Original art by @modográfico

A lot has been said about the Petro, Nicolás Maduro’s much ballyhoo’d new cryptocurrency, but little is known for sure. When it comes to the Venezuelan government, we know they like to keep things tight and the Petro affair won’t be any different.

Chavismo’s plan is to just tell the market how many Petros there are, how much they’re worth, the method of acquisition and if transactions are registered by machines or an underpaid intern.

That sounds bad, but it’s not the reason I mistrust this thing.

The Petro is a blockchain project, with the particularity that all coins are already mined; a blockchain is a record of ongoing interactions between users of a decentralized system where cryptography protects the integrity of transactions. Interaction blocks are usually “mined”, which means they are registered by machines solving mathematical problems to earn the privilege to confirm them.

The supply of premined coins is limited, that’s why demand can add value to these assets. Liquidity of privately-owned blockchain, on the other hand, can be managed through the purchase and sale of coins, as the company considers market behavior.

Other cryptocurrencies have also been premined. Ripple, for example, is a privately mined token with the 3rd largest market capitalization and signs of acceptance by a few banking institutions.

No centralized registry, no closed doors and certainly no Superintendente De Los Criptoactivos. This is a big reason I believe the Petro will fail: trust.  

Now, in the case of the Petro, the initial sale will be privately held and the government will choose who can collaborate on the transaction verification process. If you feel like this is the same failed exchange-schemes the government has tried before, that’s because it is. A “public auction”, sort of like CADIVI, will sell crypto this time, for all those bolÍvares running around. It may change later, but the boy has cried wolf before and who’s to say the government won’t only sell once, get some money and call the whole thing off?

If you needed funds from a foreign government (cough-cough, Russia) to finance your presidential campaign and sanctions blocked that transaction, you could try to create a digital system where anonymous trade could be held and untraced, then use these premined coins to exchange them for other currencies anonymously. You may exchange your Petros for Bitcoin, transfer that to a wallet in China, Russia or whatever, withdraw that money from an unregulated exchange with little identity rules and turn them into cash. Or pay directly in Bitcoin.

Why would you go through all that trouble?

Petro, like other cryptocurrencies, has no intrinsic value, besides the underlying technology making peer-to-peer transactions on a decentralized manner. Other coins, like Ethereum, also began their premined journey successfully. The big difference is that in those cases, anyone anywhere could open a digital wallet, purchase the coins and exchange them for goods online. No centralized registry, no closed doors and certainly no Superintendente De Los Criptoactivos. This is a big reason I believe the Petro will fail: trust.

Guys, the Petro is nothing but a self-financing scheme that will work with some success and disappear like every other foreign currency scheme the government has implemented. Question is: will this be a lesson on the inefficiencies of current sanctions? Or will the Petro be remembered in history as the smartest way to avoid them?

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    • https://dolartoday.com/atencion-lo-que-se-sabe-del-operativo-en-contra-de-oscar-perez/

      I mentioned this in another thread. The more people you let in on your rebellion, the higher the likelihood you get discovered.

      The guy stole guns for his revolution, for better or worse. I saw in another DolarToday posting that he was announcing he was involved in a shootout, and being attacked.

      Well, DUH! It was bound to happen. Time and resources are not on his side. In a nation as impoverished as Venezuela, someone was bound to turn him in for a bounty. I am surprised that he allowed himself to be captured, if all of this is “real”. If he is indeed captured, then very likely Maduro et alli will deny they ever had him, and he will be tortured first, then end up in a shallow grave in some weedy field.

      If he was indeed “for real”, I am surprised. At least SOMEONE in Venezuela had the balls to take up arms and fight for their country.

      • Saw a video around noon that he had posted, showing cops surrounding his location. They looked like CICPC, not military.

        Later in the PM my woman says she read that there was a shoot-out with a few dead on both sides. I know nothing of how accurated that is. If he’s captured, he’s as good as dead.

