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Venezuela Launches Oil-Backed Cryptocurrency (bbc.co.uk)
Venezuela has launched a cryptocurrency backed by oil in an attempt to bypass tough economic sanctions imposed by the U.S. government. "The 'Petro' is intended to bolster the country's crumbling economy, which has been suffering from hyperinflation and devaluation for years," reports the BBC. "Venezuela claims it is the world's first sovereign cryptocurrency." From the report: Critics say the move is a desperate attempt by Caracas to raise cash at a time when Venezuela lacks the ability to repay its $150 billion of foreign debt. Opposition leaders said the sale constitutes an illegal issuing of debt, while the US Treasury Department warned it may violate sanctions imposed last year. The government says the currency aims to circumvent US sanctions on the economy. President Nicolas Maduro has said each tokens will be backed by a barrel of Venezuelan crude. The Latin American country has the world's largest proven oil reserves. A total of 100 million Petros will be sold, with an initial value set at $60, based on the price of a barrel of Venezuelan crude in mid-January. The official website published a guide to setting up a virtual wallet in which to hold the cryptocurrency, but did not provide a link for actually doing so on Tuesday.
You've got Venezuela, Oil prices AND Cryptocurrencies! All hallmarks of financial stability and trust! Excellent work. Where do I send my gold?
It is interesting watching them put out a cryptocurrency, which is in the planning stages later in two months. Like Germany's currency reform, it has possibilities in becoming the replacement of the petrodollar, because it is essentially hackproof and immune to things like QA.
Venezuela is bashed by right for "socialism", but they have done some things well. They enacted a complete gun ban on civilian ownership, and gun violence went down by a factor of 1000. In fact, their country isn't even on the map anymore when it comes to firearms deaths in South America because of this. Maybe the US could use a death toll count reduction...?
Meh, oil backing is overkill. Bitcoin is doing great backed just by thin air. ICO FTW!
(Yes, I am pissed for not thinking about it first. I'd at least make up for the cost of the extra guest at the London Embassy...)
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As if we dont know how this will turn out. 'whats your is mine'.
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Freedom via the USA coming next month. 82nd Airborne a carrier air group and the air force along with a Marine Brigade
This is what you can redeem it for.
This isn't being backed by oil, it's being backed by Maduro, a compulsive liar prototype dictator that has fallen back on his promises over and over and over again. It's the guy who seized a whole lot of private foreign assets.
You'll be safer putting your money on practically anything else.
Crypto currency backed by Venezuelan oil? You mean you want to privatize that industry your government took over for a profit?
So if I want to trade my Petro for a barrel of crude is it FOB origin, shipping point or FOB destination shipping paid? My guess is it's like the Gold Standard used to be.... Forget trying to cash in.
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Or, more to the point, South Sea shares in baleen whale futures
-- Tigger warning: This post may contain tiggers! --
Even if there are enough gullible investors to make the ICO a success for the bankrupt regime of Maduro: Foreign agencies that will not miss the opportunity to steal whatever crypto-currencies are accumulated. Given that Venezuela has no computer hardware they could trust not to be back-doored, this is just too easy not to be done.
Untrue. VZ oil goes back to the 1920s.
You mean, giving it to poor people like Chavez's daughter (now worth billions).
Poor, but also agriculturally very rich. If the current administration only could maintain farming and some industry beside oil...
Silly libertarians, recoiling over such minor issues like mass starvation and dictatorship.
Seriously? What did we do or not do to South America?
I'm really curious.. Are we somehow responsible for the troubles down south? What did we do? Surely you cannot think we where responsible for Venezuela's failure...
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
Venezuela is only getting trying to get into Crypto currencies because they're totally and completely broke because of corruption, mismanagement and trying to implement a failed "socialist" economy, which isn't even socialist at all, they're just plain fascist. The Venezuelan government is "lead" by a bus driver, Maduro, who only wants to stay in power with all the "Chavistas" goons so they can keep all the money and power they're accumulated for almost 20 years since Chavez got into power in 1999.
