Venezuela pegging its economic recovery to a cryptocurrency that’s widely considered a scam

CNBC ^ | 08-20-2018 | Kate Rooney

[NRx]

Venezuela is doing something completely unprecedented. Some even say illegal.

As part of an attempt to stop skyrocketing inflation, the country is issuing a new fiat currency called the "sovereign bolivar," which will be backed by a cryptocurrency. But that cryptocurrency, called the "petro," does not trade, and Venezuela's own parliament says it's being illegally used to mortgage the nation's cash-strapped oil reserves.

"This is a smoke-and-mirrors operation typical of Venezuela — I'll believe it when I see it," said Steve Hanke, professor of applied economics at Johns Hopkins University and one of the world's leading experts on hyperinflation. "The problem with the petro is it's a scam, it doesn't even trade."

In February, President Nicolas Maduro unveiled the oil-backed "petro" digital currency as a means to raise cash amid an economic meltdown and economic sanctions. Maduro said each petro token, which is not in circulation yet, would be backed by a barrel of the state's national petroleum. He also said about 100 million petro tokens would be issued — estimated to be worth around $6 billion.

Crypto rating site ICOindex.com, which rates initial coin offerings, labeled the petro "scam status." The site evaluates coins based on their white papers, and said while petro promised to be backed up by oil resources, "the technology and mechanisms to do so are not adequately explained." Another site, ICObench, gives it a 1.6 out of 5 stars.

[FatherofFive]

each petro token, which is not in circulation yet, would be backed by a barrel of the state's national petroleum

Why don't they just sell the oil? Oh, they can't. Their talent has fled, assets being seized.

But the people are happy. They are all millionaires and have all lost weight. Many are on vacation in neighboring countries.

[Slyfox]

Actually, dealing in bitcoin has helped people who are trying to buy or sell property. Mainly because the fluctuation in the Venezuelan currency is so erratic that when one person agrees to sell his property by the time papers are drawn the land gets devalued in sometimes just one day, which makes any transaction difficult. They are finding that bitcoin is helping out smooth over transactions.

[Elsie]

Thank GOD! the American dollar is backed up by GOLD!!!

[grimalkin]

Good luck with that.

[Moonman62]

If you want to convert your dollars to gold, you can.

[lgjhn23]

“...This must be what she thinks will cure what socialist experiments worldwide have been doing wrong....”
Occasional Cotex should be right down there helping them to do it “right”.
And to think not too long ago, Venezuela was a thriving oil-rich economy. It sure doesn’t take socialism long to destroy stuff, especially when it runs out of other peoples’ money.

[lgjhn23]

“...Venezuelan oil can’t just be pumped and used. It’s dirty stuff that needs steps to clean. When Chavez confiscated the oil industry, the US companies overseeing extraction and refining disappeared, leaving a processing vacuum that was never filled....”
BINGO!! Nail, meet hammer. The stupid POS confiscated american assets and technology that was key in keeping their economy afloat. The Americans basically had no choice but to write it off as a loss and pull out. The problem was, Chavez didn’t have the talent and experience available to fill the vacuum. Liberals/Socialists/Communists are stupid.
The Venezuelan oil company still has 2 refineries in the US (Corpus Christie, TX and Lake Charles, LA) that were engineered & designed to handle Venezuelan crude oil. They can also handle the tar sands crude as well (Keystone Pipeline). And I believe it was just last month that I read a news article that they were being looked at to be “nationalized” and held for sale to US entities to keep Russian/Chinese investors from acquiring them.
IMHO, Chavez totally screwed over his country and it’s people. That’s what libs/socialists/communists do best. And yeah, we’ll probably have to go back in there at some point to bail em out; not for the sake of the current govt, but for the people. Only this time, our assets and interests need to be protected...BIG TIME.

[SaveFerris]

[ As part of an attempt to stop skyrocketing inflation, the country is issuing a new fiat currency called the "sovereign bolivar," which will be backed by a cryptocurrency. But that cryptocurrency, called the "petro," does not trade, and Venezuela's own parliament says it's being illegally used to mortgage the nation's cash-strapped oil reserves. ]

WHAT could possibly go wrong with THIS? Let us not worry, dear FRiends. The Democrats, as always, have a brilliant solution! Danny Glover and Sean Penn know economics!

