The government of Venezuela will not let its petro cryptocurrency dreams die.
It’s a scheme that might actually work to spur adoption—but not necessarily the way Maduro intends. In a country with one of the most significant peer-to-peer BTC trading volumes in the world, even if young people in Venezuela ultimately reject the petro, the results of this experiment could be great for Bitcoin.
Just two weeks ago, Maduro announced the approval of a budget of $924 million bolivars (approximately $150,000 USD) to begin distributing 1 million crypto wallets, preloaded with petro tokens. The wallets are earmarked for individuals registered in the country’s Plan Chamba Juvenil, a government work program for students and other young people.
The idea, according to the president’s announcement, is to encourage the country’s youth to begin using and trading the petro. The country’s specially developed “Digital Bank for Students and Youth,” first announced in May 2018, will begin accepting petros from these wallets, said the president. The bank would then presumably exchange the crypto for fiat, since petros are still not accepted as currency by merchants or government services in the country.
But if the plan works, it could at last kickstart nationwide acceptance and use of the petro—Maduro’s Hail Mary effort to rescue the Venezuelan economy and evade U.S. sanctions.
Precise details as to how the tokens will be distributed, however, have not been made available, and representatives for the government’s National Superintendency of Crypto Assets and Related Activities (Sunacrip) did not respond to Decrypt’s requests for comment.
But even though the Venezuelan government has yet to come through on grandiose plans involving the petro, Maduro’s announcement was met with optimism by the country’s National Cryptocurrencies Association (Asonacrip)—a nonprofit organization that promotes the use and adoption of cryptocurrency in Venezuela.
Jose Angel Alvarez, president of Asonacrip, told Decrypt that he sees Maduro’s plan as a “positive” sign for crypto broadly. “It’s a little premature to provide a full analysis,” he said, since we don’t yet know the details of how the $150,000 fund is going to be used. Nevertheless, getting crypto into the hands of a million young people could provide a valuable “educational and training” tool, he said.
Regardless of the government’s goals with this program, it’s a net positive for crypto, he said—if it comes to fruition. “We are talking about a million individuals with crypto wallets ready to be used for buying and paying for goods and services with blockchain technology,” said Alvarez. And since the only trading pair currently available for the petro on open exchanges is bitcoin, the Venezuelan government could indirectly drive up demand for BTC, he said.
Although Venezuelans still have very little exposure to cryptocurrencies generally, the country ranks among the top 5 nations in the world in terms of peer-to-peer trading volume in bitcoin. In fact, in 2018, Venezuelans moved more bitcoin p2p than traders on the entire European continent, according to analysis from AirTM consultant Matt Ahlborg.
It’s also worth noting that the Venezuelan government has itself been welcoming of bitcoin and other cryptocurrencies. In March, it launched a national crypto remittance service that allows users to send funds in both bitcoin and litecoin to a custodial wallet, which the government then takes and deposits into the beneficiary’s account in fiat. The service doesn’t yet accept petros.
Still, until Maduro’s government lays out the specifics for its latest petro-promotion strategy and delivers tangible results, much of this will remain purely speculative. After all, the Digital Bank which is supposed to handle petro exchanges doesn’t exist yet, nor has it even been registered in the country’s Official Gazette (a prerequisite for the creation for any new institution).
What’s more, this isn’t the first time that Venezuela has attempted a petro “airdrop” of sorts. Last November, Maduro tried giving away petros to the country’s elderly pensioners. It didn’t work out so well.
The government failed to properly explain to those receiving pension payments in petros what to do with their crypto, or how to convert it to bolivars. The ordeal resulted in protests in the streets across several Venezuelan cities, and the program has since been quietly shut down.
Maduro’s new plan could similarly yield unintended consequences—and that’s good news for bitcoin.