The only reason they want to get into their own crypto currency is because no bank, multilateral financial institution nor foreign government wants to lend money to Venezuela anymore because they know Maduro's government will likely default, as it has done with the last set of bonds they put out in the market. China and Russia were the only ones giving Maduro money until recently, but they stopped because they already see a high risk in getting their money back. Inflation last year was more than 2000% because they literally went after most of the private sector so almost nothing is produced in country anymore, so they have to import everything, from food to even gas. Yes, an oil "rich" country imports gas because of all the mismanagement at the state owned oil company, PDVSA.
PDVSA used to be one of the top oil companies in the world before Chavez in 1999. Just look at their oil numbers and revenue before 1999, even when oil prices were really low. PDVSA now cannot even sustain local gas consumer demand to fuel their local cars. They have to import it.
So if you want to loose your money, by all means, buy their shitty crypto currency, whatever is called...
claims it is the world's first sovereign cryptocurrency
The entire point of cryptocurrencies is that they are supposed to be decentralized, meaning you don't have to rely on any one government. This is probably as trustworthy as the old currency they used. How is this any different from printing new bills to attempt to get out of their debt/other economy problems?
It isn't really any different except that "printing" it is basically free. Which at this point would be a good thing, printing bolivars is likely becoming a real strain on the country's resources when inflation is so high.
"File to fit, pound to insert, paint to match" - Aircraft Maintenance 101
Can someone reminds me why US did cast financial sanctions against Venezuela?
It may have to do with Obama's executive order calling Venezuela a US national security threat, but I am not sure I recall why it was a threat.
This is a crude idea.
Finds quotes like:
The rise of murders in Venezuela following the Chávez presidency has also been attributed by experts to the corruption of Venezuelan authorities, poor gun control and a poor judiciary system.
and
According to Alessio Bruni of the United Nations Committee against Torture, "a typical problem of the prison system is gun violence, nearly circulating freely within prisons, causing hundreds and hundreds of people killed every year"
Outlawing guns without a proper judicial system is hard. And outlawing guns when they are readily available from the US is very hard.
I think it's fair to say that the ease of access to guns in the US causes a LOT of murders in south America. Where do you think Mexican cartels gets their guns from?
Also what is with the obsession of framing everything as a pro/con gun regulation argument. We know sane regulation of firearms limits the amount of damage a single person can cause... Fixing schools, education, mental healthcare, prisons, criminal justice, poverty, and running an trustworthy police force all contribute to reduction of violence, along with sane gun regulation.
The added upside to gun regulation is that it also protects neighboring countries, who currently suffer from illegal weapons import from the US.
Is the issuer worthy of trust regarding the exchange of these coins with oil at some undetermined time in the future?
Yes. Venezuela is trustworthy, and for good reason. They have huge overseas assets. They own Citgo, a refinery in the US. They own their own tankers, since many other shippers avoid shipping Venezuelan oil because of sanctions. These overseas assets can be seized in a debt default, which would shut off Venezuela's lifeline of oil revenue.
They may let their own people starve, but they will not default on international debt. If you bought Venezuela's dollar denominated bonds a year ago, you would now have a fantastic ROI.
Here is an article that explains it better than I did.
I'm sure US involvement had absolutely nothing to do with that. They should have just pulled themselves up by their bootstraps while the US and the WTO was putting enormous economic pressure on them and the CIA was assassinating their leaders and continuously financing coups.
> Venezuela's problem isn't "socialism", it's utterly corrupt and incompetent governance, socialism is just the form in which the politicians choose to express themselves.
Socialism is a system in which the government controls business. In folk songs, "the people" is used as a euphemism for government, but of course each individual person doesn't vote on all business decisions, the government, the politicians, have the power.
