Venezuela is pegging its economic recovery to a cryptocurrency that’s widely considered …

Carlos Becerra | Bloomberg | Getty Images

Nicolas Maduro, Venezuela’s president, speaks next to a stack of 12 Kilogram gold ingots during a news conference on the country’s cryptocurrency, known as the Petro, in Caracas, Venezuela, on Thursday, March 22, 2018.

Venezuela is doing something completely unprecedented. Some even say illegal.

As part of an attempt to stop skyrocketing inflation, the country is issuing a new fiat currency called the “sovereign bolivar,” which will be backed by a cryptocurrency. But that cryptocurrency, called the “petro,” does not trade, and Venezuela’s own parliament says it’s being illegally used to mortgage the nation’s cash-strapped oil reserves.

“This is a smoke-and-mirrors operation typical of Venezuela — I’ll believe it when I see it,” said Steve Hanke, professor of applied economics at Johns…