Venezuela, which has been going through its worst economic crisis of recent times, is struggling to stay afloat in the global economy. As inflation levels hit record highs (predicted to hit 1,000,000% later this year), the Venezuelan President Nicolás Maduro is now looking at cryptocurrencies to bail the country out, particularly at Venezuela’s own Petro, an oil-backed cryptocurrency which was officially released earlier this year. Maduro has reportedly declared that Petro will now be the second official currency of the country.
The Petro would now be used as a ‘unit of account’ in the country, and it will be legal to pay salaries and pensions, as well as purchase goods or services in the Petro. Maduro made this announcement on national television, stating that a new system of salaries and pricing system for goods and services which will be purchasable via Petro will be announced soon. Maduro believes that by switching to Petro, there would be a significant increase in the income of the people.
Moreover, he also made it official that from the 20th of August, the Petro and the Bolivar would both be the official currency of the country. Petro was introduced earlier this year as an ambitious move to bypass the sanctions imposed by the US and the European Union. Venezuela also tried luring other countries to use the Petro by offering them crude oil at a cheaper rate if paid via Petro.
Maduro, during his television address, announced:
“As of next Monday, Venezuela will have a second accounting unit based on the price, the value of the Petro. It will be a second accounting unit of the Republic and will begin operations as a mandatory accounting unit of our PDVSA oil industry.”
Cryptocurrencies are often used in countries which are struck by inflation or by dictatorial leaders. We have seen this in the case of countries such as North Korea, Russia, Iran and most recently in Turkey, where the Lira is losing its value and interest in cryptos is growing. Moreover, cryptos are also popular in some countries such as war-torn African nations, where no proper banking system exists.
