Category Archives: Nicolás Maduro

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Venezuela Calls for Crypto as Tax Payment

Venezuela Calls for Crypto as Tax Payment

The Venezuela state government now requires operators with crypto business in the country and overseas operators dealing in foreign countries to pay relevant taxes using cryptocurrency to boost the economy.

The move further illustrates the move towards digital currencies, as the value of the bolivar continues to fall. Given the economic crisis, Bitcoin has fast become a financial refuge for many nationals, with President Nicolás Maduro struggling to save the economy from going under from highly unsustainable inflationary situations and an ineffective and largely invisible introduction of the oil-backed Petro, Venezuela’s national digital currency.

The new decree states: “The Venezuelan people are currently facing a fierce war waged by internal and external factors that pursue the deterioration of the economy, which is why it is necessary to adopt sufficient measures to ensure the strengthening of the current fiscal regime.”

The Ministry of Popular Power of Economy and Finance is already putting the new legislation in place which will attempt to enforce the Petro as the only tax payment system for this particular group. The only exemptions to the new rule, according to the decree, will be transactions of securities traded on a stock exchange and “the export of goods and services, carried out by public bodies or entities”.

It appears that those “who carry out operations” in foreign currencies or cryptocurrencies as authorized by the law can also pay their taxes in foreign currency as well as digital currency. Normal taxpayers won’t be billed in Petro, as some believed would happen after an announcement by one state region declaring that cryptocurrency would be the new mode of payment for taxes. Tax refunds will be repaid in bolivar, the nation’s fiat currency.

Jean Carlos Martínez, representing the Service Desconcentrado de Administración Tributaria (Sedemat), clarified that “taxpayers will not be charged taxes in Petros”. He explainted that Petro would only be used as a reference unit to determine minimum tax, as “the ordinance of the current economic unit is still stipulated in percentages of gross income”.

He explained that those conducting transactions in Petro, Bitcoin or other currency, should declare their income according to the currency that they use. Als,o he clarified that the Petro has two uses, one as a cryptocurrency and the other “as a unit of account that translates into 9,000 sovereign bolivars, which will be used in passport procedures or current salaries”.

 

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President of Venezuela: Petro Exchangeable for Other Cryptos Only If Purchased in 2018

The President of Venezuela, Nicolas Maduro, has said “Anyone who buys Petro before 31 December 2018 can convert it into any digital currency or international convertible currency”. This implicitly indicates that anyone who buys Petro after New Year’s Eve will not be able to exchange it, raising further doubts about the Petro’s existence.

All cryptocurrencies in existence can be traded for any other cryptocurrency or fiat currency if there is a willing buyer. Maduro is saying this will not be possible for people who buy the Petro ‘too late’. Further, if the Petro was a real cryptocurrency it would not be possible to stop people from trading it for other cryptocurrencies or fiat currencies. This announcement by Maduro is implicit proof that the Petro is not a cryptocurrency, while at the same time the announcement will make Venezuelan citizens who do not understand cryptocurrency rush to buy the Petro.

So far there is no evidence the Petro exists. The block explorer is non-functional and actually worse than non-functional since it seems to be producing fake data regarding the number of blocks. It says there are 626 blocks, much less than if the block time was really 1 minute like it says in the Petro whitepaper, and no block data or transaction data is viewable.

Beyond the faulty block explorer, people who bought Petro when the public sale started received paper certificates instead of actual cryptocurrency. This suggests the Petro is a fiat currency at this point, and that has been re-enforced by Maduro’s announcement that the Petro will not be exchangeable for citizens who wait until 2019 to buy. With a non-fungible fiat certificate, it is certainly possible to ban people from exchanging Petro if they buy past a certain date, but it is not possible to do that with a fungible cryptocurrency.

Ultimately, the purpose of the Petro was to halt Venezuela’s hyperinflation crisis, since Bolivars are supposedly backed by Petros. Inflation continues unabated, with 26% inflation in the week since Petro launched according to Bloomberg’s Café Con Leche Index, where someone buys the same cup of coffee at the same shop in Caracas regularly to gauge inflation. Annual inflation is at 150,000% per year.

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Venezuela Begins Selling Petro, Buyers Get Certificates Instead of Crypto

On 29 October 2018, the Venezuelan government announced that the Petro could be purchased by the public, pushing up the date of the sale by about a week due to the eagerness of President Nicolas Maduro. People can buy it with fiat currencies as well as major cryptocurrencies. However, buyers are receiving paper certificates that show their ownership, rather than actual cryptocurrency. There continues to be no evidence that the Venezuelan state cryptocurrency really exists.

Venezuelan government officials and at least one Chinese delegate made a public show of buying the Petro. They were given certificates, which include the full spectrum of identifying info such as name, signature, and fingerprints. This is apparently required to buy it, which does not make sense since it was supposed to be designed to be an anonymous crypto like Dash. Further, the officials and delegate proudly had pictures taken with their certificates, proving that the certificates do not include a private key.

