It doesn't. At all. The concepts don't even make sense strung together like that. Basically, the Venezuelan bolívar isn't worth very much, due to a number of

It doesn't. At all. The concepts don't even make sense strung together like that. Basically, the Venezuelan bolívar isn't worth very much, due to a number of reasons, including rampant printing. They tried passing laws to say it was worth more, but nobody listened, because nobody outside Venezuela cares what the Venezuelan government says (and even inside the country, you can ignore the laws of reality, but it doesn't mean they'll ignore you...). So they made a cryptocurrency of sorts, backed by nothing other than people's faith in the Venezuelan government, which is basically nil, so it was also basically worthless. So they said it was backed by oil, but the only way you can "back" a cryptocurrency with a commodity like that is to just sort of promise you'll totally back it, and (see above) nobody trusts the Vezezuelan government to honour their promises, so it was still basically worthless. They they announced petro gold which was ...I don't even know, maybe a second type of petro coin backed by gold instead, but I don't think that went anywhere because (see above) nobody cares. So now they're passing a law to back the bolívar with the cryptocurrency. So... ...in other words, they're realised that a currency backed by their promises is worthless, so they're trying one backed by a promise to back it with something which is backed by their promises. Because obviously if you don't trust the government to manage the existing bolívar correctly, you'll totally trust them to manage the new one, which is pegged by fiat to a different currency, which you're also trusting them to manage, and which is pegged by fiat to an actual commodity, which you're trusting them to actually have. Fundamentally, the whole thing is fiat all the way down. An fiat currencies can work very well when well managed by an entity which is trusted by market participants, it doesn't work here, because it's not well managed and nobody trusts anyone. Waving a hash algorithm over your fiat currency doesn't magically make it non-fiat. (Also! A 95% devaluation is an enormous "fuck you" to anyone who actually still trusted the current Venezuelan government, and will have ensured that any trust that did somehow still remain is now gone. All existing currency, savings, pensions, many contracts, etc., have just been ripped up. And now they're saying "right, now that we've totally screwed anyone who trusted us before, now just trust us when we say that this time, this paper is actually backed by some magic crypto which is actually backed by some oil, totes legit." This couldn't have worked before today, but it double extra can't work now.)