Maduro’s crypto move in Venezuela failing

Five years ago, the creation of Venezuela’s Petro cryptocurrency seemed like a promising idea. The country, facing financial difficulties, sought new funding sources, and cryptocurrencies were booming globally. Introduced in late 2017, the Petro was meant to be backed by oil and gold reserves, attracting initial success with $5 billion in sales and touted as a cornerstone of Venezuela’s recovery plan.

However, the Petro experiment is now faltering. A corruption scandal led to the overhaul of the entity overseeing it, and the cryptocurrency has ceased trading on major exchanges. It is rarely used in daily transactions within Venezuela, and users and companies have reported blockchain failures over the past year.

The Petro’s centralised nature and limited operational flexibility hindered its success from the start. Additionally, international sanctions imposed by the United States in 2018 further undermined its viability. The US government labeled the Petro a “scam” orchestrated by Nicolas Maduro’s administration, prohibiting any financial transactions involving it within the US.

Furthermore, the Venezuelan government has taken a restrictive approach to the cryptocurrency sector, banning mining operations earlier this year. This decision marked a U-turn from their previous support of the sector, which had seen significant adoption due to the country’s weak local currency and restrictions on cross-border payments.

While some still support the Petro in Venezuela, acknowledging its flaws and price distortions, its future remains uncertain. The lack of public information about its evolution and usability contributes to the uncertainty. However, the underlying issue of Venezuela’s inflation problem remains unresolved.