This Sunday, leader of the Venezuelan regime Nicholas Maduro announced that the Venezuelan state would create its own cryptocurrency.

Reuters quotes him as saying: “Venezuela will create a cryptocurrency... the ‘petro,’ to advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”

The same article also explains that: "The digital currency will be backed by Venezuelan reserves of gold, oil, gas, and diamonds, he said during the near five-hour show, which included traditional Christmas songs and dancing."

Venezuela at this moment is being racked by protests caused by the state's economic mismanagement. The ruling socialist party has been in power for over a decade, but has increasingly found itself beleaguered as oil prices collapsed and living conditions faltered.

Venezuelan miners

The Venezuelan population in the meantime has already turned to cryptocurrencies because of hyperinflation, Venezuelans are in a situation where one dollar now exchanges for 103.000 Bolivars on the black market. An Atlantic article explains that:

"Electricity, it so happens, is one thing most Venezuelans can afford: Under the socialist regime of President Nicolás Maduro, power is so heavily subsidized that it is practically free. A person running several bitcoin miners can clear $500 a month. That’s a small fortune in Venezuela today, enough to feed a family of four and purchase vital goods—baby diapers, say, or insulin—online. (Most web retailers don’t ship directly to Venezuela, but some Florida-based delivery services do.)

Under these circumstances, a miner starts to look a lot like an ATM. Professors and college students have mined bitcoin; so, rumor has it, have politicians and police officers. It has become a common currency even among non-miners: Peer-to-peer online exchanges (think Venmo, but with cryptocurrency) allow everyone from shopkeepers to a former Miss Venezuela to buy and sell with bitcoin."

Yet that has not prevented the government from going after miners, even when they are now creating their own cryptocurrency.

"Maduro has begun cracking down on mining operations, apparently finding in them a convenient political scapegoat—much as he calls those who seek to profit off inflation “capitalist parasites.” Yet trading bitcoin is still condoned. It’s as if Maduro realizes that cryptocurrency is one of the few things holding the country together."

Maduro the clown

Opposition members meanwhile greeted the plan with scepticism. “It’s Maduro being a clown. This has no credibility,” opposition lawmaker and economist Angel Alvarado told Reuters.

“I see no future in this,” added fellow opposition legislator Jose Guerra.

Maduro says he is trying to combat a Washington-backed conspiracy to sabotage his government and end socialism in Latin America. On Sunday he said Venezuela was facing a financial “world war.”

Whether the petro will be a success, or even see the light of day, remains to be seen. The idea, however, of a government backed cryptocurrency has been put forward before., the Estonian government suggested making an Estcoin in August of this year. They were then swiftly rebuffed by the European Union.