Petro - The Venezuelan Crypto Disaster

The majority of Venezuelans eat only two meals a day. Teachers leave classrooms along with their students and kids to go wait in line for food. How can a country that is a throw back to the Soviet Union launch a crypto currency tied to its oil reserve? The average Bitcoin transaction takes 77kwh of power to send - which is about $8.00 in most western countries and certainly more power than the average person uses in a day. Are miners and investors around the world going to invest in a digital asset from a country that shows little regard? Talk of a petro backed cryptocurrency is nothing more than propaganda - a way to show the people that the United States has no power over the Venezuelan government (they do). Backing a digital asset against their oil would be another example of smart contracts that dont work - how much oil does Venezuela actually own if they are in default on 60 billion in bonds? Does anyone really trust the governments pledge to back the currency with their oil reserves? Bonds are fixed securities that HAVE to be paid back - the fact that the government is attempting to work around their current obligations (so they dont have to pay anyone back) should be concerning for everyone.

The big problem in Venezuela economically is hyper-inflation - they just released a 100,000 bill in fiat currency. Creating a digital currency would likely increase the volatility in the region. People would have to be willing to exchange local currency for the new crypto (unless the government did it) - and unless there was some fixed value applied to the token - the market could do whatever it wants. An "oil fix" is nothing more than a gimmick to be manipulated - much like the $10 SBD which was designed to be a $1USD peg. With oil predicted to correct - would a digital currency solve the economic problems that currently exist? Problems that many feel are caused by sheer incompetence at the highest levels? After all - they already have debt and a currency "backed" by the country of Venezuela - how can a country in default provide security for any loan? If you had a car loan - you can't sell or borrow against your car unless you are borrowing less than you owe and more than its worth. Venezuela owes a lot of people a lot of money - its debatable what the country is actually worth with the current government and economic problems.

Venezuela needs more than crypto - they need a new government - help from the "west" - and forgiveness or renegotiated debt terms. As if Oil volatility wasn't problem enough for the country - they seem to at least be paying lip service to doubling down on it.

Buying Venezuelan debt is a cheap gamble - for 28 cents on the dollar you can earn ridiculous interest and IF they pay you back - capital gain. If a crypto is successfully implemented perhaps they may start paying back their bonds. I'm of the opinion neither will happen - but i'm also a big believer in the power of the people. Venezuela needs to be rebuilt from the top down - the biggest hurdle in its development is a man named Maduro. Perhaps a new currency might breath new life into the citizenry - perhaps they will oust Maduro and be the first country to switch from fiat to crypto. Most of us are not used to our home currency inflating any more than a couple percent a year - in this case - perhaps the risk of a new currency is mitigated by the absolute failure of the current government and their FIAT currency.

Change will come.