Is Petro the First Centralized Cryptocurrency?

I saw Luke sitting down at the end of the bar. He was leaning over the dark wood bar rail, a beer bottle in one hand, his phone in the other.

Peering into the screen that slightly illuminated his face, he was slowly shaking his head back and forth, as if disapproving of whatever he was looking at.

I wondered what it was.

He might have been a little drunk. And I knew if that were the case, going over to talk with him meant good odds he’d hit on me. Or at least he’d try to hit on me and play it off as a joke later.

I took my chances and walked over anyway.

“What’s happening?” I said to him.

He looked up at me, showed me his phone, and said, “F**king bastards!”

Maybe he was drunk.

On his phone was a Reuters article about the Venezuelan cryptocurrency, Petro.

F**king bastards? What the hell was he talking about?

Venezuelan President Nicolas Maduro recently announced the country would soon issue its own cryptocurrency aptly named “Petro,” which is planned to be backed by the country’s oil, gold, natural gas, and other natural resources.

Critics have already raised doubts over whether or not Maduro and his leftist regime will actually issue the crypto at all. The Reuters article quoted opposition lawmaker and economist Angel Alvarado, who said, “It’s Maduro being a clown. This has no credibility.” Another critic added, “I see no future in this.”

So what’s the big deal?

“Yeah, I saw that,” I said to Luke. “You think they’re actually going to issue it?”

“I don’t know,” Luke said. “But if they do, it will be just another centralized currency like any other, expect completely digital.”

Hmm, I hadn’t thought about that.

One of the key features of Bitcoin and every other cryptocurrency is their decentralized status. Cryptocurrencies are not issued by any government-run central bank. Petro would be the first.

“This is the first step governments will take to try to suppress cryptos,” Luke said to me. “They’ll simply try to create a more credible competitor.”

Venezuela has a horrific track record in monetary policy. After years of corruption and abuse, the Venezuelan bolivar is now nearly worthless.

Back in July, the black market exchange rate from Venezuelan bolivar to USD was about 10,000:1. Today it’s over 100,000:1. And prior to Maduro’s election, it was a lot stronger.

“It’s probably just bullshit,” Luke said. “But this is how it starts. What happens if other governments follow suit?”

Good question.

Will centralized cryptos be able to compete with decentralized cryptos?

Of course, every Bitcoin fanboy on the planet is going to say “no” and rattle off a bunch of statistics about how governments have always failed in monetary policy. And, yeah, that’s true.

But should we assume that the public can manage sound monetary policy better than central banks?

Should we assume that individuals are always going to make the best long-term decisions with the global economy in mind? Or should we assume that humans are opportunistic creatures that are mainly concerned with their own immediate comfort and happiness?

The public is never going to like the government’s monetary policy. And that’s simply because every government forces some of the population to make a sacrifice for the greater good. Will owners of decentralized currencies be willing to make those sacrifices?

We’ll see.

Until next time,

Alexandra Perry

@AlexandraPerryC on Twitter

Alexandra Perry is a contributing analyst for Wealth Daily and Energy and Capital. She has multiple years of experience working with startup companies, primarily focusing on artificial intelligence, cybersecurity, alternative energy, and biotech. Her take on investing is simple: a new age of investor can make monumental returns by investing in emerging industries and foundational startup ventures.