Cryptocurrencies are all the rage these days. People all over the world are getting excited about the surge of bitcoin, figuring out how to buy them — and telling their friends about it. This trend didn’t escape Maduro, and just a few days ago he announced his government would create PETRO, a cryptocurrency hecha en socialismo.

It can take long to wrap your head around cryptocurrencies, but if you learn only one thing about them, it should be that they’re parallel financial systems where transactions are unstoppable by any authority. A sweet way to avoid U.S. sanctions, right? The government sure is interested, and it isn’t wasting time. The country’s prime technical university, held hostage, is developing research and mining facilities, while two crypto-related companies are competing behind the scenes to get PETRO just right.

Launching a new cryptocurrency isn’t especially difficult; the hard part is convincing others to give you things that have value in exchange. Communists’ opinions aren’t that hot in markets, but Venezuelan oil is, so Maduro will issue pieces of paper where he promises to redeem PETRO for some of the 300 billion barrels of oil waiting to be exploited in our territory.

I know what you’re thinking: who in their right mind would trust Maduro to live up to his promise? Let me introduce you to Mr. InsaneCrypto Market:

Yes, a cryptocurrency called PetroDollar (unrelated to PETRO) went up in price more than 2,800% the day Maduro made the announcement. It crashed immediately afterwards, okay, but some people made money. The government could hold a closed sale after orchestrating a propaganda campaign, and if it’s massively successful, it only needs to work once.

Very little is known about PETRO at this point, and what I just described may not be the government’s strategy; the world’s largest cryptocurrency sale brought in $230 million – more than plenty for a business venture, but small money at state scale. The government may want Chinese and Russian citizens to buy up claims to Venezuelan oil. Perhaps if those two governments and their threats are involved, those certificates Maduro is so fond of won’t be completely worthless. He would be literally selling the country in the world’s first Initial Country Offering.

Seguiremos informando.

23 COMMENTS

    • Mrubio, I want to send some seeds. Will try the open-pollinated kind first. I was thinking black and pinto beans. Is there a particular type of corn that does best there? I am not a farmer or gardener and am unfamiliar with growing cycles. This won’t be a very large shipment this first time; I hope to do better once I know how to do it and more specifics about what you could use.

      • J, thanks for the kind offer. Over the coming days John and I will be comparing notes on what the locals tell me are the best varieties of each type seed they wish to plant. Having said that, open-pollinated versus hybrid is a good choice since a portion of the crop can be harvested and saved for replanting the following year.

        Beans are planted extensively here once the rainy weather begins to taper off. Our soils are generally sandy loam and well-drained and beans survive with relatively little rainfall. They’re also readily received by the locals in their diets.

        If you’re in the States, my recommendation is to work closely with John for now as he has both the procedural experience and trusted shippers in place to get packages into the country and ultimately to their final destination. I don’t see the need to double up on shipping, but that’s your choice. I worked with John’s shippers for the first time a few weeks ago and they went above and beyond the call of duty to make sure the package made it to us.

        I’m working on data for John right now and I’m sure he’ll be glad to share it with you.

        Again, thanks for the kind offer.

        • Seeds are just part of the problem. Beyond a nice gesture that is highly appreciated, I don’t see any benefits other than to those charging fees to carry your delivery to Venezuela. Your seeds should come with a reasonable dose of fungicide, fertilizer and possibly, some pesticide too. Yes, I know, fertilizer can ‘be produced’ from organic sources, and pesticides and fungicides damage the environment and your health, so does say the mantra. Agriculture in the Tropics is not to be compared with those charming, high-throughput places in the corn belt of the US, or the warm and productive lands of California. Besides, low-intensive, traditional agriculture is not a part-time hobby as many pretend it to be. A tomato produced in your orchard will be many times more expensive than one produced by a knowledgable farmer, so will be corn. That, provided that you know how to battle the many zillion bugs, pathogens, viruses, bacteria and many animals that will try to take advantage of your well-intentioned production plot.

          • “Besides, low-intensive, traditional agriculture is not a part-time hobby as many pretend it to be.”

