Category Archives: Nicolás Maduro

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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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Venezuela Ditching Bolivar Fuerte for Crypto-Backed Sovereign Bolivar

The Venezuelan government is ditching the Bolivar Fuerte fiat currency and replacing it with the Sovereign Bolivar on 20 August 2018, which will apparently be tied to Venezuela’s state cryptocurrency the Petro. This is due to extreme hyperinflation that has made the Bolivar Fuerte practically worthless, to the point that toilet paper is a far more ideal currency than the Bolivar Fuerte. The Bolivar Fuerte is expected to reach 1 million per cent annual inflation by the end of the year according to the International Monetary Fund. At this point the situation in Venezuela can be considered a currency collapse, like post WW1 Germany and more recently in Zimbabwe.

The Bolivar Fuerte replaced the Bolivar in 2008, with each Bolivar Fuerte being worth 1,000 Bolivars. The transition from Bolivar Fuerte to Sovereign Bolivar will be even more extreme, with each Sovereign Bolivar being worth 100,000 Bolivar Fuerte. Originally, the Sovereign Bolivar was going to be launched in June 2018 at a ratio of 1 to 1,000 Bolivar Fuerte, but was delayed.

There would be nothing to stop the Sovereign Bolivar from experiencing hyper-inflation like the Bolivar Fuerte or the Bolivar if nothing else was changed, but the Venezuelan government is trying something drastically new via anchoring the Sovereign Bolivar to Venezuela’s state-backed Petro cryptocurrency.

The President of Venezuela, Nicolas Maduro, says, “The economic reconversion will start on August 20 definitively with the circulation and issuance of the new Sovereign Bolivar, the new monetary cone that is going to have a new method of anchoring the Petro.”

Maduro goes on further to say that the Petro will be improved to proliferate globally. Technical details of the Petro are difficult to verify. It is supposed to be backed by Venezuelan oil, but it is unknown how exactly.

This marks the first time in history that a national fiat currency would be backed by a cryptocurrency. If everything is true regarding what Venezuela says about the Petro, then the Sovereign Bolivar would essentially be an oil-backed currency, which is another first. Details on how the Sovereign Bolivar will be anchored to the Petro have not been disclosed.

 

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Petro to Fund Housing for Venezuela’s 2 Million Homeless

The Venezuelan Housing Ministry is to initiate a fund to support the country’s homeless by constructing homes for them using the national cryptocurrency, the Petro, according to Cointelegraph.

Minister of Housing Ildemaro Villarroel has called the project the ‘Great Mission for Venezuela Housing (GMVV)’, and to be initiated in the second quarter and financed by Petro. He announced that 33 companies have started logistics, financial and technical testing in preparation for starting the project. Minister Villarroel explained:

“Together with the governors, we are reviewing the plans that we will begin in the second quarter, in this second quarter GMVV will have an injection of financial resources, which this year will be protected and established with [the] Petro.”

According to GMVV, the government has finished building more than 2 million houses but it is unclear if these are all for allocation to the country’s homeless population, which stands at the same number, according to recent figures.

New source Criptotendencia has cited a government official who claimed that the Petro would create a “protective shield” for house construction. Venezuelan president Nicolas Maduro authorized a budget of 75 billion bolivars (approximately USD 750,000) and 909,000 Petros for the new homes.

This is the second social support project proposed by the Maduro government this year. In May, President Maduro announced a government plan to initiate a bank for students and young people in his country starting with a state donation of 20 million Petros.

According to local news source Noticas24, Maduro’s student plan is to promote the mining of cryptocurrency by high school children, with each school having its own mining operation, using school IT departments’ computers to mine cryptocurrencies.

This move, along with the USD 1.2 billion startups for his planned student bank, is designed to raise funds for young people currently enlisted on the state-issued ‘Chamba Juvenil Plan’, an initiative to combat youth unemployment. Its goal is 100% youth unemployment in Venezuela. Currently, over a million young people are part of the Chamba Juvenil Plan, and the government expects that half a million more will be added in the coming months.

Bitcoin trading has increased significantly this year, with Venezuelan Bolivar to Bitcoin exchange increasing by 138% from March to April. The country still awaits the launch of the Petro Gold, a national cryptocurrency backed by precious metals, announced back in February 2018.

 

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Venezuela Turns to Bitcoin Mining as Hyperinflation Reaches 18,000%

Venezuelans are increasingly turning to Bitcoin mining in order to combat hyperinflation in the South American country, Bloomberg reports.

Caracas has recently become a crypto mining hub, says Daniel Cancel, a reporter and resident, in a report from the capital. Cancel talks of a friend living in the city buying a machine to mine crypto and telling his son to run it round the clock. The result; USD 6 a day. The reporter tells of another friend who had to move his machine due to noise complaints. The most successful, Cancel reports, is a friend that has invested with his family purchasing three machines and is now clearing USD 1,000 a month, which in Caracas is a “small fortune”, he says.

So why are residents of Caracas going to these lengths to provide themselves with any kind of an income?

Under its controversial president, Nicolas Maduro, the country continues to struggle with a hyperinflation rate estimated at 2,400% at the end of 2017, which has skyrocketed to 18,000% in 2018. The crumbling economy is now causing a humanitarian crisis with 600,000 Venezuelans fleeing to neighboring Columbia alone.

