Venezuela has launched its own cryptocurrency called Petro to circumvent US-led financial sanctions. It will be backed by the country's vast natural resource reserves.
In this regard, Venezuelan President Nicolas Maduro has approved the creation of BlockchainBase observatory to oversee development and rollout of new cryptocurrency.
Petro: Know More
What is a Cryptocurrency?
- The cryptocurrency (in Spanish, criptomoneda) could help Venezuela evade international sanctions.
- Venezuela will create a petromoneda cryptocurrency to advance the matter of monetary sovereignty as it will help defeat the financial blockade and move toward new forms of international financing for the economic and social development of the country.
- The petro will be backed by strategic reserves of oil, gold, gas and diamonds - tangible support that the government hopes will help it fight both sanctions and Venezuela's high inflation rate
- Questions remain about how the new cryptocurrency will be rolled out and whether it might be linked to established digital currencies such as bitcoin or Ethereum.
- Economist Jean Paul Leidenz warned via Twitter that the system could merely reinforce hyperinflation - which could then disproportionately harm Venezuelans who use only the bolivar currency
- A cryptocurrency is a digital or virtual currency that uses cryptography for security.
- A cryptocurrency is difficult to counterfeit because of this security feature.
- A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.