What Is the Petro and What Does It Mean for Fiat Currencies?

by Andrew McGuinness  //  jul. 30, 2018

Cryptocurrencies allows for advantages we never even would have been able to imagine when our world consisted of only fiat currencies. It allows for the incredibly complex and not always fair ecosystem of economy to be ignored, along with all financial and government-supported institutions.

The fact is, cryptocurrency offers an endless stream of advantages to individuals, businesses, and even countries. But it is their choice whether or not to utilize these benefits. The Petro cryptocurrency is a way in which the country of Venezuela has decided to take advantage of the positive assets digital currency has to offer. Here are a couple of facts about the Petro and what it means for the future of fiat currencies.

1. Overview of the Petro

The Petro is the national cryptocurrency of Venezuela, first launched in December 2017 by president Nicolas Maduro. How much the currency is worth will greatly rely upon the value of the country’s most prominent and beneficial materials. These include Venezuela’s mineral, natural gas, and oil reserves.

2. Venezuela

Venezuela’s economy has seen better days. At the moment, the national fiat currency of Venezuela, the Bolivar, has substantially decreased in value due to both inflation and debt. Not only this, but the Bolivar appears to be incredibly unstable by nature. For this reason, the country seemed to be stuck without a single solution in sight. This was until the concept of a national cryptocurrency was introduced. Now, Venezuela offers an investment opportunity for its citizens as well as those international investors interested in cryptocurrencies of all shapes and sizes.

By earning money through these investments, Venezuela may even be able to pay off its debts on its own. The Petro has only been on the market for about a month, and it should be kept in mind that most cryptocurrencies have taken a couple of years to earn any considerable profits. However, as long as Venezuela remains patient with their investment in cryptocurrency, they may be enjoying high returns by 2020.

3. Future of fiat currencies

The odd thing about the Petro cryptocurrency is the fact that it was established by the government. This completely goes against what cryptocurrencies were made for. While Venezuela takes advantage of some features offered by digital currencies, they reject others like the advantage of decentralized transactions. By associating the Petro with a government institution, the Venezuelan digital currency appears to be more of a hybrid between fiat currencies and cryptocurrencies rather than one or the other.

Conclusion

The best-case scenario for Venezuela would be that the Petro is somehow officially recognized as safe, secure, and profitable and seen so by investors within the cryptocurrency market. This would allow for the digital currency to gain investments far and wide. By gaining these investments, the Venezuelan government would then be able to pay off its debt and regain stability for their fiat currency, the Bolivar.

However, there are many more things that can go wrong with the Petro than can go right. First of all, a government’s involvement in a currency that was created with the intention to exclude all financial and government institutions is not a good sign of investors to come. The fact that the government affiliated with the cryptocurrency is in debt as well is not doing the Petro any favors. There is a lot of work to be done in order to fulfil Venezuela’s best case scenario with the cryptocurrency, but here is to hoping it all works out for the best.





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