      • My guess was that he was turned in.

        Kind of like the French Resistance fighters who were turned in to the Nazis for a few favors.

        But not for a few croissants. In this case, a pernil.

  1. Good post Alejandro.

    But I disagree on the get-money-from-Russia angle (or from whoever).

    1) If the government wanted to use cryptocurrencies to receive money from Russia, they wouldn’t need to create their own cryptocurrency. They could simple tell Russia to give them bitcoins; i.e. use the existing cryptos. Why create “ a digital system where anonymous trade could be held and untraced”, if several systems like that already exist?

    2) The sanctions might make it difficult for Venezuela to use their bank accounts in the US and Europe, but nothing stands in the way of them receiving money in Chinese or Russian banks, or in any other sketchy country.

    • Hi pedro!

      1) BTC has a public ledger, and like for mastercard, we are numbers to the ledger. Data flows are very predictable, and in this context, the government could not take the chance to make these transactions on a blockchain they do not own.

      2) Agreed! but these flows are becoming more traceable + on blockchain they create a platform to transform those inorganic VEF to USD

    • I agree with Pedro. The government may have full control over the Petro, may move it to Russia and back, but when the time comes to recover their investment they will have to convert it to hard currency ($$$) and then all the efforts to avoid sanctions will be lost.

      I see the petro more as a financing Ponzi scheme: get some investors in, pay at due time to the first investors to create momentum and then all of a sudden declare it under attack by evil NSA hackers and keep all the money.

      • A former local contact of mine, a rancher, told me one day that he was involved with some “general in Caracas” buying dollars at the preferred rate and was “making a killing”.

        Apparently they’d both put up money (the buddy’s share being significantly more than the general’s). The buddy would apply for the dollars so as not to expose the general’s involvement but the general would pull the right strings for the buddy to be awarded the dollars. They’d then split the ill-gotten gains 50/50. Didn’t matter that the buddy was putting up much more in bolivares because the return on the dollars would dwarf the difference.

        Long story short, I saw him one day and asked how the dollar buying scheme was going and he said it went sour. Sour I asked? “Yeah, eventually I put up a huge amount of money and the general ended up with all the dollars. When i went to him and asked for my share of the money, he told me there was no share to be had. I pressed and he finally said that if I thought I could pressure him into paying me, he knew where my wife and kids lived”.

        End of story, though it did give him a different view of what “making a killing” meant.

  2. As for the Petro, as with anything these guy do: wheres the scam?

    The devil is in the details and that is what we are waiting for now.

    A dumptruck full of Bolivares Fuertes says these guys are preparing themselves a “back door” from which they can cash out in real money. Guaranteed.

    No different from any CADIVI scam and the like.

    Rome is burning and Chavista enchufados are playing their proverbial fiddles (nice expensive handmade imported fiddles bought for pennies on the dollar) while Venezuela goes down in flames.

  3. Hi Pedro,

    1) BTC has a public ledger, and sort of like a mastercard, we are numbers to the ledger. Data flows are very predictable and they couldn’t take the risk to make these kinds of transactions on a blockchain they do not control.

    2) Agree! but this is the smartest way anyone has ever avoided international sanctions + they create a platform to make some money in the process (transforming inorganic VEF to dollars in a legal way)

    • Thanks for your article, but I’m still confused about a lot of things.


      1) If they pretend to control the blockchain, then why in hell wouldthis be a “blockchain”. I mean, the idea of that is to have a distributed public ledger, no?

      2) If the petros are already mined (sounds logical – you mine more you must make their value in “oil” less), then what incentives would you have to actually be part of the distributed ledger?

      So, basically, I’m wrong to think this is as much “blockchain” as “I have some central computer in a basement of the BCV for this, and that all”?

    • But you haven’t explained why they’d need to do this over a blockchain.

