Venezuela experiences a serious economical crisis and the government keeps developing plans to save the economy. Complicated economical situation has negative impact on human wellbeing – according to Credit Suisse estimations, the number of people who live below the official poverty line increase by 48% from 2014 to 87% in 2017.
The analyst expect the situation to get worse – the level of oil extraction and income made on selling it will keep falling due to lack of investments in the industry, absence of technical base and outflow of professionals. One of the main elements of plans for economical recovery are denomination of national currency and creation of blockchain-based asset Petro.
Petro is a token the price of which is linked to material wealth. Also, this is the first blockchain asset in the world issued in a centralized way by the government of an entire country. The token is based on NEM platform, its supply is fixed – 100 million tokens are issued, 82.4 million of them are available for sale. According to the project’s white paper, Petro may be widely used in economy, including paying for services and goods and creation of investment and storage tools. Some elements of protocol implementation remind the other popular blockchain-based asset – Dash. Petro highlights in its White Paper that the most important innovative of the protocol is an opportunity of immediate transaction making, however, this mechanism is already implemented in Dash.
As for its economical nature, Petro is a tool for tokenization of future cash flow from sale of exploitable minerals. The government linked the cost of Petro to the price of one barrel of oil and promised to back it by reserves located in 380 km from Atapirire. In September, 2018 Reuters agency published a report noting that the region was poorly developed and that it did not have the infrastructure needed for petroleum development.
If investors appreciate Petro and the asset has demand it will be possible to say that the country attracted additional investment for development of resource-based industry. Also, the government believes that the use of Petro will allow to resist to US financial sanctions.
Restriction on circulation of USD at Venezuela’s territory and US sanctions contributed to increase of use of public decentralized blockchain assets – Venezuela’s legislation does not restrict them. In December, 2018, the number of vendors who accept Dash as payment method is much higher than in USA. Among the vendors who cooperate with Dash actively there are such major players as KFC. Responding to economical realities of Venezuela, Dash also adapted SMS transaction signature service. Considerable part of population has no access to smatphones and uses the simplest phones.
Meanwhile, Dash is just one of examples of public blockchain assets which gains popularity in the country. Bitcoin’s annual turnover per head on localbitcoins is 36 times higher in Venezuela than in China and 3 times higher than in Norway in 2018.
The fact that it is possible to watch two types of blockchain assets – Petro, issued by the government in centralized way and decentralized assets – like Dash or Bitcoin – competing with each other illustrated by the entire country’s economy makes this situation unique. Decentralized blckchain assets’ core value is an opportunity to store and transfer them without intermediaries. Venezuela became economical sandbox where it is possible to estimate to what extent blockchain technologies are ready to be used on a nationwide scale.