Venezuela's cryptocurrency: Petro Whitepaper [pdf]

elpetro.gob.ve

4 pointsplopilop3 comments

What a horrifying idea to back a cryptocoin with oil. Oil is really not a long-term value store as technology improves and the world goes electric. It may be viable for 20-100 years, but tying a coin to a resource -- especially naming a coin after a resource -- will only lead to difficulties and confusion down the road. Would you ever fill up your tank with BTC? Would you ever buy a coffee with Tether (scam) ? Presuming you answered definitively "no" to these two questions, then why would you ever use a cryptocoin to buy petroleum or accept a coin in exchange for petroleum. Maybe the idea is lost on me, but tying a globally and internationally exposed digital asset that feels the variability of markets and wake/sleep cycles of humanity to something as dirty and short-term as oil seems to just be asking for problems.

It's a tempting idea because Venezuela exports a lot of oil, but you may as well try and tie a coin to oxygen and see how you do.

Most dominant currencies of the past centuries were tied to real commodities with intrinsic value -- eg, gold, silver for instance. There is nothing horrifying about a commodity-backed currency, especially when compared to the "alternative" -- the international reserve currency, the US dollar, is backed by "confidence" and is created out of thin air -- that we are now stuck with.

I haven't read Venezuela's crypto offering in detail, but Venezuela's problem, as I see it, is most investors/traders won't trust socialist Venezuela to honor their contracts when push comes to shove.

Commodity-backed coins are great, but why oil of all things? It's dirty, low-tech, actively polluting the air, and running out. It looks like someone just looked at a list of chief exports and thought "yeah I can make a new currency for that"

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