      1) What’s the problem with the transaction being traceable? The goverment is not doing anything ilegal by receiving money from Russia or China. They do it all the time. Russia lends money to the goverment (they even signed a refinancing agreement a couple of months ago, which Maduro announced as good thing; no need to hide it). They can do it again, whenever they want, through banks. And the US sanctions don’t apply on this loans (nor on “gifts”). They have no reason to hide anything.
      2) The thing about turning Bs into USD via the Petro remains to be seen. In fact, the Bs doesn’t matter; what matters is whether they will be able to sell Petros for USD/€. For that to happen, you have to assume that lots of people would be willing to pay USD for Petros. I’m sure some speculators will jump at the chance, but it’ll be peanuts (best case scenario, a under $100 million). When we talk about exchanging A for B, someone has to be willing to give up B for A. And I don’t think many people will be willing to pay USD or BTC for a premined crypto where the issuer retains the right to issue more at will, and thus debasing the currency (just like they debased the bolivar)

      I’m sure there’s a nefarious or stupid purpose behind the Petro. Maybe it’s money laundering, or an attempt to create a new SITME, using the Petro instead of bonds. But I don’t think they’re doing it to hide something they have no reason to hide.

        • Simply the hype surrounding it, he hopes to attract investors from around the world with this “scam,” and all over the world people are putting money into cryptocurrencies and blockchain like there’s no tomorrow.

          It’s obvious he’s holding all the coins and can hold as many as he pleases by creating his own coin, without anyone knowing. Ever. The coin will likely garner a pairing with BTC if anyone is dumb enough to buy them (or if they get turkey to make a large initial investment to boost the price,) giving each coin a minimum value of 1/satoshi (rate is around 1000 satoshi=~$1USD give or take)

          Also, as far as the other thing you guys were talking about- Bitcoin is not private but there are many cryptos that already exist and that are very liquid, that ARE private. So that’s not a reason for creating one. He wanted to create one under the guise of helping his country while capitalizing on trigger-happy blockchain investors from around the world, all starting with literally nothing.

  4. Hi jesus,

    1) “blockchain” doesn’t mean its public or private. It just means a new protocol to establish a secure way to process interactions between peers with no intervention from a central intermediary. So you can think of blockchain as distributed-through-machines bank. Also, the ledger can be private. Coins such as “Dash” focus on privacy.

    2) In the case of a distributed mining service, there could be a reward for keeping the system running, but that reward is going to their own pocket under the current scheme.

    Hope this helps!

  5. Help me out here, Alejandro. Are government workers, oil workers, merchants, private service providers (e.g., taxis, barbers, painters, auto mechanics), etc., all expected to take petros in exchange for their paychecks, goods, services? Is the Petro intended to be a replacement currency that will somehow hold value, resist inflation and replace Bs for day-to-day (“peer-to-peer”) commercial transactions? Do the millions of “peblo” people all have smart phones, and are they ready to buy food, clothing, pay rent, etc., using petros? Is the telecom infrastructure capable of supporting this, especially in view of the problems that exist with point of sale transactions and internet service in general?

    Seems to me know one would agree to be paid in petros unless they were confident they could freely spend those petros on the good and services that they need, unless we are just talking transaction laundering because the exchanges can allegedly be anonymous?

  6. “As for the Petro, as with anything these guy do: wheres the scam?”


    “Como ej el negosio” “Cuanto hay pa’eso”? That’s what should be explained here by the finance specialists.

    This Klepto Currency, or KleptoPetro, was created in order to be able to STEAL more, now that another forms of THEFT and embezzlement have been exhausted by the Chavistoide Narco-Kleptocracy. That’s all.

    S please be specific: how does this KleptoCryptoPetro financial ruse allow the Chavista thugs to steal more? Will it work, for how long? How much more can they steal by using this bogus new tool?

    Those are the only real questions.

    • Thus, all this conversation over all the technical details of cryptocurrencies can be counterproductive.

