In their continuing economic crisis, the socialist regime of Venezuela has made the Petro, a cryptocurrency backed by the nation’s oil wealth, an official currency alongside the Bolivar which has been the longstanding currency of the troubled nation. The move is interesting for a number of reasons, not just from an attempt at easing the nation’s hyperinflation but that it is making a cryptocurrency synonymous with its own hard currency. This would create an internal exchange rate between the two and may likely lead to a phasing out of the printed money in most cases, especially if the money becomes stable. While the currency has been around since December of 2017 and officially launched in Feburary, the move appears to be an attempt to form an economy not traded against the US dollar to avoid further issues with sanctions. It is unclear at this time whether the cryptocurrency has any chance at salvaging the dire straits the nation’s economy finds itself, however the Maduro regime contends that it will improve the conditions and salaries of the nation’s labor force.
What is interesting from another angle is a nation attempting to base its economy around a homegrown cryptocurrency. It is the first of its kind in the world. While the idea has planted itself in other troubled regions, most notably the Kurdish region of northern Syria known as Rojava, concerns among political dissidents to the Maduro regime include citing that the currency is simply a means of making corruption official. Those same opponents cite that it simply forwards the sale of the nation’s oil wealth inside and among a regime that has shown little regard for private property rights. Such a practice is a hallmark of Leftist administrations.
The next step will be one to watch; any nation who’s rejected the conventional means of trade for what they label as ‘sovereign’ faces tremendous issues. Regardless of the politics, such a move is usually always followed by war. The ongoing trade war between the US, China, Iran and Turkey are all linked, with Russia having close ties to two and building closer ties with the third as the Turkish economy appears to be in freefall. China and Russia have close ties with Venezuela and the Chinese in particular have greatly expanded their influence in South America. BRICS is real and expanding. With the increasing signs of domestic instability at home, the time to prepare yourself and your family has never been more pressing than now.