Power corrupts. Absolute power corrupts absolutely. Themistocles knew that 2,500 years ago. Socialism is more power for politicians, and therefore more corruption.
It also begins to remove the legitimate, legal ways of gaining wealth (making cool stuff that people will buy from you), thereby leaving those who seek wealth with only illegitimate, illegal ways to do so.
It differs from their old currency precisely because of it's decentralization. No dependence on a bank that can be cut out of the 'good old boys' currency exchange and inter-bank exchange mechanisms.
The problem I can see here is that, unlike Bitcoin (and others) with a fixed amount of issuable currency, the number of Petros will be based on some amount of oil reserves or actual pumped oil. Numbers that might not be easily audited.
Have gnu, will travel.
Venezuela's crypto-currency is no more of a crap shoot than the stock market, if you're just one of the little fish devoured by the thousands every day by predators like Goldman Sachs.
I've calculated my velocity with such exquisite precision that I have no idea where I am.
Wealth an power are the problem in any economic system. Their accumulation should be measured and treated as the threat they potentially are to society.
They've already defaulted on international debt, and you're a fucking moron. http://www.bbc.com/news/world-latin-america-41982069
venezuela has already defaulted, nice try. and their tankers are breaking apart.
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Most of the world is traded in US dollars, which is the only thing that fuels your $1.4+ trillion annual war budget and maintains your 20+ trillion in debt. Once that bubble pops....you're fucked. Who's gonna be the clown then?
> Wealth an power are the problem in any economic system.
Concentrations of power tend to be associated with corruption. So that needs to be managed. The founding fathers used several mechanisms, such as spreading the majority of power between the 50 states, and dividing the federal power between three branches of government which each maintain their own power by keeping the others in check. We have perhaps screwed up by ignoring Article 1 and the 10th amendment, which restrict the federal government to only a few listed powers. Unfortunately, every time "our team", our favorite political party, is in the White House, we let them claim more and more power which simply is not granted to them by the Constitution, and is in fact forbidden the feds by the 10th amendment.
You said "wealth and power are the problem in any economic system". Wealth is the GOAL of an economic system. We all want a little wealth. No sane person is trying to create poverty.
In any economic system, some people will be good at creating and accumulating wealth, others won't be so good at it. Jealousy will arise. Sometimes, to the extent that the insanely jealous actually do start trying to create poverty. I said "no sane person wants to create poverty", but not all people are sane, some people will actually destroy things of value.
A "good" economic system should probably give everyone *opportunities* to create and to accumulate wealth. For example, the best ways to generate wealth are almost all based on investing for the long term - plant a small, nearly worthless seed today, harvest a big plant producing food or whatever many months later. Invest time studying, reap a higher salary years later. Invest your savings into business capital (factories, machines, etc), reap profits later. So a good economic system would allow people to get educated if they choose to, and allow anyone to own a part of a business. Modern capitalist countries have developed a great way to do the latter - the stock company. Anyone who wants to can become an owner of Microsoft, GM, Google, GE, or Walmart by putting in whatever amount they want, even just a couple hundred bucks if they are teenagers and haven't saved much yet.
That would be the CIA and the rich/bourgeois in Venezuela finding excuses for regime change. Capitalists DGAF about starving people before democratic socialists took over, and you'll go right back to not GAF if you install a CIA toady.
Whereas you don't give a shit if people starve as long as The Glorious Revolution marches on?
They would love to, but Venezuela doesn't have the money to out-subsidize American crops that are then dumped into the market via NAFTA.
DO TELL how you would start a business when your competitors can run with what would be losses, perpetually.
Shitbag Ameircans, pretending to GAF about human rights in countries not down with American hegemony, but couldn't care less about the worst dictatorships on the planet that you're busy selling arms to, like the Saudi's. If you were reality-based, you would support Venezuela's democratic socialism, as it tripled the country's GDP and lifted millions out of generational destitution.
