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May 1, 2019
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Petro Cryptocurrency Is a Gift to Future Generations of Venezuela

Leon Markovitz is a serial entrepreneur and marketing professional. Born in Venezuela, he now lives in Israel where he is researching and marketing stablecoin projects.

I truly got into digital forms of money when I found out about Venezuela’s stablecoin endeavor, the petro, toward the end of last year.

The possibility that the tyranny would have a go at utilizing blockchain to additionally bring together its capacity was startling, and it’s pushed me to examine arrangements that could work in Venezuela’s not so distant future.

The petro was launched in March and, until recently, it was all but forgotten – with the project lead fired for having failed to raise $5 billion for a national cryptocurrency project.

But late last month, President Nicolas Maduro announced on live TV the slashing of five zeros from the hyper-inflated currency, and announced a “Hail Mary” attempt to revive the petro by tethering the new bolivar’s value to it, calling a meeting with all banks to improvise something.

The autocracy in Venezuela is really helping future ages out by making question in focal expert, cheapening national bank issued fiat, and teaching the general population about cryptographic forms of money. The ground is ready for a genuine unrest where control is wrested far from the legislature and depended to the blockchain. Venezuela does not have the right to proceed down its present way.

The country’s economy has contracted drastically in the past five years, with a rampant 1 million percent annual hyperinflation, and people dying in the streets from diseases like polio – yes, it reemerged during the socialist revolution – the highest homicide rate in the world, and the lowest salaries in the region. This is the result of 20 years of a failed socialist experiment printing currency like confetti, and a complicit ruling class that is silent, almost absent, to the clamors of the people.

Individuals are utilizing bolivar charges as bathroom tissue since it’s less expensive, and the whole world woke to the way that the communist transformation of the twenty-first century is a trick. However the degenerate cohorts of a dead man are keen on restarting the trick with the petro. They need to ride the blockchain wave, however blockchain is incongruent with this socialist misrepresentation.

This is a decentralized insurgency, oppositely restricted to incorporated control. The petro was conceived as a disappointment since it was considered to keep up brought together powers in charge, and nobody in their correct personality would utilize it except if somebody put a weapon to their face. The undertaking is dead.

In any case, we should discuss this extreme examination in a speculative situation. Expecting the administration is gone tomorrow, could this trial work?

A decentralized alternative

For generations, Venezuela was drunk on petrodollars. People became lazy and used to getting cheap dollars at preferential exchange rates to import 90 percent of goods consumed. The current disaster is the consequence of generations of Venezuelans spoiled by the easy revenues from the black gold.

But that’s the past. Now imagine the day after in Venezuela, breaking free from the chains of communism, with the world ready to help. We would need at least a projected $80 million to jump-start the economy, provide humanitarian aid, and create a radically different market.

Since Venezuela’s production capacity has been decimated, getting a loan from the IMF won’t do, but re-branding the country as the blockchain nation could prove to be an opportunity hidden in chaos and despair — the light at the end of the tunnel. How can we successfully use a cryptocurrency as the national currency? Decentralize.

Unlike the petro, Venezuela’s ideal stablecoin would need no collateral and certainly no central bank. The gold and petroleum reserves could serve as strategic insurance to buy back the currency if demand falls. The issuance of the stablecoin would expand and contract based on an “algorithmic central bank” responding to the economy’s health (e.g. nominal GDP targeting), and the shareholders, the citizens, would receive sustained revenues accruing from the interest from savings and bonds of a healthy economy. Most importantly, the wallets of public officials would be subject to public scrutiny.

If the regime abandons power tomorrow, there is an opportunity for Venezuela’s government to be radical and embrace decentralized information networks. Venezuela can be the first country to separate state and finance, but if a similar attempt to the petro is implemented (a centralized stablecoin) then we would be back to square one and nothing would change.

The day after the communist regime is gone, Venezuela will implore for decentralization of power to unite and empower the people, get investments flowing in, and bring transparency to governance and monetary policy. It can evolve from a nation known for its petroleum and gold, to one know for its digital gold and energy.

The petro is a horrible idea, but people in Venezuela have woken to the power of blockchain. There is an ever-growing community of engineers and miners locally – and millions more looking from abroad.

Very soon the chains of communism will break, and the crypto-space must be ready to defend the advocates of a decentralized national stablecoin when the day after comes.

Venezuela is ready; are you?

Bitcoin on map via Shutterstock

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