      We all know it is bullshit and wont work. Yeah, we are asking some good questions on block chain and stuff. But in the end, this is just another sales pitch from the socialist snake oil salesmen. Thus, dont get too bogged down on the technical details of blockchain and stuff like that.

      To begin a truly kleptozuelan analysis of any economic activity in Venezuela, WE ALWAYS BEGIN WITH THE DETAILS OF HOW THEY ARE GOING TO STEAL THE MONEY.

      This article does a good job of debunking the petro in theory and I really liked it. However, I think we need to move beyond a technical discussion of cryptocurriencies to uncover what is the real SCAM behind this and HOW the enchufados are going to cash out with their Petros…and then EXPOSE their scam.

      • Precisely.

        “I’m sure there’s a nefarious or stupid purpose behind the Petro.” writes Pedro here, and many others while scratching their heads. Trained Economists, Finance Majors..

        Theft, another way to steal, illicit enrichment, IS the purpose. Complicate things a bit, hide bogus public ledgers and stuff, now that most other milk cows ran dry.

        Scratch you heads all you want talking about “blockchains” or any other intricate financial mechanisms. The KleptoPetro is very, very simple: just another attempt at massive embezzlement by the greedy Tropical Kleptocracy.

  7. Good you mention Ripple because thats one coin that got swollen and shortly fell thses last few days, even their core team says it is not safe for speculation and as an investment, but as a means for a lot of sout korean projects to do their procedures.

    Petro is one big pump and dump, people who get into it as an investment will lose big time.

    Allthough once it falls to the lowest price it can be good alternative for bolivares,

    What i mean is, a petro can start at a 50$ price per token and fall to one cent per token, sure, all those investors lost their money (lol ) but afterwards if a petro is worth one cent one month and one cent the next one is better than holding bolivares that are worth less each day it passes. Making inflation hit a lot less if you can make the conversion or if you get paid in petros by the state.

    • “or if you get paid in petros by the state”

      I asked about that in an earlier comment – is the government going to start paying people in Petros?

      • I don’t believe they will. There is no infrastructure to pay everyone in Venezuela with petros, we are currently having trouble paying with good old fashioned debit cards…

        The thing is that with the petro, if it actually works as a stable thing and not only as a money-laundering machine, it could alleviate dollar demand in Venezuela. Considering that the government doesn’t have a positive cash flow, selling an asset in bolivars that’s worth an oil barrel and could be sold on international exchanges, would definitely accomplish this.

        • The Petro–in theory–and if enough people bought in (and this is a big if) AND if the Petro does not lose value it could alleviate dollar demand among Venezuelan business owners who earn in Bolivares. That way they do not have to buy and sell dollars as a way to keep up with inflation.

          Other than that, forget about getting your barrel of oil. Wont happen. Also forget about the Petro being a stable currency. Wont happen.

          All that will happen is that they will flood the Petro at the beginning with their ill-gotten gains. Then they will let other speculators in on the scam and that will further inflate it. Those in “the know” will get out and cash in their Petros for a real currency or cryptocurrency at the right time… and the rest of the dupes will be left holding some worthless psuedo crypto currency at the end of the day.

          Even if the overall objective is to come up with some grand money laundering scheme with the Petro (which would be for the collective good of Chavismo), you better believe they have left a back door open for them to steal money from themselves. It is in their Kleptozuelan DNA.

      • We don´t know yet (as far as i heard at least) , but it might be a possibility. It has been speculated since the news about Petro was first revealed.

        It would be kinda difficult to implement though but it might be so for a certain number of workers , who might use it to buy dollars. For the general populace i doubt it, this country can barely hold the online payment network and debit card machines as it is to be implementing more novelties.

  8. Why not use corpoelec to mine bitcoin? Seriously, turn all ministry offices, government owned industrial complexes, into mining machines. Take advantage of the negligible costs of electricity, the same way regular miners have been doing. The upside is you control electricity. I’m sure they must be doing it somewhere. Probably in Upata. Most definitively in Upata.


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