            C’mon! I can personally attest that there is nothing more satisfying than spending 12 hours a day, walking over plowed dirt, staring up at a draft-horse’s ass-hole!

  1. The Chavistas are always setting up parallel systems to try and skirt the real ones they can’t control and/or ignore with impunity.

  2. How is a currency launched and backed by a country a crypto-currency, anyway? Isn’t that like say, taking three zeros off the existing currency and calling it “strong”?

  3. A crypto currency for a country would require everyone to have an on line account. Even assuming everyone had such an account would not the government have access to send benefits and any other remittances. The ultimate control of the population would be in the good hands of your friends the Chavistas. Ouch.

    • “Jennifer Suárez / 8 dic 2017-. El Presidente de la República, Nicolás Maduro, firmó este viernes un decreto para la creación de la “Superintendencia de la Criptomoneda y su Relación con el Mundo”.

      Para este despacho, designó como superintendente al constituyente Carlos Vargas, quien aseguró que a partir del lunes se instalará el “Observatorio Nacional del Blockchain”.

      Maduro dijo que todos los venezolanos tendremos acceso a la criptomoneda, ya que “todos los venezolanos podremos adquirir esta moneda tangible en un poquito de petróleo”. De este mismo modo, expresó que “nuevamente, se le están abriendo las puertas a Venezuela hacia la modernidad”.

      Por su parte, el nuevo Superintendente explicó que la criptomoneda se soportará con las reservas petroleras del país. “Ese sueño del comandante Chávez, el Petro, vamos a materializarlo y hacerlo realidad”, dijo.

      “Los venezolanos tendremos un ‘activo refugio’ que impactará de manera positiva para combatir el dólar, para combatir los indicadores que nos han inducido a una inflación”, aseguró.”

      Alguien, por favor, podria explicar como el venezolano de a’pie podria utilizar el Petro?

      http://www.noticierodigital.com/forum/viewtopic.php?f=1&t=88807

  4. “Por su parte, el nuevo Superintendente explicó que la criptomoneda se soportará con las reservas petroleras del país. “Ese sueño del comandante Chávez, el Petro, vamos a materializarlo y hacerlo realidad”, dijo.”

    So it appears that this week they’re not going to diversify away from a reliance on oil.

    Also, isn’t it about time for Maduro to recall all the 100 bs notes once again? They gotta pay those pensions and aguinaldos.

  5. Chavismo is going to cryto-currency due to a lack of the real thing.

    Venezuela’s oil sales to U.S. fell in Nov to lowest level since 2003
    Venezuela’s crude oil exports to the United States fell in November to their lowest level since January 2003, when a strike knocked down the country’s output, due to sanctions and a steep production decline, according to Reuters data.

    State-run oil company PDVSA and its joint ventures sent 475,165 barrels per day to its customers in the United States last month, down 36 percent from a year earlier and 12 percent from October.

    The South American country has lost 1 million bpd of production in the last four years and pumped less than 2 million bpd in October, according to official numbers reported to the Organization of the Petroleum Exporting Countries.

    As the US is one market where Venezuelan oil gets real cash money, as opposed to paying back loans to those anti-imperialist Chinese or Russians, this indicates Venezuela’s cashflow problem is getting worse.

  6. This Reuters article points out that it Wall Street speculating gringos aren’t the only ones who hold Venezuelan bonds. Venezuelans also own some of the bonds. The silent creditor group in Venezuela’s debt crisis: Venezuelans
    The prospect of a Venezuelan debt default triggering a clash between revolutionary socialists and foreign creditors has overshadowed an equally complicated dilemma facing the OPEC nation: a standoff with its own citizens who are bondholders.

    Though Venezuela’s junk bonds are popular among high-rolling Wall Street funds, they are also widely held by Venezuelans due to a decade-long Socialist Party policy of subsidizing the purchase of foreign debt by individual investors….
    It is not immediately clear what percentage of the country’s $60 billion in outstanding bonds are held by Venezuelan individuals.

