Will Venezuela launch a cryptocurrrency?

by on December 3, 2017 at 4:04 pm in Current Affairs, Economics | Permalink

President Nicolas Maduro said on Sunday that Venezuela will launch a cryptocurrency to combat what the leftist leader says is a financial “blockade” against the crisis-hit nation spurred by U.S. sanctions.

Maduro said the OPEC member’s new currency, “petro,” will be backed by natural resources reserves although he did not provide details on the logistics of its roll-out.

Here is the link, no additional text, believe what you wish!  For the pointer I thank M.  Do any of you have a more detailed Spanish-language source?

1 A Truth Seeker December 3, 2017 at 4:15 pm

It is like owning a small bit of a not particularly well-managed gas station.

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2 chris purnell December 4, 2017 at 11:26 am

“…the leftist leader says is a financial “blockade” against the crisis-hit nation spurred by U.S. sanctions.”

Do you ever say ‘rightist’ leader? If not is that because it’s a default power position and doesn’t need noting?

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3 Israel December 3, 2017 at 4:15 pm

Printing money got to expensive?

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4 Peter December 3, 2017 at 6:14 pm
5 JWatts December 3, 2017 at 4:23 pm

Who’s going to buy this currency? Or is the government just going to unilaterally start paying it’s bills with it. And woe be the group that attempts to insist on being paid in tangible assets.

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6 Borjigid December 3, 2017 at 10:30 pm

People love cryptocurrencies. Dogecoin was (is?) a thing. Petro makes senses in comparison.

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7 Matthew Young December 3, 2017 at 4:38 pm

Backed by oil, and if it really a cryptocurrency, then it can do a cash transaction with no bank involved. This is unlike bitcoin which is not a cryptocurrency and bitcoin cannot do cash transactions. What is the difference? The $20 dollar bill, done in digital crypto with counterfeit proof watermark. That is digital cash, bitcoin can never do that, it is stuck as a blockchain security.

I say, yes, Venezuela may as well be the first nation to do this, wealthy people already have cryptodollar and they can autotrade whicih is why they always get see the best gains first.

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8 XVO December 3, 2017 at 6:27 pm

Define cryptocurrency for us please? How does it differ from Bitcoin?

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9 bellisaurius December 3, 2017 at 8:03 pm

Fine with the idea, but venezuala woudn’t be my first choice in ‘secure’.

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10 Dzhaughn December 3, 2017 at 11:51 pm

Please provide details on the process of getting the oil from the currency.

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11 Sam the Sham December 4, 2017 at 7:47 am

For a time, even Rare Pepes were traded in Venezuela (backed by bitcoin). But still the biggest joke in Venezuela remains socialism. The joke is just killing it!

https://thebitcoinnews.com/venezuelans-using-rare-pepes-and-bitcoin-as-currency/

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12 The Original D December 4, 2017 at 11:56 pm

This will fail. Cryptocurrency has to have on- and off-ramps for fiat currencies. That means it’s value will fluctuate based on sentiment about the government that backs the fiat. So owners of the tokens will demand higher prices for Venezuelan bolívares relative to the dollar, pound etc. Unless the economy completely converts to this new currency, which basically means giving up all control of monetary policy.

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13 Mike December 3, 2017 at 4:44 pm
14 Massimo December 3, 2017 at 5:02 pm

And here is the announcement in Aporrea.org, the chavista main blogosphere
https://www.aporrea.org/economia/n318050.html

It’s histerical, Maduro has no idea of what it means, he just repeats what he is told to repeat. Probably by El Assaimi, in this case, because Cabello is streetsmart, but not particularly intelligent..
The liquidity has grown from 8 trillions of bolivars to 81 trillions in the last 12 months (official BCV figures, among the few they are still publishing). Who in the world is going to believe that this stuff will be “backed” in any way? BTW, a few years ago Chavez reimported the gold of the BCV in Venezuela, so they cannot even use the few reserves they still have.

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15 albatross December 3, 2017 at 6:01 pm

It will be the first cryptocurrency based, not on proof of work, but rather on proof of hunger.

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16 Russell December 3, 2017 at 5:52 pm

This is literally the plot of one of my favorite dystopian novels of the past few years: The Mandibles

Except in that one, a bunch of other nations collectively form a new currency pegged to natural resources, not just one, and exclude the US from participation.

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17 Borjigid December 3, 2017 at 10:36 pm

Commodity indexes tend to be dominated (~3/4) by petroleum, so I’m not sure there’s much difference. Dunno how you would exclude somebody from using a such a currency either.

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18 Bill December 3, 2017 at 6:03 pm

I am announcing that I am creating a

100 Bill–not to be confused with the $100 bill–

Which will be backed by

My natural intelligence,

And your willingness to accept it,

Either one of which is sufficient for it to be successful.

