The new way of avoiding sanctions in Venezuela: The PETRO

Several experts say that the new Venezuelan cryptocurrency is a way of avoiding sanctions and collecting foreign currency for the payment of an external debt of around 8 billion dollars.

To understand how Petro works, we must know what cryptocurrencies are

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The cryptocurrency or cryptocurrency, are virtual currencies that only exist on the Web and are used through a system of encrypted electronic payments without the need for intermediaries, its main feature is that they are not issued by governments or central banks and transactions are anonymous .

For the prominent oil economist and expert, José Toro Hardy, the creation of Petro as a cryptocurrency - proposed by President Nicolás Maduro - does not have the characteristics of being a cryptocurrency and does not make this type of money viable.

• The government raises as support the oil that is in production to fix the price of Petro in an international market. If you use this type of support, would not give greater credibility to this type of currency?

A: They would be supporting a debt, as a result, that would become the title of the public debt, the problem is that Article 312 of the constitution prohibits the State from issuing a public debt that is not backed by a Public Credit Law approved by the National Assembly and currently the AN considers this measure null and unconstitutional on the part of the national government, attracting as a consequence that there is no confidence.

• The executive has opened to oriental markets to get around the financial fence imposed by the United States, can this attract some kind of positive economic result?

A: Although the government alleges that it is looking for clients and has obtained some, it has not been able to prove it, it is difficult for other countries to assume that purchase commitment without carrying out investigations that guarantee the cryptocurrency of legal, constitutional and valid use, any investigation that is has done around the Petro shows that it is illegal, null and void.

• Does the Venezuelan external debt force the country to enter these types of markets to generate foreign currency?

A: The country is in a perverse circle where the government does not generate dollars, the oil production collapsed and the leaders are desperate because they have commitments and a debt of 8 billion to pay this year, therefore it is a mechanism for the Obtaining foreign currency that is needed, for that Petro need and believe that if they succeed, they can sell it and acquire foreign currency, since nobody currently lends to Venezuela not only because of the United States sanctions but for the predicament that is found unable to pay the debts.

"PDVSA generates money without support that contributes to the increase in the money supply, there are many bolivars circulating in the form of deposits and transactions, generating demand for goods and as there is no agricultural and industrial production, they collapsed, the price increase in the country is product of the increase in the money supply ". José Toro Hardy

National Government bets on Petro to face the crisis

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The Petro, the new Venezuelan cryptocurrency, is the bet of the national government that tries to fight the financial fence that the country is currently experiencing, according to what high officials of the executive power state.

In a forum held at the headquarters of the newspaper Últimas Noticias, which was called Cryptocurrencies, on Wednesday, February 21, several experts gave their perspective on the outlook facing Venezuela so that the implementation of this new financial reform will be successful .

The new digital currency wants to generate a state of economic confidence

"It is not a bonus, it is a decentralized support that opens the point of international financing." This was stated by Víctor Álvarez, economist and coordinator of the Observatory of Economics of the Latin American Institute of Social Research (Ildis), who also insisted that the entry to Venezuela of a cryptoactive that has as backup oil reserves can create a state of confidence, which allows to bring as a result the foreign investment in the country.

Álvarez believes that the petro well employed and with reasonable expectations can become a true ally of the economy. "The petro will be our currency for the capture of foreign currency and the bolivar will be for national use, the two will be set at the same value so that the purchasing power will be recovered". He assured.

The fluctuation of the Petro and the bolivar

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For its part, Laura Carreño, director of institutional relations of the Superintendence of Crypto assets and related activities of Venezuela (Supcacven), stressed that the utility of the petro in the country will depend on the use and confidence that is granted.

"The bolivar will fluctuate against the petro, just as the dollar currently does, we must make both currencies coexist," said Victor Theoktisto, a professor at the Simón Bolívar University and a member of the Blockchain Observatory, who unlike Álvarez He argued the danger that the competition of the bolivar with the petro supposes as it happens at the moment with the dollar that tries to disappear the national currency.

"400,000 barrels of oil is just what Venezuela can use to raise foreign currency" Víctor Álvarez.
To achieve the economic objectives that are proposed, José Ángel Álvarez, president of the National Association of Cryptocurrencies (Asonacrip), explained that in order to carry out this reform "Asonacrip proposes the promotion and diffusion to be the first crypto in the world, advice free to digital miners and the creation of new cryptocurrencies such as cacaocoin for the purchase and sale of cocoa products in the Venezuelan region "He explained.

According to specialists in the field, the confidence of the system depends on security in the digital platform, highlighting that a weakness of the cryptocurrency is the variability between supply and demand, if the price of the barrel decreases the prices of the currency also .