It appears as though there is finally some concrete financial action that is about to be taken in regards to Venezuela’s oil backed cryptocurrency, the Petro. President Nicolas Maduro expressed to the media this week that he will be sending $1 billion worth of profits from the coin to the country’s central bank. Once in the hands of the central bank, the profits will be sold using DICOM auctions.
This is an important event, not only for the financial backers of the Petro but also for the citizens of Venezuela, as it may finally confirm two very important things. The first being that Maduro has actually sold enough Petro to make this kind of financial transaction.
Maduro has made some fairly exceptional declarations about just how much Petro he’s been able to sell, but so far no one from outside of the Venezuelan government has been able to authenticate his claims. The most recent claim made by Maduro was that he’s so far been able to unload more than $3 billion dollars worth of the oil backed cryptocurrency. The successful completion of this newest transaction will not confirm any sales in the range of $3 billion dollars, but it is a step in the right direction.
The second important thing that this transaction will tell us is whether or not Maduro plans to spend these funds in a manner that benefits his citizens. The conditions that led to the creation of the Petro were born out of the mismanagement of socialized funds and poverty has become an extremely relevant issue for Venezuelans since the collapse of the country’s economy last year. Whether they like the country’s oil backed cryptocurrency or not, citizens of Venezuela will all be taking a keen interest in what social benefits the profits of this transaction eventually produce.
For those unfamiliar, Venezuela’s DICOM auctions are simply government orchestrated currency exchange auctions. People wishing to purchase the Petro have been able to do so using a really wide variety of currencies, and thus, the country’s central bank will have quite a few different notes in need of exchange. For example, when the Petro was first launched it could be purchased using Rubles, Bitcoin, Ethereum, and NEM. Purchasing is now available using an even wider range of assets.
In terms of what entities will be partaking in the DICOM auctions, there are no concrete leads, but some news sources are reporting that foreign corporations will be the main participants.
Commodity Backed Cryptocurrencies
A plethora of different digital coins are popping up these days and more than a select few are backed by real-world commodities. The Petro is one of them, but entities like Aramco have also launched their own oil backed coin. If you would like to learn more about how these assets operate, please visit our guide, What is a Commodity Backed Cryptocurrency?