Petro Gold Cryptocurrency 2018: Venezuela's Gold-Backed Digital Coin Explained

Erika Rasure is a globally acknowledged expert in consumer economics, specializing in financial therapy and coaching, with a focus on empowering women to invest wisely.

What Was Petro Gold?

Petro Gold was a state-issued cryptocurrency introduced by the Venezuelan government in early 2018 as part of an effort to stimulate economic recovery. Launched in February 2018, it was purportedly backed by gold reserves, aiming to offer a stable digital asset amid Venezuela's financial crisis. Despite these intentions, Petro Gold failed to attract significant interest from investors and the general public, limiting its practical use.

Following the creation of the Petro cryptocurrency—tied to the value of Venezuelan oil—Petro Gold was intended to complement this digital currency ecosystem. Both cryptocurrencies utilized blockchain technology and were overseen by SUNACRIP, Venezuela's regulatory body for digital currencies. However, in a twist of fate, SUNACRIP was dissolved and restructured in March 2023 after its leadership was implicated in fraud and theft.

Key Highlights

• Petro Gold was announced by Venezuela’s government in early 2018 as a gold-backed cryptocurrency.
• It followed the launch of the Petro, which was linked to oil reserves.
• Experts criticized these state-issued cryptocurrencies as attempts to bypass international sanctions.
• The U.S. government prohibited transactions involving Venezuelan government-issued cryptocurrencies.

Understanding Petro Gold in Depth

On February 20, 2018, Venezuela claimed that the Petro cryptocurrency received 171,000 certified purchase orders worth $735 million on its pre-sale day, pegged to the value of a barrel of Venezuelan oil. However, the oil backing these tokens was based on proven reserves, meaning the oil had not yet been extracted.

Shortly after, President Nicolás Maduro announced Petro Gold, pegged to gold and other precious metals. It remained unclear whether this gold was sourced from Venezuela’s reserves or production. Maduro asserted that Petro Gold would bolster the Petro and play a crucial role in economic recovery.

These digital currencies were designed for use via digital wallets and exchanges, with users required to create a wallet through the "PetroApp" to transact.

Fast Fact

It remains uncertain whether Petro Gold was ever publicly available or fully issued.

History and Developments of Petro Gold

In 2019, Maduro pushed for wider Petro adoption, ordering the opening of Petro transaction points in all Banco de Venezuela branches and distributing one million cryptocurrency wallets preloaded with small Petro amounts to youth, alongside educational programs.

Maduro praised Petro as a revolutionary economic tool benefiting workers and retirees, branding Venezuela as a global example.

Despite these efforts, Petro Gold did not gain significant momentum, as skepticism among Venezuelans and global investors persisted.

Critiques and Controversies

Petro Gold was widely viewed as a government strategy to sidestep international sanctions imposed by the U.S. and other nations. The U.S. Treasury warned that Venezuela’s cryptocurrencies could violate sanctions.

Important Note

Petro and Petro Gold should not be confused with PetroDollar (XPD), a distinct cryptocurrency.

Critics pointed to Venezuela’s rampant inflation, economic collapse, and debt issues as factors likely to cause government manipulation of cryptocurrency values, leaving investors vulnerable.

Special Economic Considerations

By January 2021, Venezuela’s inflation rate had eased to 2,665%, down from an estimated peak of over 30,000% in 2019. Despite improvement, inflation remained extremely high due to ongoing currency depreciation, pandemic impacts, and reduced oil production.

In 2023, the government reported inflation rates of 436.3% in April and 282.8% by year-end, though data transparency remains questionable.

Current Value of Venezuela’s Petro Cryptocurrencies

Venezuela launched two official cryptocurrencies: Petro, backed by oil, and Petro Gold, backed by gold and precious metals. As of now, no active pricing or trading data is available for either.

What Is Venezuela’s Official Cryptocurrency?

Petro and Petro Gold were government-backed digital currencies, but there is no verifiable evidence of their current circulation or practical use.

Is Petro a True Cryptocurrency?

Both Petro and Petro Gold functioned as central bank digital currencies pegged to natural resources. However, the absence of tangible backing and discontinuation of use cast doubt on their legitimacy as cryptocurrencies.

Conclusion

Petro Gold was Venezuela’s gold-backed cryptocurrency initiative aimed at economic revival, but it failed to achieve adoption by citizens and investors, leading to its eventual collapse.

Disclaimer: The views expressed here are for informational purposes only. The author does not hold any cryptocurrency as of the writing of this article.

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