Venezuela to launch new cryptocurrency 'Petra' amid economic crisis
In a bid to revive Venezuela's economy, President Nicolas Maduro has announced the creation of a new virtual currency. Maduro said the new currency "Petra" would be backed by the country's oil, gas, gold and diamond wealth. Opposition leaders have slammed Maduro's decision. The move comes amid increasing global interest in Bitcoin, a leading cryptocurrency. Here's more about it.
Cryptocurrencies use cryptography for security, regulation, and generation of currency units. They are created and transacted electronically and are difficult to counterfeit. As central authorities don't issue them, all cryptocurrencies are "immune" to government interference. There are no middlemen, not even banks! Bitcoin, invented by an unknown person under the pseudonym Satoshi Nakamoto in 2009, is the most popular cryptocurrency currently in circulation.
Venezuela has an oil-based economy based on abundant energy reserves. The slump in oil prices along with the plummeting value of its currency, Bolivar has compounded a pre-existent economic crisis, leading to severe shortages of food, medicine, and other essential items. Inflation in the country stands at 700%. The country owes at least $140bn to foreign creditors and is tied down by US sanctions.
In a televised announcement, Maduro stated that the new virtual currency would help Venezuela "advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade". "The 21st Century has arrived," he stated to loud cheers from supporters. Maduro didn't reveal details on when or how Petra would be launched.
Maduro is perceived as a dictator by large sections of Venezuela. His policies are highly unpopular. Responding to Maduro's announcement, opposition MPs insisted that the introduction of Petra would require Congressional backing. Speaking to Reuters, Opposition MP and economist Angel Alvarado stated: "It's Maduro being a clown. This has no credibility." "I see no future in this," said fellow opposition MP Jose Guerra.