
Enter 'petro': Venezuela to launch oil-backed cryptocurrency - setra
https://www.reuters.com/article/us-venezuela-economy/enter-petro-venezuela-to-launch-oil-backed-cryptocurrency-idUSKBN1DX0SQ
======
Entangled
As a Venezuelan I say this is a bad joke. They ransacked the central bank
reserves, they pillaged all the gold bars in the vaults, they indebted the oil
industry and there is nothing left to give as guarantee for more money. They
only want to try circumvent the shitty currency they destroyed with their bad
policies.

Stay away from this.

~~~
sremani
This is a sign of a hail-mary thrown by an utterly bankrupt (morally and
politically) government. I see it as, Maduro is very desperate and the end of
him is near. Thought 2017 would be the end of him but sometimes the inevitable
takes time. Among other things Venezuela is a narco-state both its elite and
military engage is lot of narco smuggling and money laundering. This could be
a mechanism for them to hide or transfer wealth out, I am only guessing. I do
concur that people should stay away from this.

~~~
sjeohp
> an utterly bankrupt (morally and politically) government

How so? My understanding is that they just won regional elections praised by
international observers as free and transparent[0].

Interestingly, western governments/media & opposition claims of fraud (without
evidence) directly contradict the findings of the delegation from the Latin
American Council of Electoral Experts (CEELA). From the article cited:

 _The CEELA delegation was comprised of 1300 international observers,
including former Colombian Electoral Court President Guillermo Reyes, ex-
president of the Honduran Supreme Electoral Court, Augusto Aguilar, and former
Peruvian electoral magistrate Gastón Soto.

According to the body’s report, the vote was held under conditions of “total
normality” and the right to a secret ballot was “guaranteed”._

I also find this interesting:

 _For its part, CEELA has reported that it has yet to receive any formal
denunciations from the opposition, which has issued its fraud allegations via
the media.

President Maduro has requested a 100 percent audit of Sunday’s elections, a
call that was subsequently echoed by the [opposition]._

[0]
[https://venezuelanalysis.com/news/13442](https://venezuelanalysis.com/news/13442)

~~~
jimmywanger
I could not find a single article about these findings that aren't from a
leftist leaning website.

If you search "ceela venezuela vote" on Google, the only articles that come up
are from teleSUR (a mouthpiece of the Venezuelan government) and Venezuela
analysis (another rabidly left organization, the one you cited).

Do you have any fairly impartial news sources you'd care to cite?

Of course, this could all be a plot of the evil Imperialist western capitalist
powers to strangle the last peoples' stronghold. /s

~~~
sjeohp
> Of course, this could all be a plot of the evil Imperialist western
> capitalist powers to strangle the last peoples' stronghold. /s

From your sarcasm I take it you're unaware of the history of leftist
governments in Central and South America?

~~~
jimmywanger
I am quite familiar. However, your argument holds no merit.

Even with the term "banana republic" there was an economic endgame in sight
(e.g. cheaper fruit).

This current Venezuela farce has absolutely no redeeming qualities unless
you're a member of the ruling elite (of Venezuela).

By your reasoning, every economic and/or political collapse in Central/South
America can be blamed on the history of United States intervention, absolving
the government of all accountability.

~~~
sjeohp
I wasn't really making an argument, just alluding to the fact that western
governments/media have a history of undermining/overthrowing democratic left
wing leaders in the region, so mocking the idea as you did was disingenuous.

That said, I think it's possible the revolution has deteriorated since the
death of Chavez and that corruption is indeed rife. I'm just wary given the
history of propaganda.

I also think its possible that the administration still has popular support in
spite of its real problems, given the violent right-wing nature of the
opposition and the apparent lack of credible evidence suggesting otherwise.

~~~
jimmywanger
Nobody is mocking anybody.

> the violent right-wing nature of the opposition and the apparent lack of
> credible evidence suggesting otherwise.

People in Venezuela have lost 19 pounds on average in the past couple of
years. Take a look at the exchange rates. What is the profit for "right-wing"
groups?

~~~
owebmaster
> People in Venezuela have lost 19 pounds on average in the past couple of
> years.

Looks like the US need some left wing rule. But yeah this is fake news. Don't
lie to pretend you have a point kiddo.

~~~
jimmywanger
Not quite sure what you're referring to.

[https://www.economist.com/news/finance-and-
economics/2172028...](https://www.economist.com/news/finance-and-
economics/21720289-over-past-year-74-venezuelans-lost-average-87kg-weight-how)

The last time I checked, the Economist is a fairly neutral news organization.

Although el gordo Maduro hasn't had too much trouble finding rice and beans,
by the look of things.

