Venezuelan President Raises Petro Value, Devaluating Fiat



Last Updated: December 3, 2018 at 7:19 AM EST
Venezuelan President Raises Petro Value, Devaluating Fiat

Nicolas Maduro, the president of the Bolivarian Republic of Venezuela, raised the price of the official cryptocurrency of the country, the Petro. This as a measure taken to raise the minimum wage, that is now pegged to the price of their crypto asset. But this has raised questions as if this cryptocurrency is a kind of stablecoin or another thing.

Petro Price to 9,000 Bs From 3600 Bs

The issue of the Venezuelan cryptocurrency is one more time in the spotlight, now that the president of Venezuela, Nicolas Maduro, raised its value. Maduro announced this price rise as a measure to fight the raging inflation that has developed in the country. But in doing so, he has also devalued the current fiat currency, the Sovereign Bolivar, almost three times versus the US dollar.

Venezuelan President Raises Petro Value, Devaluating Fiat

This is the twelveth wage raise that Maduro has sanctioned in the last two years. However, it is the first rise that happens since the Petro price was fixated for the ICO. This measure raises a lot of questions that affect the already battered reputation of the Petro. The most economic savvy had expected a drop, due to the current state of oil prices in the international market. But Maduro did not announce that. Instead chose to keep the price the same in dollars, and to devalue the fiat currency.

Petro Woes

But in doing so, he has raised a lot of questions about the validity of the Petro as a cryptocurrency. This is the kind of issues that present when governments handle cryptocurrencies as a part of the monetary economy. Venezuela is the first country that has an official cryptocurrency (in name only) and these issues are not documented. However, this could be a case of study about cryptocurrencies as an economic instrument.

Venezuelan President Raises Petro Value, Devaluating Fiat

Despite all this, there is little interest in a cryptocurrency whose price can be raised on the fly. despite the Petro being in the spotlight lately, there is little real movement on its blockchain. The Venezuelan government launched a campaign for people to save in Petro. But the real effect of this campaign is uncertain.

Still, there is still uncertainty in how the Petro will be used internally. The crypto asset still lacks a working wallet. People that have bought it received a purchase certificate and nothing else. So it cannot be used to make purchases or to be traded in online exchanges. so the Petro can be understood more like an adjustable electronic bond and mess than an actual cryptocurrency.