citizens outside its borders.
Despite all attempts by President Maduro to bring cryptocurrency to the world level, so far there has not been a single real deal based on it. Additional President «caught» on the discrepancy between the declared amounts on fundraising during the ICO (the amount varied from $ 3 billion to $ 5 billion). It is noteworthy that there is no confirmation of the reality of the calculations.. Obviously, society must rely on the integrity of the head of state. Additionally, it is necessary to highlight the following points:
- President Maduro announced the creation of four economic zones, in which in the near future it will be possible to carry out financial transactions with the help of El Petro. Why the introduction of cryptocurrency will be done zonal — was not explained.
- Pre-Sale amount was officially announced, — $ 3.338 billion.
- The very attempt to circumvent the sanctions in this way has caused a lot of discussion. Some believe that possible success will become a serious threat, neutralizing the power of sanctions as a regulatory tool. In this case, the experience of Venezuela can become the basis for a large number of states in avoiding the negative impact of such restrictions. In the event of a failure, El Petro will be a powerful blow to the attitude of people towards cryptocurrencies (a failure with a launch at the state level will become a stop signal for many market users).
«Venezuela became a provocateur and the release of the El Petro cryptocurrency further worsened its trade relations with the United States. Yes, there are individual beneficiaries, and we are unlikely to find out about them. But you need to understand that the country’s economy — these are specific people. How it affected them — depends on their status in Venezuela. Some seamstress running her small business hardly felt any effect after adopting El Petro. However, Venezuela has taken the pioneering risks and countries will follow its path by issuing their cryptocurrencies. — often more successful than Venezuela itself», — believes Maxim Tarasenko, Managing Partner of GT Blockchain Investments Fund.
And here is Russia?
Even while working on the El Petro prototype, information was slipped in many media about the close cooperation of the Venezuelan team with Russian specialists. Some even made statements about the attempts of the Russian authorities to facilitate the release of the coin as their own experimental base. And if earlier such information was perceived as nothing more than rumors, today, when information about work on a crypto-ruble is slipping more and more often, the puzzle begins to converge.
Here are some facts:
- It is known that specialists from Venezuela, for example, the Minister of Finance, are involved as a consultant for the work on the crypto-ruble..
- Cooperation with a domestic company «KamAZ» can be concluded in El Petro. The openness of interaction between Venezuela and Russia, while more and more countries adhere to the US rhetoric, suggests the existence of a large number of similar views on economic development.
- El Petro received the Satoshi Nakamoto award from RACIB. Against the background of the negative attitude of most countries to the Venezuelan cryptocurrency, such a gesture of goodwill is another reason for reflection on the involvement of the Russian side in the issue of the coin..
In addition, it should be noted that there is very little information about El Petro. The Venezuelan government is literally dosing the data coming into the market. The same thing happens with the crypto-ruble: only a little is known.
It turns out that Russia has much more in common with the citizens of Venezuela than they might think:
- the policy of the presidents of both countries made it possible to quarrel with a number of states;
- both countries are literally mired in sanctions, from which ordinary people suffer, however, in an attempt to maintain their position and not make concessions, the heads of state continue to bend their line, which is fatal for their citizens;
- solving problems for the heads of state is seen as one — creation of an alternative pseudo-cryptocurrency with a subsequent attempt to oust the dollar on its basis.
Additionally, both MPs are famous for their special views on corruption in the country. Despite many incriminating incidents, there has been no change in the regime of both leaders. Loss of trust in power contributes to the growth of anxiety, based on the fear of being in an even more deplorable situation.
View from above
El Petro is still an under-cryptocurrency: in general, something not fully formed. The president’s negative reputation, as well as the strongest pressure from sanctions and the deplorable state of the country’s economy, literally divided its residents into two camps: some see El Petro as a ray of light that will allow them to bypass the hated America with its sanctions at a turn, others are preparing for an even more severe growth of the crisis … Given the negative attitude towards cryptocurrency on the part of many experts, as well as the lack of an evidence base for the current state of sales and interest from investors, participation in an attempt to correct «health» Venezuela’s economy in the form of investing in El Petro does not look safe.
text: Evgeniya Likhodey, photo: Visual Hunt