I'd like some references about the tankers falling apart. I know some have been impounded because of unpaid debt, but I get nothing about their condition.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.
"Citgo, a refinery in the US" yeah right, this people
How do you mine this thing? Do you need a true to the word Mining Rig (TM) and go on location?
Draw one barrel of oil out of the ground, the state takes it and gives you one Petro in exchange. Then the Petro is backed by thin air and popular confidence like any fiat currency, except it's on a blockchain and you can see when the government printer is working really hard.
Now... getting currency issued when you produce a thing and put it on the market is something on the back of my mind (but how do you value stuff?). And have currency destroyed when the product is taken off market. My gut feeling is that the equations would look the same as they do for "currency as a mean of exchange", but with different dynamics that I'm unable to imagine just yet. The Petro though seems to do just half of that.
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You said "wealth and power are the problem in any economic system". Wealth is the GOAL of an economic system
DISTRIBUTION is the GOAL of an economic system. How do we distribute limited resources in the most useful manner. Some economic systems encourage the accumulation of wealth as a goal (capitalism). Others try to encourage the sharing of wealth (socialism). The sweet spot is no doubt somewhere in between.
It is a very bad economic system indeed that only slices up the pie, and pays no attention to how big the pie can be.
> Some economic systems encourage the accumulation of wealth as a goal (capitalism). Others try to encourage the sharing of wealth (socialism).
Capitalism, the definition, is:
Those who invest their savings into business capital (machines, factories) reap commensurate reward.
Socialism is "everybody owns the factories, whether or not the do anything to help create them".
The goal of capitalism, therefore, is to produce more by encouraging investment. The goal of socialism is to be fair by having everyone equally poor.
Venezuala will not use a proper cryptocurrency for the same reason their national currency is in the dumpster: They cannot afford to NOT interfere with their monetary supply.
Look, we get that you hate the US. Now back a better horse than Venezuala. You are, almost, a perfect example of "The enemy of my enemy is my friend".
But, just for the record: http://www.businessinsider.com...
So, is it like a futures contract, as in if I want to claim my barrel of oil, I just have to go to Venezuela and get it? Sounds like fun!
The proponent of socialism is obliged to argue that the goal must only be the equal distribution of goods, because even a first-year student can show that the system is very much not optimal for the production of goods (for people having stuff) or the allocation of inputs (efficient use of resources). Therefore the socialist must argue that having things we need is not a legitimate goal, that seeking to maximize the production of goods and services is illegitimate.
However, the first-year economics student can also readily see what happens if we accept the socialist's optimality function - the equal distribution of goods. It is trivial to show that destroying all of the resources, burning all the good stuff and nobody having anything, creates a perfectly equal distribution (0=0). Therefore, by the socialist's definition of the goal (equal distribution), the perfect economic system is simple destruction. That creates more equal distribution than any other possible system.
You are correct that I, and practically every economist, do not accept equal distribution as the goal, and therefore do not believe that either destruction or socialism are optimal. Rather, we seek to optimize the production of goods and services, bases on an allocation of resources, followed by a system of exchange, which optimizes the production of goods (requiring efficient use of resources) and the freedom of the individual to acquire the resources most desired by each individual (which requires an efficient and free system of exchange post-production). In short, our goal is for people to have the stuff they want. That can be broken down into a) having stuff and B) having the items they want to have.
In a planned economy such as North Korea, people don't get the goods and services they want, they get what Dear Leader says they'll get; and they get less overall. Therefore we can see the system is suboptimal on both axes.
So what, then, do you propose as the goal? What's your optimality condition?
We've shown that if equal distribution is the goal, that can be perfectly achieved by destroying all input resources and producing no good or services. So if you stick to that as the goal, socialism, and indeed any system, is strictly inferior to destruction.
Btw, you don't distribute resources. Resources are the inputs to production. You distribute the outputs.
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Thank you.
"The agriculture ministry is not in charge of Gundam" - Japanese ministry official.