"The Petro Is Born Today" - Maduro Launches revolutionary Oil-Backed Crypto

More than two months after Venezuelan President Nicolas Maduro announced his intention to launch the world's first state-sponsored cryptocurrency to try and help Venezuela raise some badly needed foreign capital, the Petro - backed by 5 billion barrels of oil that are still waiting to be pumped out of a local oilfield - is now a reality.

Venezuela first tipped its hand at its intentions over the summer, when it appointed what we believe to be the world's first "superintendent of cryptocurrency."

The Venezuelan government has been saying for months that the Petro would be available for sale beginning Feb. 20. The Venezuelan government has been openly discussing and providing concrete details, timelines, and updates on the implementation progress for many months.

There will be a fixed number of 100 Million Petros backed by the certified oil reserves from field 1 of the Ayacucho block of the Orinoco oil belt, which consist of at least 5,342,000,000 barrels. Venezuela is doing a pre-sale right now of 38.4%. The main IPO is slated for April and will involve 44%, or the bulk of the Petros. 17.6% will be retained by SUPCACVEN (Superintendencia de Criptomonedas y Actividades Conexas Venezolana) and distributed according to the plan laid out in the white paper.

More Info-

Petro Website with several key documents- http://www.elpetro.gob.ve/index.html

 Working alongside them has been a 27-year-old Venezuelan technology entrepreneur named Gabriel Jimenez, who says he’s spent months helping develop the concept of the Petro and remains certain of its power to fix what ails Venezuela. “This is a lot more ambitious than just a cryptocurrency. It’s a project which I, along with a national and international team, have worked arduously to benefit this country,” says Jimenez. He says he hasn’t been paid for his work and will be compensated only in Petros if the token succeeds.   

For the past seven months, Jimenez has been part of a government team working in secret in Caracas to study how cryptocurrencies could alleviate some of Venezuela’s deepest problems, including its recent lack of bank notes. Despite importing billions of banknotes, Venezuela’s worthless currency has struggled to keep up with quadruple-figure inflation that values the highest-denominated bill (100,000 bolivars) at just 50 cents. As a result, ATMs are empty across Caracas, and local banks limit customers to withdrawals equivalent to just a few cents a day.

Rather than build their own system from scratch, the Petro is built atop the ethereum blockchain. Venezuela's petro team reportedly paid a visit to China, where People's Bank of China is supervising crypto trials of its own.

Maduro's near-daily updates about the status of the Petro were reportedly a headache for the team of engineers, who had to talk him out of setting the initial price close to the present value of a barrel of oil.

Maduro’s spontaneous, running commentary on the Petro during his near-daily television appearances has caused headaches for the Petro team, which must constantly change the currency’s parameters or speed up work to fit the president’s latest ideas, according to two people with the project. For example, in December, when Maduro announced that virtual exchange houses were in a trial stage, they were just being programmed, two people familiar with the work said.

During a speech in early January, Maduro mentioned a $60 price per Petro, roughly the current value of a barrel of oil. Some on the team disagreed, saying it was too high and warning that early volatility in the currency could bring huge losses to initial buyers. In the end, a series of decreasing discounts was set in place that mean only 24 million Petros (of a total of 100 million) will cost the full price. Under this system, earlier buyers will be rewarded with a better price.

Venezuela also hosted a cryptocurrency forum last year and invited several high-profile cryptocurrency experts. However, all three of the invitees later refused to endorse the government's "technical specs" for the Petro.

At the event, Evercoin exchange founder Miko Matsumura, digital-currency attorney Carol Van Cleef, and Bitcoin Center NYC founder Nick Spanos praised the idea of an open currency and a transparent marketplace,according to people familiar with the event.

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  There is a lot of very detailed and specific information readily available. For example, the white paper drafts have been publicly available, and anyone who wants to read the current version of the whitepaper can read it here (in Spanish of course) and determine for themselves if it is "a political document infused with socialist doctrine" or not.

To fuel demand, the government guarantees that it will accept the Petro as payment for taxes and fees. It has also said it will seek to promote the Petro abroad.

President Maduro was quoted as saying in a launch announcement:

"Petro is born and we are going to have a total success for the welfare of Venezuela... The largest and most important companies and blockchain in the world are with Venezuela, we are going to sign agreements."

And it appears the Maduro government was successful in securing buyers. After trip to Dubai, Maduro announced Tuesday that 40 million Petros (out of an offering size of 100 million) had already been placed with institutional investors, leaving the administration wide latitude to offer discounts and other enticements (no word yet on whether Goldman Sachs has already signed on). Members of the public won't be able to buy their Petros for another month.

While it's unconventional, after the US adopted a ban on trading in Venezuelan debt in August, the country has been effectively shut out of global debt markets. Some see the Petro as a potentially illegal way to circumvent these restrictions.

Already, US politicians are trying to subject the Petro to the same sanctions affecting other Venezuelan assets. Last month, US Senators Marco Rubio and Bob Menendez urged US Treasury Department Secretary Steven Mnuchin "to outline the department’s enforcement mechanisms and efforts to combat the Maduro regime’s plans to use cryptocurrencies to evade U.S. sanctions."

“Maduro has proven that he will use every tool at his disposal to perpetuate his authoritarian objectives, including financial lifelines from Russia and China. As such, we are concerned that a cryptocurrency could provide Maduro a mechanism by which to make payments to foreign lenders and bondholders in the United States, actions that would clearly thwart the intent of U.S.-imposed sanctions,” the Senators wrote.

According to Reuters, the Petro has already attracted investments from Turkey, Qatar, Europe and even the US, according to the country’s cryptocurrency regulator (obviously not the most reliable source when it comes to this).