    New York-based Torino Capital estimates “resident holdings” of such debt at around $14 billion, though a significant portion of that is believed to be in the hands of state institutions.

    The Information Ministry did not immediately respond to an email seeking comment.

    No surprise from the Information Ministry, which would be more accurately described as the Disinformation Ministry. I wonder what percentage of the bonds in Venezuelan hands were bought with cheap dollars only available to enchufados. My guess is most.

  7. The worth of Oil reserves depends on the countrys capacity to extract them , the cost of such extraction , the kind of oil being extracted, its demand in the world markets vs other options , the price which it can fetch at different times , and ultimately in the amount which can be monetized after deducting from the price the cost of its extraction handling and marketing ……this means that if most of the reserves consist of extra heavy metal rich oil which specially costly and difficult to extract refie ad market and the country lacks the economic incentives and other conditions to bring in the expertise and investments to monetize them , they will be worth very little …….their great worth is a delusion in todays circumstances, Venezuelas total oil reserves in actual economic fact must be worth perhaps 20% of what an equivalent volume of reserves are worth in places like the Middle East or Russia.

    The volume in bls is not important , what is important is the relative level of monetization which its extraction and marketing can bring in……one important factor is that the chaotic conditions which now prevail in Chavista Venezuela make it worth much less than if we had a governent like they have in Chile , in Colombia or in Peru…………because the cost of monetizing it is so much higher and difficult . The notion that producing 1 million more bls than now will entail some great benefit for the country reveals the shortsightedness of the people now handling the oil industry !!

    When will we ever learn that reserves are just a factor in a business and that it is the effiiciency of the latter that makes those resources valuable …

    • This is where the respected news sources always get it wrong.

      They keep claiming that VZ has the largest PROVEN oil reserves, totally misunderstanding the meaning of “proven” in this context.

      For example, there’s an estimated million tons of natural gold in and under the world’s oceans (I’m making this number up), but it’s all worthless because it would cost you 10 million bucks to find 5 bucks’ worth of gold.

      • I am reminded of a story (NSFW) where a boy goes up to his father and asks what the difference is between theory and reality.

        The father tells his son to ask his eldest sister if she would sleep with the dirty drunk laying in the street for a million dollars.

        The young boy reports back that she gladly would.

        The father then tells him to ask the same question of his other sister.

        Again, he reports back that she would not hesitate to get the million dollars.

        So the father says to the young boy, “in theory, both of your sisters are worth millions of dollars each. In reality, they are just a couple of whores”

        So it is the same for the VZ crypto currency. A pump and dump scheme like any else.

    • Bill,
      The math that I have done convinces me that the regime is not realizing any cash from value added to the oil industry from oil production. They are reducing debt with China and Russia and realizing money from cash flow that is being diverted from Capex and maintenance.
      Admittedly it is a challenge to have hard numbers. The bloated workforce, even though they are paid with almost worthless Bolivars, has given PDVSA the highest lift costs of any OPEC member. About 45% of production is available to monetize. The last estimates that I could find on PDVSA lift costs put them at over $27 per barrel. VZ crude sells at roughly a $10 discount to WTI.
      For easy comparison, assume that VZ oil is bringing $50. Remember that only 45% of production is going to the market. For every 2 barrels produced at a cost of close to $55. PDVSA realizes cash in hand of $45.
      Deferred capital investment and deferred maintenance may allow for money to be redirected. This only results in more rapid deterioration of production.
      Lift costs will continue to increase as production decreases and fixed overhead remains the same.
      The amount of investment that will be required to restore the Venezuelan infrastructure, coupled with the burgeoning environmental disasters, may make it very hard to entice foreign investment that will be needed after the regime is gone.
      2017 will have more money invested in renewable energy production worldwide than in fossil fuel production.
      The game is changing rapidly. The rush for electric vehicles is gaining traction with all of the major auto makers involved.
      There may never be $100 oil again.

  8. It should not surprise me that the USB is involved – after all, if you are going to do anything related to Computer Science, thats the place in Venezuela. But it makes me sad to have my old alma mater involved in this bullshit.

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