Venezuela has been looking for a way to create a national crypto coin for some time now. It would appear that it is a tool to get past the many hurdles it faces in the global financial system. One way it is achieving this is by launching its own cryptocoin, the Petro. The government recently unveiled details on how it is going to be mined, traded, and issued. This new crypto coin will be backed by crude oil – 5 billion barrels of it.

The President Made the Decision

The decision to back up the new crypto coin with exactly 5.3 billion barrels of oil was made by the country President, Nicolás Maduro. The oil is currently estimated to be worth about $267 billion. The announcement of this new cryptocoin was first made in December 2017.

During his weekly broadcast on TV and radio, he revealed a document that showed the Ayacucho oil field located in the Orinoco Oil Belt, which has been set aside to support the new coin. According to Maduro, every single Petro is going to be backed by actual oil barrels.

The President said that his government would set up a special team of specialists, so that mining will take place in all municipalities and states in the nation. He has also vowed to allocate gold and diamond deposits in the Orinoco belt to the Petro. The National Blockchain Observatory and the Cryptocurrency Superintendency will oversee this new cryptocoin.

Details for Issuance and Trading

The government of Venezuela published a Gazette notice that consists of 13 parts. Nearly half of these parts talk about the operational aspect of the Petro. According to part 4 of the notice, the new cryptocoin “is about Venezuelan oil quoted in the OPEC basket, as well as other commodities, including gold, diamond, coltan, and gas.”

Part 5 of the notice talks about the wallet that will hold the cryptocoins, as well as the currency’s convertibility. It states that the holder of the new cryptocoin may exchange it for another cryptocoin at a market exchange rate that will be published by the national crypto asset exchange house. The part also states that every person will hold their own virtual wallet, which will be their own responsibility.

There May Be an ICO

According to the Gazette notice, there may be an ICO for the issuance of the Petro. This is not clearly elaborated but is hinted at in part 8 of the Gazette notice. It states,

The initial placement will be made through auction or direct assignment, made by the Superintendence of crypto-assets and related Venezuelan activities.

However, the government was also quite clear that it would be decentralized. The month of issuance has not been clearly defined, but it is expected to be around the month of January.

What do you think about this new cryptocoin launch by the Venezuelan government? Is it going to be a success? Leave us your thoughts in the comment section below.