Venezuela is going to launch “petro gold”, a new cryptocurrency that will be backed by precious metals. The announcement was made by Nicolas Maduro, Venezuela’s President on Wednesday, one day after Venezuela launched its oil-backed cryptocurrency, the Petro.
“Next week I‘m going to launch the petro gold, backed by gold, which is even more powerful, that will strengthen the petro,” Maduro said. He believes that cryptocurrencies will be across sectors like tourism, gasoline sales as well as for oil transactions.
Now Venezuela is fighting with hyperinflation and a collapsing socialist economy, and Maduro hopes that digital currencies will help Venezuela combat sanctions and the “economic war” waged by the U.S. government against his country.
Announced in December 2017, Petro is claimed to be backed by the country’s oil and mineral reserves. It was designed to advance monetary sovereignty, help to overcome the financial blockade and thus move towards new forms of international financing for the economic and social development of the country. This currency is regulated by the Superintendence of Cryptocurrencies and Related Activities.
“We have taken a giant step into the 21st Century… We are on the world’s technological vanguard,” Maduro said.
According to Telesur, investors from Brasil, Denmark, Honduras, Poland, Norway, and the Middle East have expressed interest in the Petro, either in accepting it as a form of payment, or investing in it.
On Tuesday, the leader of Venezuela announced that ‘Petro’ tokens raised a whopping $735 million in just first few hours of the token sale.
However, there are those who oppose the new currency. Opposition leaders call Petro an illegal debt issue, and investors have questioned its value given concerns about Venezuela’s solvency and transparency.
Venezuela’s Congress declared Petro illegal, as it is claimed to violate the Constitution of the country. The parliament stated that the whole concept of Petro creates a mechanism of borrowing against the oil reserves of Venezuela. Jorge Millan, one of the legislators who took part in the discussion of the digital currency, said: “This is not a cryptocurrency, this is a forward sale of Venezuelan oil.”
The U.S. warned that the cryptocurrency could violate the sanctions and thus create legal risk for U.S. investors.
Sean Walsh, founder of crypto-asset investment firm Redwood City Ventures, said it was difficult to come to any conclusions about the petro gold without seeing specific details. But he said he was a little interested in tokens backed by physical assets.
“Rather than buying a cryptocurrency backed by gold, I’d just go buy the gold,” Walsh commented. “Gold is a physical thing that you want to be able to hold in your hands, because that’s the point.”
Gold-backed cryptocurrencies already exist, a prime example is RMG created by The Royal Mint in Britain. But blockchain experts believe that digital tokens are only as valuable as the faith inspired by their issuer.