An attempt to revamp the economy of Venezuela has led to the introduction of Petro cryptocurrency this year by the nation’s president. The introduction, as proposed, to take off on August 20, 2018, will see a 96 percent devaluation of the value of the national currency Bolivar.
Amidst the previous inflation the country’s economy is battling, world economists foresee more and harsher inflation in coming months.
The Bolivar Devaluation Against the Petro Cryptocurrency
The Bolivar, national currency to be further devalued by 96 percent against the newly introduced Petro cryptocurrency by the president in revamping the economy of the country. The new introduction as announced by the President, Nicolas Maduro will be the solution to the nation’s ailing economy.
As stated by Maduro, the process will lead to the increase of minimum wage by over 3,000 percent, boosting the corporate tax rate, and increasing highly-subsidized gas prices in coming days.
The devaluation will make 1 Petro equal $60 and have the equivalent of 360 million Bolivars. This creates a new exchange rate of 6 million Bolivars per dollar.
While speaking last Friday, he stated that:
“They’ve dollarized our prices. I am petrolizing salaries and petrolizing prices, and we are going to convert the petro into the reference that pegs the entire economy’s movements.”
The Opinion of Economists and the World on the Petro Cryptocurrency
Though the Petro cryptocurrency will be the first national cryptocurrency in the world, a measure introduced by Maduro to transform the country’s economy. Cryptocurrency enthusiasts see it as a beautiful development in the right direction, as a national cryptocurrency by a country would pave the way for more adoption by other countries.
However, the opposition leader of the Venezuelan government sees this idea as a fruitless plan that will lead to the wreckage of the nation’s economy. He tagged the President the “world champion in economic disasters.”
In the past months, there has been a massive migration of Venezuelans to other South American countries, to escape the harsh conditions of the economy.
While the international monetary fund predicts Venezuela to hit 1 million percent inflation this year, the United States President, Donald Trump signed an executive order, barring any U.S.-based financial transactions involving the Petro cryptocurrency, calling it a “scam.”
Some cryptocurrency experts also cast aspersion on the success of the Petro because it lacks clear details on how it operates.
World economists state that strict currency controls, botched nationalization, and excessive money creation as the causes of its economic crisis.
