Venezuela making oil backed cryptocurrency as its economy implodes

Venezuela is creating its own “petrocurrency,” backed by reserves in oil, gas, gold and diamonds. It will enable Venezuela “to advance in monetary sovereignty, carry out its financial transactions to overcome the financial blockade,” Maduro said.

The black market rate for one dollar weakened to 103,000 bolivars on Friday compared with 10,000 at the end of July, according to, a website that tracks the data. The International Monetary Fund sees Venezuela’s economy shrinking 12 percent this year and annual inflation rising beyond 2,300 percent in 2018.

2 thoughts on “Venezuela making oil backed cryptocurrency as its economy implodes”

  1. This is a perfect example of how blockchains cannot force the real world to comply with the state of the blockchain. They cannot solve political problems.
    Fact Pattern: You register with a Bolinarian crypto-exchange to trade your Bitcoin for this new Petrocoin, and do so. You now own Petrocoins equivalent to 1 million barrels of Venezuelan oil. Great. You take a flight to Caracas and present your coin to the State-run oil company, demanding delivery of the oil to the tanker you have waiting off the coast.
    Possible Result 1: They shoot you.
    Possible Result 2: The oil was already sold for cash. So sorry.
    Possible Result 3: The government uses its Private Key (the same one they used to create a the asset in the first place when the oil was added to the reserve) to invalidate your petrocoins.
    Possible Result 4: All of the above.
    I’m sure you see the problem. Blockchains can only verify the data in their data store. They cannot verify the real world. They cannot compel anyone to do anything in the real world. They cannot make Maduro’s government law-abiding, peaceful, or inclined to honor property rights.

    • Excellent comment, Brock. I’d add that, while cryptocurrencies and blockchains may prove useful, they appear to be subject to an investor mania now, rather like the dot com craze in 1999 – 2000. Tread carefully…

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