Venezuela’s crisis has steadily worsened as a result of lower oil prices, corruption, and a totally mismanaged socialist system, experiencing all but a total collapse of the economy, public services, security, and healthcare, writes the Independent.

Armed gangs and Colombian guerrilla roam the beleaguered nation’s borders. Pro-government militias are terrorizing urban areas, while police stand accused of extrajudicial killings in a country which has now the dubious notoriety of being home to 10 of the world’s most dangerous cities, according to Igarape Institute, a Brazilian think tank which studies violence.

Bitcoin is now recognized as the only way of getting around the country’s currency controls, and bitcoin mining offers Venezuelans a chance to pay for good imported from overseas. Although the process is not sanctioned for individuals other than going through ‘official’ methods, residents are able to sidestep the government controls to buy foodstuffs from Florida and Miami by trading Bitcoin for bolivars, the local hyperinflated currency.

Cancel suggests that even the USD 6 a day his friend was mining is half decent money in the depression hit country, commenting:

“One key to my mining pals’ success: electricity, while spotty, is basically free, the result of an odd combination of hyperinflation and government-mandated utility price freezes. (It’ll cost you 900,000 bolivars—or about USD 0.90 at the black-market rate—for a coffee, pastry, and juice at a cafe, but you can pay your monthly electricity, water, gas, internet and phone bills for about 300,000 bolivars.).”

Cancel maintains that for those residents who haven’t yet fled the borders to Columbia, its all about managing “somehow” to set up a steady flow of revenue in dollars or another foreign currency. “Human beings can adapt to anything” is a line he keeps hearing as his friends continue the daily struggle of life in Caracas.

 

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Crypto-Funded Youth Bank Announced by Venezuelan President

Venezuelan president Nicolas Maduro has announced that the government has plans to initiate a bank for students and young people in his country.

According to news source Telesur, the president of the economically-beleaguered Latin American country was speaking at a mass youth ceremony at Aragua this week, promising to put 20 million Petros into the new banking project.

The Petro is the nation’s controversial oil-backed cryptocurrency, the first of two according to Maduro. It is condemned by the Venezuelan Congress and the subject of continual debate as the country continues to struggle with an inflation rate of 2,400% in 2017. The crumbling economy is now causing a humanitarian crisis with 600,000 Venezuelans fleeing to neighbouring Columbia alone.

The move has been widely condemned as a way to avoid US-led sanctions against the country. Similar accusations have been aimed at Russian president Vladimir Putin, after his recent statement that he would like to move Russia towards adopting a “cryptoruble”.

According to local news source Noticas24, Maduro’s new plan is to promote the mining of cryptocurrency by high school children, with each school having its own mining operation, using school IT departments’ computers to mine cryptocurrencies.

This move, along with the USD 1.2 billion startup for his planned student bank, is designed to raise funds for young people currently enlisted on the state-issued ‘Chamba Juvenil Plan’, an initiative to combat youth unemployment. Its goal is 100% youth unemployment in Venezuela. Currently, over a million young people are part of the Chamba Juvenil Plan, and the government expects that half a million more will be added in the coming months.

During his speech, Maduro said that the plan will also be extended to universities which should each have its own crypto mining farm to support and strengthen the economy of Venezuela.

The country still awaits the launch of the petro gold, a national cryptocurrency backed by precious metals, announced back in February 2018.

 

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Venezuela’s Petro Token Faces Allegations of Falsified Records

The controversial state-backed cryptocurrency of Venezuela, El Petro token, has met further contention after allegedly holding falsified records regarding the initial coin offering (ICO). Venezuelan president Nicolás Maduro reported USD 5 billion raised during the event, but both CCN and Criptomoedas Fácil report a discrepancy in the total reported and the amount possible to be raised according to the information on the whitepaper.

The Numbers

The whitepaper for the Petro token records 38,400,000 tokens in total to be sold, each valued at USD 60, and with a 60% discount added during the ICO stage. For each of these tokens to be sold at their valued price, the ICO would have raised USD 2.304 billion before subtracting the discount. The official documents released by Maduro reporting USD 5 billion raised is in direct contradiction to this.

This indicates that either the whitepaper contains misleading information about the actual value of the Petro token or that Maduro announced false claims about the earnings of the ICO.

Following the ICO, Maduro detailed the event received 200,927 participation requests from 133 different countries.

Further Controversies For El Petro

Each unit of El Petro is backed by one barrel of oil in Venezuela, introduced by Maduro to combat economic sanctions due to a what he dubbed a US-led blockade. There are, however, many that challenge the integrity of Maduro’s ambitions, denouncing it as a plan to compensate the lack of oil production that is seeing the state’s economy plummet.

Maduro does not have full support from his government, with the Venezuelan congress recently ruling El Petro as both unconstitutional and illegal. The National Assembly of Venezuela dubbed the currency a fraud, and a threat to potential investors. With many citizens in Venezuela struggling to provide themselves with basic essentials such as food and medicine, there is a call to invest the money raised in the ICO into rebuilding the economy. This would prove logistically challenging, as investors would surely demand compensation.

China-based credit rating firm Dagong see the Petro token as a good investment, however, suggesting it may aid international currency markets.

Other controversies aside, Maduro must address the financial discrepancies regarding the profits made from the ICO for it to be considered legitimate tender on exchange platforms.

 

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