The currency will supposedly be backed by the country’s oil, gold, and mineral reserves. This is his latest installment of a series of desperate attempts to circumnavigate suffocating US economic sanctions.
According to news agency Reuters, Mr Maduro’s triumphant announcement, made during his annual five-hour Christmas special on his weekly radio and TV broadcast “Sundays with Maduro”, “was met with widespread derision. Opponents doubt that with a crippled economy Venezuela could pull off the launch of a cryptocurrency.”
This comes as no surprise, a year ago Maduro’s “Plan Conejo” (Rabbit Plan) saw local authorities distributing baby bunnies to poor neighborhoods in the hopes that the rabbits would, well, breed like rabbits and thus provide a new source of food for malnourished citizens
There’s a saying in Spanish that goes, “aunque la mona se vista de seda, mona se queda”, which roughly translates, “Even if a monkey dresses up in silk, it’s still a monkey.” It’s the Spanish version of the rhetorical expression “you can put lipstick on a pig, but it’s still a pig.”
The problem with Maduro’s proposal is that Venezuelan authorities are universally seen as both monkeys and pigs, it just depends on who you’re talking to. In order for a new currency to thrive, there needs to be trust, and nobody trusts Venezuela.
The government’s economic blunders are the stuff of legend. While corruption and plummeting oil prices are certainly contributors to Venezuela’s plight, it’s the government’s mismanagement of currency that has sealed the country’s fate.
Anyone who does their due diligence before establishing business relations with the country will find that a) the government has zero fiscal credibility, and b) there has not been a change of power. In order for the digital currency to pull the country out of crisis, there has to be a break from the past; the petro cannot be connected to the Venezuelan government, so what is Venezuela to do?
Max Keiser of The Keiser Report, a long-time Bitcoin proponent and advocate (he published a cryptocurrency patent in 1996), recently laid out a four-step plan for Venezuela to not only pull itself out of the financial disaster, but also become financially sovereign (independent of the US dollar):
(click on images for expanded view)
While this plan still ultimately puts the same clowns in control of the state’s finances, there is little room for corruption as the national currency exists in plain sight on the Bitcoin blockchain.
Let us know what you think of Venezuela’s idea to jump into the cryptocurrency game. Do you think there’s a chance to save the country, or are they doomed?