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Enter 'petro': Venezuela to launch oil-backed cryptocurrency
- juancampa 9y agoHow ironic, an authoritarian government launching a cryptocurrency. Having said that, it'll be interesting to see how the fact that "it's backed by oil" affects it
- whb07 9y agoHow does one actually claim a portion of that oil though? Its the same thing as a bond, which its feared they will default on. At the end of the day if they don't want to pay, then they don't pay.
- jungans 9y agoExactly. The minute a cryptocurrency is backed by something, trust in a third party is reintroduced which defeats the whole purpose.
- adrianratnapala 9y agoThere are probably a lot of in-between cases where a cryptocurrency can be used convert trust in a well respected 3rd party to trust in someone unknown. For example to have an "account" at a national reserve bank, you basically need to be a bank. A reserve bank could promise to honour certain cryptocurrency transactions between registered banks. But the blockchain as a whole could serve include both reserve-compatible-account-ids and arbitrary users. Whether that would be good for anything is another matter. In particular you need a well respected 3rd party who actually wants to back a cryptocurrency. That's not a big set intersection, and Venezuela is not in a position to make it larger.
- einarvollset 9y agoThat’s probably a simplistic view? An ICO obviously introduces trust in a third party (the company issuing the ICO). Does that mean all ICOs defeat the purposes of crypto? To the degree that your view of crypto is that it is all about decentralized, quasi anonymous money transfer yes. To the degree that you consider the other benefits of crypto assets, no. To add weight to the latter view point, I’d argue that Ethereum was the first ICO. Is the whole “purpose” of crypto negated with Ethereum? That’s a hard position to defend imho.
- deleted 9y ago[deleted]
- sebleon 9y agoVery interesting move. Curious to see if they find investors they couldn’t reach through traditional financial institutions.
- JumpCrisscross 9y agoI suspect they want to repay offshore holders of their current bonds with this magic money.
- mrhappyunhappy 9y agoMagic Internet Money
- mplewis 9y agoAs whb07 said, "Its the same thing as a bond, which its feared they will default on." I don't know how Venezuela expects anyone to take this seriously after they defaulted on their bond payments in November.
- paulsutter 9y agoAnyone find a link to their paper on “proof of barrels”? Ah, we have their assurance. Alright then.
- albertgoeswoof 9y ago> “Venezuela will create a cryptocurrency,” backed by oil, gas, gold and diamond reserves, Maduro said I am not sure if that’s even possible, it doesn’t make much sense. How do you link the currency to those reserves in a way that is any different to the current currency? That being said, a crypto which is relatively stable could be very useful for countries with runaway inflation or other issues with the state. Both for local use and liquidity across global markets.
- keypusher 9y agoThis has been done already by projects like Tether (USDT). There is currently some... discussion as to whether they really have the assets to back it 1:1, but it does stay about even with the dollar on exchanges. Some coins also offer "price-stable" options such as BitShares.
- drcode 9y agoTechnically it is totally possible to create a cryptocurrency that whose price is fixed relative to a basket of oil, gas and gold reserves... until the day comes the government decides that some baskets of fixed goods are more equal than other baskets.
- derefr 9y agoI'm unclear on how you can fix the price of a cryptocurrency. Saying how much you'll buy something back for doesn't set the price people will pay to buy it, because the issuer isn't the only player making the market—people can buy it from each-other, rather than from you, and they can pay whatever they like when they do so. Look at US treasury bonds: the US can adjust the interest rate on them, but it's the market (dealers holding auctions, etc.) that actually sets the price of them. If everything else is a bad investment (like during the 2007 recession), people will actually buy the likely-negative-yield treasury bonds at a premium, because they need to stick the money somewhere and everything else looks to have a worse NPV. As such, the market value of any security can exceed the value of its call option.
- 9y ago
- Entangled 9y agoAs a Venezuelan I say this is a bad joke. They ransacked the central bank reserves, they pillaged all the gold bars in the vaults, they indebted the oil industry and there is nothing left to give as guarantee for more money. They only want to try circumvent the shitty currency they destroyed with their bad policies. Stay away from this.
- alacombe 9y agoBe careful, there is a lot of zealots of the Venezuelan "model" around here.
- deleted 9y ago[deleted]
- Frondo 9y agoWide-scale corruption and dictatorial tendencies? No, I don't think many people endorse that here.
- major505 9y agoTry living in Brazil. A "socialist" in every corner endorsing crazy Maduro policies.