Now we need the Occasional Cortex with "Nice economy ya got there...."

[SaveFerris]

[ Also, the current currency is losing its value at light speed. Nobody says why. Government printing money? Extreme shortages of goods? (How would that work?)

None of this will work. ]

Just need a global currency. That will fix everything. If only it was just a joke. Yet they keep trying.

[SES1066]

Venezuela has joined Brazil, Zimbabwe & Weimar Germany in the Hyperinflation Hall of Infamy! Here is a picture that is worth its weight in words!

The stack of money is 14 million Strong Bolivars!

The late Jefe, Hugo Chavez, was elected President of Venezuela in 1998 following a 23% devaluation of the Bolivar by the previous government. The record since would be comical except for the misery as the national currency has gone from 'Bolivar' (named for Simon Bolivar - 'Liberator' of Venezuela, Columbia, Ecuador, Peru & Bolivia) to 'Strong Bolivar' [Bolivar Fuerte] to the new 'Sovereign Bolivar' (Bolivar Soberano). Since the Chavez government took power in 1999, the purchasing power of the currency (Bolivar) has shrunk by at least a million to one, and that is probably understated!

[2harddrive]

“Sounds like a plan where Maduro can walk away with Venezuela’s whole economy, when things finally fall down.”

His proper name is Manureo. Because he is FULL of it!

[2harddrive]

His proper name is Manureo. Because he is FULL of it!

[2harddrive]

His proper name is Manureo. Because he is FULL of it!

[2harddrive]

His proper name is Manureo. Because he is FULL of it!

[SunkenCiv]

Thanks NRx. Related, from the Petro keyword:

• Venezuela to remove five zeroes from ailing currency [07/25/2018]
• Maduro's cryptocurrency 'genius' once pushed US sanctions (Venezuela, Russia, Turkey) [07/25/2018]
• Venezuela is Launching a Crypto Currency Backed by Oil, Gas, Gold and Diamonds [12/09/2017]
• Enter the 'petro': Venezuela to launch oil-backed cryptocurrency [12/03/2017]

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• Trump's trade war advantage: The US economy is 'firing on all cylinders,' says expert [08/12/2018]

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• A military coup in Venezuela could pave the way to democracy, or to a Russian/Chinese protectorate [08/16/2018]
• Are Russia and China Trying to Kill The Dollar? [08/14/2018]
• Turkey’s Lira Currency Crumbles as Trump Turns the Screws After Erdogan Double-Cross [08/13/2018]
• Russia Looks To Get Rid Of USD In Oil Trade – “Too Risky For Trade” [08/12/2018]

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• Payment seen unlikely on $1.1 billion in maturing Venezuela bonds [08/16/2018]
• U.S. Judge May Have Just Given Freedom to Venezuela [08/13/2018]
• U.S. judge authorizes seizure of Venezuela’s Citgo [08/10/2018]

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• Hospitals scrap surgeries, Venezuelans forgo showers as taps run dry [08/16/2018]
• UN says an estimated 2.3 million people have fled Venezuela [08/15/2018]
• In Venezuela's hospitals, eat at your own risk [08/08/2018]

[GrandJediMasterYoda]

And just think: Just about every Democrap candidate running for office is pushing for this kind of government.

"It's Utopia!! I tell you, it's UTOPIAAAA!!!!!"

UTOPIA! UTOPIA! UTOPIAAA!!!!

[neverevergiveup]

Talk about scams.. Marxism / socialism is a scam.

[cpdiii]

“Socialism + fiat money + cryptocurrency = The trifecta of make-believe wealth.”

WHAT COULD POSSIBLY GO WRONG!

[rlmorel]

Gives cryptocurrency a bad name!!!!!

Hahahahahahaha...

[cpdiii]

I worked in Venezuela pre Chavez. You are correct about their “heavy oil” but the deeper Cretaceous oil is pretty good. The majority of Venezuelan crude is the less desirable heavy oil and also high in sulfur.

Pre Chavez Venezuela built one of the best refineries in the world to handle these heavy crudes. This refinery is now operating at minimal capacity and is in disrepair.It should also be noted that pre Chavez, Venezuela had the highest standard of living in South America. There were no shortages of anything. People were not hungry and desperate.