~~~
owebmaster
> Not quite sure what you're referring to.

How do you know that a country lost weight? They didn't show how they got
these numbers, just said it as an IMF forecast. This is plain simple
manipulation. It is a shame that my first comment got so many downvotes.

~~~
jimmywanger
[http://www.independent.co.uk/news/world/americas/venezuela-w...](http://www.independent.co.uk/news/world/americas/venezuela-
weight-loss-average-19lb-pounds-food-shortages-economic-crisis-a7595081.html)

If you distrust all news sources that disagree with your point of view, I
don't know what else to say.

This study was conducted by Venezuelan universities.

~~~
owebmaster
You would be skeptic too if you know a little how Propaganda works world-wide
nowadays.

~~~
jimmywanger
So things you don't agree with can be dismissed out of hand as propaganda?

What argument would you want to hear that would make you decide that Venezuela
is a hideously mismanaged dictatorship? They can't keep up production of oil,
which is their (95%) only source of foreign reserves.

------
albertgoeswoof
> “Venezuela will create a cryptocurrency,” backed by oil, gas, gold and
> diamond reserves, Maduro said

I am not sure if that’s even possible, it doesn’t make much sense. How do you
link the currency to those reserves in a way that is any different to the
current currency?

That being said, a crypto which is relatively stable could be very useful for
countries with runaway inflation or other issues with the state. Both for
local use and liquidity across global markets.

~~~
jmharvey
> a crypto which is relatively stable could be very useful ...

It seems like there's a fairly tight correlation between the value of a
cryptocurrency and the effort required to mine it. (Which is what you'd expect
-- if the price of BTC rises, more people mine it, and the per-block
difficulty increases, and if the price falls, fewer people mine it, and the
difficulty falls.)

I wonder if we could create a more stable cryptocurrency by keeping the mining
difficulty constant (or possibly tied to moore's law). It may be wildly
"inflationary" in terms of the size of the monetary base, but it should be
fairly stable in terms of real resources per unit of currency.

~~~
einarvollset
Crypto assets do not actually require mining after launch I believe. You could
pre-mine all the assets. I believe XRP (ripple) is an example

~~~
cryptodogemoon
The contending decentralized consensus algorithm is called Proof of Stake, and
it works by giving you lottery tickets based on how much wealth you already
have.

PoS coin supplies should be avoided, as the production cost or input work is
not worth the speculative asset produced.

XRP is a case study in how they've created artificial scarcity and can flood
the market with sell orders from their reserves.

[https://www.coindesk.com/ripple-jed-mccaleb-settle-suit-
over...](https://www.coindesk.com/ripple-jed-mccaleb-settle-suit-
over-1-million-in-disputed-funds/)

~~~
repsilat
They could also just have a centralised service validating transactions. No
need to mine, no need for stake. Not exactly a traditional cryptocurrency at
that point, but in day-to-day use no different (and rather more attractive to
political regimes like Maduro's.)

------
mplewis
As whb07 said, "Its the same thing as a bond, which its feared they will
default on."

I don't know how Venezuela expects anyone to take this seriously after they
defaulted on their bond payments in November.

------
juancampa
How ironic, an authoritarian government launching a cryptocurrency. Having
said that, it'll be interesting to see how the fact that "it's backed by oil"
affects it

~~~
whb07
How does one actually claim a portion of that oil though? Its the same thing
as a bond, which its feared they will default on. At the end of the day if
they don't want to pay, then they don't pay.

~~~
jungans
Exactly. The minute a cryptocurrency is backed by something, trust in a third
party is reintroduced which defeats the whole purpose.

~~~
einarvollset
That’s probably a simplistic view? An ICO obviously introduces trust in a
third party (the company issuing the ICO). Does that mean all ICOs defeat the
purposes of crypto? To the degree that your view of crypto is that it is all
about decentralized, quasi anonymous money transfer yes. To the degree that
you consider the other benefits of crypto assets, no. To add weight to the
latter view point, I’d argue that Ethereum was the first ICO. Is the whole
“purpose” of crypto negated with Ethereum? That’s a hard position to defend
imho.

