Venezuela’s controversial state-sponsored cryptocurrency, the ‘Petro,’ is back…kind of. And it’s already starting to feel like a case of déjà vu.
What happened with “El Petro”?
Originally “launched” in early February, Venezuela’s state-sponsored cryptocurrency has been a point of controversy since its inception.
In its initial state, Venezuelan President Nicholas Maduro announced that the oil-pegged-coin was to be used to skirt U.S. sanctions. Part of this announcement mentioned that the cryptocurrency project had raised over $735 million shortly after release. The true details, however, remained limited at best.
The original whitepaper, published in Spanish, noted that the cryptocurrency was to be built on the Ethereum blockchain. But after some reconsideration, a newly-released English-language whitepaper revealed that it would be built on the NEM infrastructure. Neither blockchain contained a real version of the PTR.
In addition to the whitepaper confusion, it quickly became apparent that it was impossible to actually purchase the cryptocurrency, as the website was not operating as intended.
In the months following these events, Maduro made every attempt to spur the adoption of his creation, from offering massive discounts on Venezuelan crude oil to pleading with members of the Organization of Petroleum Exporting Countries (OPEC) to participate.
Despite his efforts, however, not a single government publicly stated that they would be using the cryptocurrency. And according to multiple publications, Venezuelans weren’t fond of using the coin either.
However, despite the lack of a cryptocurrency, supporters or adopters, Maduro doubled down on his dream. He pegged a newly released ‘bolivar soberano”, a currency which effectively slashed five zeroes from the bolivar, to the Petro.
The launch of the bolivar soberano led to chaos within the country, leaving citizens scrambling to exchange notes, and eventually leading the government to cap ATM withdrawals at 10 bolivar soberanos (about US$0.15) per day.
The currency confusion also led to numerous scams, with merchants and customers alike looking to take advantage of the situation.
Expectations vs. Reality
In early October, Nicolas Maduro finally announced that the second round of Petro sales would begin on November 5th, with revitalized claims that the state-sponsored cryptocurrency would usher in a new era of financial freedom for Venezuelans.
Additionally, Maduro released an order stating that Venezuelans would be required to purchase passports and other government services with the cryptocurrency.
Leading up to the latest release of the Petro, Maduro claimed that over 100 countries had expressed interest, and that the cryptocurrency would be available to buy, sell, and trade on at least 6 major exchanges almost immediately upon its release.
So far, the exchanges listing the cryptocurrency are little-known and fairly new, with most created just this year, including Afx Trade, Bancar, Cryptia, Criptolago, Amberes Coin, and Cave Blockchain – a far cry from Binance and Huobi which were among the ‘major exchanges originally promised.
Despite the apparent lack of interest from major exchanges, Venezuela is moving full-speed-ahead with its plans to legitimize el Petro.
So what’s new this time around?
Maduro created his own blockchain! Kind of…
When exploring the protocol and whitepaper, some Reddit users were quick to reveal that the diagram highlighting how the blockchain works was taken directly from the development documentation of Dash.
The Reddit gang also did some more digging, uncovering the exact command list used in el Petro’s wallet (at least while it lasted) had also been lifted from another project.
Additionally, though el Petro has officially hit the streets, users seem to be having mixed experiences downloading and using the wallet, much less actually purchasing the cryptocurrency.
The original version of the wallet which the Reddit users accessed is no longer online and, until last week, the download “file” was simply an empty folder called “wallet.”
Today, however, it appears there’s no wallet at all, as users receive a pop-up message which promises that the wallet is coming soon…
In addition to its revamped infrastructure, the Petro is no longer pegged to just oil. Now, the price of one Petro is based on a complicated mixture of oil, diamonds, gold and iron, according to the whitepaper. It should also be noted that there are no clear figures of the country’s true reserves of gold, diamonds, or iron.
Exit scam or just bad execution?
Maduro’s Petro v2 rollout has left a lot to be desired once again. But is it an exit scam or are they just having trouble launching in this new endeavor?
The regime is doing everything in its power to legitimize the new cryptocurrency, from forcing citizens to pay for passports with it to pegging their fiat currency to it. However, even Venezuelans are having trouble believing that it will ever be successful.
Gabriel Negrín, a journalist for Kryptoguia based in Venezuela noted, “The situation with el Petro is more complicated than it seems. The official launch was delayed a couple of times; wallets seem nonexistent and the blockchain shows quite rare movements. In addition, even though we have said that the oil price has been reflected (currently at 68.55 $ approx), they decided to leave it fixed at $60.”
Gabriel added, “They forced the banks to place the balance in Bolívares and in Petro, nevertheless this is clearly symbolic since you cannot transform your money to Petro through the exchange platform; In addition, there is no convertibility of Petro to BTC or other cryptocurrencies.”
Another skeptic, Twitter user JesusLara, attempted to purchase the cryptocurrency for himself, only to be turned away without any coin. He then investigated the blockchain explorer, finding that only 91 Petro, totaling approximately $5,500 had been exchanged in the 5 days since launch, between only 30 ‘real’ buyers.
While it’s still difficult to confirm what’s exactly happening behind the scenes given the lack transparency of the regime, it’s clear that Petro v2 may already be heading down the same path as its predecessor.