In order to save the dying economy of Venezuela, the president Maduro has announced that the fiat currency will be pegged to the Cryptocurrency Petro, which will result in a devaluation of 95% of the currency. The new currency will be named “Sovereign Bolivar”.

Venezuela has been going through a tough time, with its currency going through a Hyperinflation of over 43000% last year. This is a nightmare situation where the citizens are fleeing the country and have witnessed all their life savings going to nothing quickly.

The government had held an ICO (Initial Coin Offering) for its own oil backed Cryptocurrency called Petro back in February, which claims to have raised $735 Million in private sales.

According to Bloomberg, the government is introducing various economic reforms like the increased minimum wage, gasoline subsidies, implementation of value added tax, etc.

Instead of an exchange rate of 250,000 Bolivars per dollar, it will be increased to about 6 Million. The Petro is valued at around $60 or 3600 sovereign bolivars.

The citizens of Venezuela have lost the faith in the government, which raises the question of how effective or successful will any economic policy that is introduced by the government be.

Jamerson Lopp, a Bitcoin advocate tweeted criticising the nation backed Cryptocurrency which is no different from the Fiat money:

A lot of us dreamt that someday nation states would adopt cryptocurrencies. We also figured nation state cryptocurrencies would probably be less appealing than public permissionless projects. I don’t think anyone predicted the first to be such a shitcoin.

Eduardo Gomez, a Venezuelan and a Cryptocurrency advocate said in Tweet:

Today the Venezuelan Localbitcoin’s trading session has been crazy due to the president’s decision to remove 5 zeroes from the currency. Problems with some bank transfers plus some scammers exploiting the confusion among users and Localbitcoin’s support staff regarding the…

3/ Trading volume in VEF (Bolivars) is painting the single worst chart to have ever existed so far in my country. This is pure hyperinflationary despair: pic.twitter.com/QnZ0Unccd1 — Eduardo⚡Gómez (@Codiox) August 21, 2018

Disclaimer: Blockmanity is a news portal and does not provide any financial advice. Blockmanity's role is to inform the cryptocurrency and blockchain community about what's going on in this space. Please do your own due diligence before making any investment. Blockmanity won't be responsible for any loss of funds.

Get the latest news on Blockchain only on Blockmanity.com. Subscribe to us on Google news and do follow us on Twitter @Blockmanity

Did you like the news you just read? Please leave a feedback to help us serve you better