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19 Thor December 3, 2017 at 7:39 pm

The currency

Austere and lovely

Was haiku backed

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20 Bill December 3, 2017 at 8:37 pm

+1

That is worth

A 100 Bill.

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21 dan1111 December 4, 2017 at 7:22 am

+

1

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22 Matthew Young December 3, 2017 at 6:10 pm

The definition of crypto means local verification with a secure watermark, otherwise known as cash, one step transfer in protocol language.

Yes, every one of the busy bodies changes, repeats, hawks various crap and mal definitions. Bitcoiners are scammers, as is Diane Feinstein who proposes to ban the cash transaction.

I have a mission, take everyone through the logic. We need cash transactions, whatever the medium, paper, silicon,. mineral. We need the cash to make asynchronous purchases, least the high frequency traders begin to hedge our bet as we await a three step clearance, in protocol language. Understand? Tell me my software has to clear it with the Fed system, the HFT have no such restriction, they collect the wedge liquidity,.

If we cannot figure this out, then we get the system we have, the big banks have to form cartel to insure continued payments, they get to be the organized, official HFTers, backed by the middle class taxpayer.

Here is what you want. Secure, intelligent, personalized cash card, a card that can securely engage in any cash transaction over any monetary system. The card will be counterfeit proof, and it almost always, but not necessarily, uses crypto verification everywhere.

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23 Scott H. December 3, 2017 at 6:22 pm

Understand?

No.

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24 Ch December 3, 2017 at 6:54 pm

But why male models ?

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25 Bob December 3, 2017 at 8:36 pm

There’s no need to know anything about crypto-anything to figure out where this is going: What is going to force a sovereign country to enforce a peg, or to actually hand you oil? A blockchain might make it difficult to change the supply of coins without the world knowing, like you could with paper, but who is going to enforce anything? Look at what Venezuela did to many international companies that thought they owned rights to oil and refineries.

Digital systems to transfer assets are used all over the place, but the key is not cryptography and blockchains, but having an almost certainty that the physical part of a transfer happens. Making sure that losing the keys doesn’t make the asset disappear into the void is also an important property: Dad died, but his private key to the house deed was lost, and now the house will remain unowned forever is a bad outcome. Someone else cloning your keys, transferring the property, and ultimately telling you to leave it is just as bad. We avoid those outcomes through judges. If you have judges, you don’t have a cryptocurrency.

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26 The Lunatic December 3, 2017 at 8:53 pm

Well, sure. If you can’t actually extract the oil from the ground and sell it for real money, declare the oil in the ground the “reserves” for a new currency. Maybe you’ll be able to scam someone into taking the currency in exchange for something of actual value and put off your Ceaușescu moment a little bit longer.

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27 Doug December 3, 2017 at 9:02 pm

> Dad died, but his private key to the house deed was lost, and now the house will remain unowned forever is a bad outcome.

This can easily be solved today with timed hash locks. I set up a deadman switch on my bitcoin assets. If I don’t check in at least once a year, the blockchain releases the assets to my designated heirs. I don’t have to share private keys with them while alive (and potentially risk them stealing the assets).

> Someone else cloning your keys, transferring the property

Split your money between your “spending wallet” and “saving wallet”. Keep the latter as a 2-of-3 multisig account. One key goes to you, one key goes to a reasonably trustworthy guy, who you can call up and verify transactions with. The third key goes to a very well trusted institution (like a well-respected law firm), who keeps it in cold storage. They only take it out there’s a hack or your verifier is trying to steal from you. Unless both you and the verifier are simultaneously hacked, or the verifier and cold-storage institution collude to rob you, you are safe even if your personal keys are stolen. The point is this is just as secure as banking today, if you trust Bank of America with your dollar deposits, why would you not trust them to keep keys in cold storage?

> We avoid those outcomes through judges.

Cryptocurrencies also allow you to designate judges. Particularly if you are on a platform that supports smart contracts. The difference is participants are free to choose judges based on reputation and honesty. Whereas today you are stuck with whatever judge happens to exist in your specific country and jurisdiction. Even if they’re insane, corrupt and/or incompetent.

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28 dan1111 December 4, 2017 at 7:25 am

“This can easily be solved today with timed hash locks.”

That doesn’t help. The scenario can be easily solved in various ways if you plan ahead. But the scenario happened because somebody died without planning ahead.

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29 Tom T. December 3, 2017 at 9:34 pm

If it’s being offered by a sovereign entity, doesn’t that make it just a “currency”?

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30 Tim Worstall December 4, 2017 at 5:16 am

Someone running a country on near hyperinflation of the money supply is going to issue a currency with a hard issuance limit?

Yup, there’s that live bacon gliding past the window.

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