There is a block explorer on the official Petro website and it is barely moving. The block time is 1 minute according to their white paper but there are only 316 blocks, according to the website. None of the block details or transaction information is viewable.

The combination of the misleading block explorer and paper certificates being issued to buyers suggests that Venezuela is collecting fiat and crypto in exchange for Petro but giving nothing in return besides a paper certificate. Essentially, at this point, the Petro might have been released as a fiat currency that can be printed from a standard computer printer and, therefore, can be more easily counterfeited than any other fiat currency in the world.

The next phase according to Venezuela is Petro savings, where people can save their money with the Venezuelan government. Petro Pay will also be launched alongside the savings plan. For all real cryptocurrencies, a pay feature is not needed, since the wallet automatically includes sending and receiving features. The fact that people have to go to the government to pay with Petro, instead of sending it themselves, might be further evidence that it does not exist.

Despite all of this contrary evidence, the Venezuelan government said: “This Monday the sale of the Petro cryptocurrency is successfully launched for all Venezuelans and those who want to make financial transactions digitally through this mechanism.”

 

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Venezuela to Pay Salary Bonuses with Petro Despite Lack of Working Signs

Venezuelan President Nicolas Maduro has announced that long-awaited salary bonuses for workers will be paid in the coming weeks, the caveat being these bonuses will be paid with the Petro cryptocurrency. However, there continues to be no indication that the national cryptocurrency is a functioning one.

Maduro said, “In the coming weeks the payment schedule of the bonuses will be fulfilled with the new salary tables set in the petro, which is from the economic recovery program that started 58 days ago on August 20 and will begin to pay all the bonuses as it should be, and if you think about the future, think about saving, think about the gold and petro savings plan.”

The reality is that there appears to be no sign of the Petro’s existence. There is a block explorer webpage which launched in early October 2018 but there are no blocks listed, only a search bar where someone could enter a Petro transaction ID. However, the format of a transaction ID is not known, making the block explorer unusable. Further, the page records the number of blocks and connected nodes, showing a block number of 137 on 8 October to 157 on 25 October. An in-depth investigative report in September 2018 found that the Petro was non-functional, which was confirmed by a complete redesign of the cryptocurrency in October 2018

Maduro calls on Venezuelan “workers” to invest their bonuses in gold savings and petro, claiming that the state is “laying the foundations of a savings plan that guarantees the worker a future”.

Venezuelans will not be encouraged to save, after years of hyperinflation that peaked this year to 172,600%, according to the Café Con Leche Index, where someone buys the same cup of coffee at the same coffee shop in Caracas to gauge Bolivar inflation, and this inflation rate is exponentially increasing. The re-denomination of the Bolivar Fuerte to Sovereign Bolivar, and the announcement that the Petro backs the Bolivar, has not slowed down the inflation rate.

It is unclear why the Petro has not become operational yet.

 

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LocalBitcoins Takes off in Argentina and Venezuela as Inflation Rockets

October 2018 has seen record Bitcoin trading volumes on peer-to-peer platform LocalBitcoins in Argentina and Venezuela.

Given the economic crisis in both of these South American countries, BTC has fast become a financial refuge for many nationals, with the governments of both Mauricio Macri and Nicolás Maduro struggling to save their economies from going under from highly unsustainable inflationary situations.

Such is Bitcoin’s current impact on both of these nations at present, blockchain voting project Democracy Earth developer Santiago Siri, has suggested that the Argentinian Central Bank should place up to one percent of its national reserves in Bitcoin.  BTC has become a veritable safe haven with ATMs now becoming widespread to cater for demand, and significantly more merchants across the country accepting Bitcoin as payment

Argentina, which is now on the IMF help list of struggling economies needing financial aid, has seen LocalBitcoins recently post a record trading volume of almost $9 million BTC on its platform as the peso continues its nosedive against the US dollar.  Since April, the number of bitcoins transacted using LocalBitcoins increased from 13 to 33, 153% in just a few months.

The inflation rate in Venezuela under Maduro is almost impossible to keep up with, such is its persistent decline. The Petro, brought in as a panacea to trade embargoes and sanctions and a plummeting bolivar, is still heralded by Maduro’s government, but referred to by many others as simply non-existent, despite shop fronts sporting “we accept Petro” signs.

The IMF is now predicting an inflation rate of 10 million percent by 2019, which would put the country in the same league as Germany in 1923 before the rise of Nation Socialism and Hitler’s rise to power in the 1930s. Germans at this time shopped with wheelbarrows filled with Deutschmarks. Maduro’s citizens have been making their own shopping bags out of bolivars in order to transport larger denominations of the same currency.

In this climate, Bitcoin has become the only safe currency, albeit secured largely underground with overseas dollars, and has seen accelerated activity in past weeks due to the government’s switch from the Bolivar Fuerte (VEF) to the Sovereign Bolivar (VES). P2P trading on LocalBitcoins has skyrocketed as a result, with total BTC trading volume for October 2018 standing at almost 900 million bolivars (approximately $14.4 million).

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