President Nicolas Maduro said Tuesday that Venezuela had received $735 million in the first day of a pre-sale of the country's "petro" cryptocurrency, aimed at pulling the country out of an economic tailspin.
Hugbel Roa, the Minister of Popular Power for University Education, Science and Technology, said that each Petro will be equivalent to one barrel of oil, according to the fixed price of the Venezuelan basket in the worldwide market.
The Venezuelan government often blames black market exchange websites and sanctions for the economic crisis, which continues to get worse.
In December, Venezuela's government confirmed that it would be launching a cryptocurrency backed by oil assets, but never announced a concrete launch date.
"Every single Petro will be backed by a barrel of oil".
Venezuela's oil reserves include nearly five billion barrels of oil. "We will set up a special team of cryptocurrency specialists so they will be engaged in mining in all states and municipalities of our country". During a demonstration about the technology that will be put in place to support the Petro, it was revealed that a Russian company will run the platform.More news: Queen Elizabeth Made a Surprise Appearance at London Fashion Week
In speaking with Bitcoin Magazine, Machado commented that he was unable to find any transactions on the blockchain regarding Petros and, while the token was originally slated to be released on the Ethereum network, it since has transitioned to NEM.
The president also authorized payments in cryptocurrency for Venezuela's consulate services and fuel on the border, saying it is just the "kryptonite" Venezuela needs to take on Superman - code for the imperialist United States. The white paper doesn't do a great job of defining the difference between pre-sale and actual tokens, but says 82,400,000 will be sold.
Venezuelans reported losing on average 11 kilograms (24 lbs) in body weight a year ago and nearly 90 percent now live in poverty, according to a new university study on the impact of a devastating economic crisis and food shortages. Venezuela watchers offered potential investors fair warning.
According to expert estimations, Nicolás Maduro;s government is aiming to raise more than $2 billion with this move. There is an additional problem that US -based investors purchasing the Petros would be in violation of American sanctions and could find themselves in trouble with Uncle Sam.
While Venezuelans largely blame Maduro for quadruple-digit inflation, chronic food shortages and rampant crime, the opposition's top contenders are now barred from holding office.
What happens next boils down to whether the beleaguered nation can attract investors who are willing to pile in despite risks that go beyond the normal issues we see with crypto investments.