RATE Group | Why Venezuela’s Oil Based Cryptocurrency Is Still Alive
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Why Venezuela’s Oil Based Cryptocurrency Is Still Alive

23 Feb Why Venezuela’s Oil Based Cryptocurrency Is Still Alive

Posted at 02:59h in Cryptocurrency News by

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In a recent Wall Street Journal article, Mary Anastasia O’Grady writes that Venezuela’s “National Superintendency for the Defense of Socio-Economic Rights is reportedly pressuring stores to accept the government’s new digital fiat currency, the Petro.” The Venezuelan government claims its digital currency, which launched in early 2018, is backed one-for-one by a barrel of oil. The petro is also intended to circulate at a fixed exchange rate with the bolívar soberano, the latest iteration of Venezuela’s fledgling currency. 

Ms. O’Grady quotes me summarizing some of the work I have done with Josh Hendrickson and Thomas Hogan, which shows that a government can get its citizens to use its preferred money so long as it is sufficiently big or is willing to levy sufficiently large punishments. But she leaves another question unanswered: why would the Venezuelan government prefer the petro? Stays Alive

Three reasons stand out.

  1. Avoiding U.S….

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