Venezuela Wants to Encourage El Petro Users

January 17, 2018

Venezuela Wants to Encourage El Petro Users

Venezuela plans to encourage citizens of the country to use its developed national cryptocurrency dubbed El Petro. These plans include paying public workers of the country in tokens, as well as tax incentives for its users. This is reported by Bloomberg News which claims to obtain documents related to this topic. 

The government outlines to release 100 million El Petro tokes. 38 million of them will be sold during the presale which starts on February 15 and will last 1 month. Approximately $1.3 billion might be raised during the presale. After that, the next round of sales starts, where 44 million tokens will be sold. During this round the government plans to raise $2.4 billion. Remaining El Petro tokens will stay in the government. 

Each token will be backed by 1 barrel of crude oil, although holder will not be able to trade them for actual barrels of oil. Also, each token will be divisible by 100 of lesser units called mene.  

El Petro is an another attempt of the government to raise the country's economy, which is currently in a state of a deep recession caused by a shortage of money in the country as well as US sanctions that do not allow President Maduro to access more traditional financial options in order to help the country. Moreover, Venezuela hopes that this project will be successful, because the crypto world has been developing rapidly and is very popular.

President Maduro recently said:

"Imperialism intends to drown us, to follow our bank accounts and transactions, to block our oil. This is a big bet we’re making for the stability and financial growth of our country".

It is believed than just over the half of raised through the token sale funds will go to an independent fund, while remaining funds will be spent on supporting the El Petro infrastructure as well as on the other technology projects. Venezuela government outlines to use the cryptocurrency in international oil sales and other business transactions, while citizens will be able to pay for taxes and fees with tokens. 

Cryptocurrency holders will be able to exchange their tokens for US dollars, and Venezuela hopes that it will bring more hard currency in the economy, since the national currency, bolivar, is hyperinflating. In fact, it was reported that bolibar fell by 3,400% against the US dollar in 2017. 

However, El Petro has already caused a lot of controversy, even though it is still not issued. Opposition-run National Assembly of Venezuela recently outlawed the cryptocurrency and called it "unconstitutional".

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