- oscargrouch 9y agoBrazilian here too, and this is total BS. I've never seen anyone, even the most die-hard leftist (a species headed to extinction by the way) support Maduro policies. Only some leftist parties giving oficial statements of support, but even than with the majority of their members, not supporting it, and going against the official statements. So i dont know in what reality you are living on.. but im sure is not the same as mine. HN has always been, a place of good and clear information, so please, lets keep it that way.
- rodorgas 9y ago
- brakmic 9y agoIt's basically a shitcoin. How about calling it "Merduro"?
- drcode 9y agoIt's sad that I know enough about cryptocurrency speculation to know that if they really launch this currency, there will be a willing crowd of non-Venezuelan investors likely to pour millions or even billions of USD equivalents into this. (That's assuming Maduro is informed enough to only guarantee a price floor for the currency and leave open room for upward price appreciation via speculation...)
- rpmcmurphy 9y agoA corrupt government that ran its economy into the ground backing a cryptocurrency. What could possibly go wrong? OTOH, if someone with centuries of banking experience were to launch a well managed cryptocurrency, that could be pretty useful (Switzerland I am looking at you). I would like to see a digital currency whose money supply is linked to the number of users in the system. As more users enter the system, generate proportionally more coins and vice versa. Something like this might work as a stable store of value.
- woodandsteel 9y ago>A corrupt government that ran its economy into the ground backing a cryptocurrency. What could possibly go wrong? Fortunately, as has been proven by recent experience, fraud, hacking, or serious error in the area of cryptocurrencies or the blockchain in general is simply impossible.
- rdl 9y agoVenezuela seems like a solid case for a privately-financed coup (Equatorial Guinea and Zimbabwe are there too, but in EG this was already tried and failed for stupid reasons). I don't know who they'd put in power (is there a viable opposition still?), but really anyone would be better. It's not an inherently poor country, but horribly misgoverned, and it's sad to see people suffering for decades as a result.
- notthemessiah 9y agoBecause ousting democratically-elected leaders and replacing them with right-wing dictators have been SO successful at making things better for the people of South America in the past, right?
- fjsolwmv 9y agoRight wing / left wing , dictators never tend to do well
- notthemessiah 9y agoThey do well for themselves, don't they? Dictatorships are also quite stable for people living under them compared to the chaos right now in Libya, Syria, and Iraq. Policies of regime change without changing the basis of the economy just leads to power vacuums which leads to nothing good but bloodshed, and most often a dictator worse than before. However, some defense contractors get good contracts through interventionism, and that keeps the US economy going, right?
- selectodude 9y agoYep, 18.6 trillion dollars worth of intervention-related defense spending per year. Not much else going on in the US economy.
- fjsolwmv 9y agoThe entire US federal government budget is only $4 trillion
- danschumann 9y agoHow can it be backed? Unless they are not allowing any mining, and merely having a currency that can be traded like a cryptocurrency. If you can mine, it would be worth something, and who would be backing that with oil? It'd be like giving away free oil.
- maneesh 9y agoIf it's an ERC20 token most likely it won't require mining. Most come premined
- coliveira 9y agoGiven that there are US sanctions against Venezuela, this would be an interesting case to see if digital currencies can really succeed despite the established banking system. After all, people say that necessity is the mother of invention!
- viach 9y agoWeird, I just read this prediction yesterday https://www.cnbc.com/2017/12/01/james-altuchers-bitcoin-predictions.html https://www.cnbc.com/2017/12/01/james-altuchers-bitcoin-pred...
- major505 9y agoIts just easier to take your money and throw in a fire if you wanna waste it.
- stretchwithme 9y agoIt may be a sign of desperation, but desperation can lead people to do sensible things (and unsensible ones). A commodity-backed currency is not a bad idea (US dollar used to be backed by gold, for example), but only if they stick to it. These guys are thieves and charlatans, so I expect they will devalue this currency as well when it suits them.
- edpichler 9y agoPoor people of this country. I hope this government ends soon.
- aqsheehy 9y agoPonzi schemes as far as the eye can see
- ringaroundthetx 9y agoERC20? Who do they have as their advisors? When Polo?
- thatgerhard 9y agoThis is just a terrible idea.
- AKifer 9y agoWhat would be the difference with that crypto stuff and just emitting some oil backed EFT ? They happen just to be either all idiots at the top of that government, which I hardly doubt; or they are just trying to hide their CCC rating to the ignorants and buzz riders.
- nickik 9y agoWhat an embaracment that government is. This is exaclty what everybody predicted when the socialsits took over. Systematically plunder and destroy every resource to keep up the payouts to the poor and the elites. Now they are reduced to third-rate schemes in the hope somebody gives them some money. Remember a couple of years ago whem tons of leftist, including sanders, krugman and stigliz all talked about how create these developments were? Finally somebody that would look out for 'the people'.