The country's National Union of Workers argue that Maduro's plan for forcing the public to conduct 95% of all payments electronically by next year defies the constitution.
This begs the question: Will a cashless Venezuela serve as the final proof that Maduro's government is a dictatorship?
On 20th February 2018, the Government of Venezuela released the Petro in a bid to supplement Venezuela's plummeting bolivar fuerte currency, introduced one decade earlier but now rendered practically worthless from rampant hyperinflation.
“Our country has released our first official crypto in the history of the world [...] It’s also the only one whose value is backed by real estate. The Petro demonstrates, today more than ever, that together all is possible.”
Petro, or Petromenda, is described by Venezuela's government as a cryptocurrency backed by the country's oil and mineral reserves. However, being a digital store of "value" run by the government does not a decentralised cryptocurrency maketh.
As a desperate move to secure cash amid an unprecedented economic meltdown brought about by Maduro’s socialist policies, there is little hope that it will raise enough hard currency and function as a payment method for foreign suppliers since most transactions have been stymied by financial sanctions imposed by Washington last year.
Jean Paul Leidenz, a senior economist at the Caracas thinktank Ecoanalítica, says there are about 13 billion banknotes in circulation in Venezuela. But about half of these are 100 bolívar notes, each worth a small fraction of one penny.
“Prices are doubling around every two months. So at that rate of price increases you can’t keep up with inflation even if you start importing bills,” Leidenz says.
He and other analysts are calling for market reforms, including the lifting of government currency controls, to help combat inflation and boost national production amid Venezuela’s worst economic crisis in modern history. But the Maduro government has made no effort to change tactic.
“That seems to us an abuse of power and a totalitarianism [...] In addition, [the Petro] is a virtual currency that violates the Constitution. As workers, we disagree that this cryptocurrency is imposed on us.”
A cashless society has been described as a dictator's toolkit. And for a country with skyrocketting cash demand and a government who will not reform to supply it, a so-called "oil-backed cryptocurrency" alternative will do little to win back the faith of the Venezuelen people or foreign investors.
If there was any doubt surrounding whether Nicolás Maduro could be classified as a dictator, there doesn't seem to be any now.
Excerpt from Wall Street Journal
You can only buy [Petromonedas] from the Venezuelan government. And while it's true that it says it's going to set up a system to change this, it can't even keep its story straight about how that would work. It is intended to supplement Venezuela's plummeting bolívar fuerte currency, purportedly as a means of circumventing U.S. sanctions and accessing international financing.
More than that, though, the petro isn't a currency in any sense of the word. Nor is it intended to be. There are two things to understand here. The first is that you can only buy petros with dollars, not bolivars. Which, practically speaking, means that Venezuela's people aren't allowed to buy them at all. That's because years of deprivation have left dollars in extremely short supply. The second is that you can only use petros to pay your taxes in Venezuela. They aren't good for anything else. And that sets up a very deliberate catch-22: The only people who can buy petros can't use them, and the only people who can use them can't buy them.
It should come as no surprise, then, that the petro isn't really backed by oil, either...
There are two types of countries, just as there are two types of companies: ones that are doing well, and ones that are pivoting to blockchain.
...The best way to understand that is to think about it from Caracas's perspective. It has no economy, a lot of debt and a desperate need for dollars so it can import enough food to keep its people from starving even more. (According to recent surveys, 64 percent of Venezuelans involuntarily lost weight in 2017 at an average of 24 pounds each, on the heels of 74 percent doing so in 2016 at an average of 19 pounds each)...
Crypto Currency News Bitcoin Mining Operations Cause Blackouts For a country like Venezuela, its current financial crisis is leading people to mine more and more Bitcoin in order to make any money at all, but the mining seems to have a cost as well, in the form of blackouts. All the mining is pulling every bit of energy towards it, leaving little behind to power homes, for example.
Wall Street Journal Venezuela’s cryptocurrency is one of the worst investments ever Indeed, the International Monetary Fund estimates that, by the end of the year, Venezuela's economy will have shrunk 38 percent since the start of 2014, and its prices will be 2,176 times higher. Which is why Venezuela's government has just launched the petro, its own cryptocurrency backed by oil. Well, at least that's what the regime is saying. In reality, the petro isn't a crypto, it isn't a currency, and it isn't backed by oil in any meaningful sense. It's just a way for Caracas to try to get around the sanctions against it while raising money from the only people more clueless than itself.
BBC China's slowdown and cheap oil
China's economic slowdown has finally left its imprint on global stock markets. But the impact has been discernible in the oil market for many months and it has gone further in the last few days. The reason: China is the world's biggest importer of crude oil.
Fortune Venezuelan President Asks Banks to Mine the National Cryptocurrency. Unions are Aghast (23 Feb 2018)
Venezuelan President Nicolás Maduro is doubling down on his support for the Petro, encouraging the country’s banks to mine and use the recently-launched national cryptocurrency. That authorization has led to howls of protests from unions, which say Maduro is abusing his power.
The Guardian Cash crunch: how Venezuela inadvertently became a cashless economy (20 Nov 2017)
Venezuela’s currency, the bolívar, is named after Simón Bolívar, the 19th-century hero revered across South America for leading the fight for independence from Spain. But the recent history of the banknote he inspired is far less glorious: low-value notes have been rendered practically worthless – and now Venezuela is running out of them.