------
rpmcmurphy
A corrupt government that ran its economy into the ground backing a
cryptocurrency. What could possibly go wrong?

OTOH, if someone with centuries of banking experience were to launch a well
managed cryptocurrency, that could be pretty useful (Switzerland I am looking
at you).

I would like to see a digital currency whose money supply is linked to the
number of users in the system. As more users enter the system, generate
proportionally more coins and vice versa. Something like this might work as a
stable store of value.

~~~
woodandsteel
>A corrupt government that ran its economy into the ground backing a
cryptocurrency. What could possibly go wrong?

Fortunately, as has been proven by recent experience, fraud, hacking, or
serious error in the area of cryptocurrencies or the blockchain in general is
simply impossible.

------
paulsutter
Anyone find a link to their paper on “proof of barrels”?

Ah, we have their assurance. Alright then.

------
coliveira
Given that there are US sanctions against Venezuela, this would be an
interesting case to see if digital currencies can really succeed despite the
established banking system. After all, people say that necessity is the mother
of invention!

------
drcode
It's sad that I know enough about cryptocurrency speculation to know that if
they really launch this currency, there will be a willing crowd of non-
Venezuelan investors likely to pour millions or even billions of USD
equivalents into this. (That's assuming Maduro is informed enough to only
guarantee a price floor for the currency and leave open room for upward price
appreciation via speculation...)

------
stretchwithme
It may be a sign of desperation, but desperation can lead people to do
sensible things (and unsensible ones). A commodity-backed currency is not a
bad idea (US dollar used to be backed by gold, for example), but only if they
stick to it.

These guys are thieves and charlatans, so I expect they will devalue this
currency as well when it suits them.

------
danschumann
How can it be backed? Unless they are not allowing any mining, and merely
having a currency that can be traded like a cryptocurrency. If you can mine,
it would be worth something, and who would be backing that with oil? It'd be
like giving away free oil.

~~~
maneesh
If it's an ERC20 token most likely it won't require mining. Most come premined

------
nickik
What an embaracment that government is. This is exaclty what everybody
predicted when the socialsits took over. Systematically plunder and destroy
every resource to keep up the payouts to the poor and the elites.

Now they are reduced to third-rate schemes in the hope somebody gives them
some money.

Remember a couple of years ago whem tons of leftist, including sanders,
krugman and stigliz all talked about how create these developments were?
Finally somebody that would look out for 'the people'.

------
rdl
Venezuela seems like a solid case for a privately-financed coup (Equatorial
Guinea and Zimbabwe are there too, but in EG this was already tried and failed
for stupid reasons). I don't know who they'd put in power (is there a viable
opposition still?), but really anyone would be better. It's not an inherently
poor country, but horribly misgoverned, and it's sad to see people suffering
for decades as a result.

~~~
api_or_ipa
Government must have the consent of it's people or in the long run it will
never work. Foreign intervention leads to malcontent, corruption and decay;
real change must come from within the country and grow organically among the
people.

~~~
rdl
Equatorial Guinea (and NK, and some others) are cases where I think a 6.5
Creedmoor round delivered by a foreign agent would produce positive results --
whatever local replacement emerged would be better (or repeat until it is).

~~~
owebmaster
Sure. See: Libya.

------
viach
Weird, I just read this prediction yesterday
[https://www.cnbc.com/2017/12/01/james-altuchers-bitcoin-
pred...](https://www.cnbc.com/2017/12/01/james-altuchers-bitcoin-
predictions.html)

------
AKifer
What would be the difference with that crypto stuff and just emitting some oil
backed EFT ? They happen just to be either all idiots at the top of that
government, which I hardly doubt; or they are just trying to hide their CCC
rating to the ignorants and buzz riders.

------
sebleon
Very interesting move. Curious to see if they find investors they couldn’t
reach through traditional financial institutions.

~~~
JumpCrisscross
I suspect they want to repay offshore holders of their current bonds with this
magic money.

~~~
mrhappyunhappy
Magic Internet Money

------
major505
Its just easier to take your money and throw in a fire if you wanna waste it.

------
edpichler
Poor people of this country. I hope this government ends soon.

------
aqsheehy
Ponzi schemes as far as the eye can see

------
thatgerhard
This is just a terrible idea.

------
brakmic
It's basically a shitcoin. How about calling it "Merduro"?

------
ringaroundthetx
ERC20? Who do they have as their advisors? When Polo?

