Petroleum export giant Venezuela, wracked by inflation and economic chaos, is offering India a staggering 30% discount on crude oil.
The catch? Venezuela demands that it be paid in Petro, the nation’s own oil-backed cryptocurrency.
The Petro is patterned after broadly popular cryptocurrencies such as Bitcoin but instead of pure cryptography and limited issuance, the Venezuelan crypto is supported by 5 billion barrels of oil reserves in Venezuela’s Orinoco Belt.
Back in March, a group of experts from Venezuela’s blockchain department went to India last month to see if they could hash out a deal.
And they did, or at least a starting point.
The deal is the Delhi-based cryptocurrency exchange Coinsecure, would allow Venezuela to sell the Petro in India.
If widely adopted outside the country, the Petro would provide Venezuela with an alternative to its own currency, the bolivar, and the U.S. dollar.
The bolivar currently trades at 68,915 bolivars to one greenback.
The Petro already has been pre-sold to investors and is set to launch May 20th, after presidential elections.
Coinsecure’s chief executive officer, Mohit Kalra, said that Venezuela was looking to add the Petro to the platform so that the cryptocurrency may be traded against Bitcoin and the Indian rupee.
He added that the 30 percent discount was offered during the discussions.
“They are going to different countries and making offers. The offer that they have given to the Indian government is: you buy Petro and we will give you a 30 percent discount on oil purchases.”
Venezuelan president Nicolas Maduro has said that the Petro’s pre-sale raked in $5 billion. The Petro was sold in 127 countries, and reportedly saw 171,000 would-be investors register to enter its pre-sale.
The Petro has drawn criticism from political scientists and economists across the globe.
The Brookings Institute believes it undermines legitimate cryptocurrencies. Even Venezuela’s own National Assembly declared it unconstitutional.
U.S. President Donald Trump has banned U.S. citizens and residents from purchasing the oil-backed cryptocurrency. Trump claims it was created to bypass U.S. sanctions.
In a ironic twist , Venezuela has thanked Trump for the Petro ban. Venezuela claims it was free publicity that helped double the number of interested investors.
Despite all these objections, Venezuela plans to make it the official currency by 2020. Caracas says it will have a positive impact on its economy in “three to six months.”
Investors, however, are skeptical.
“Even if it is backed by oil, it is more of a centralized currency,” said one anonymous investor.
“Nobody knows how many coins will be launched or issued. It is not decentralized like Bitcoin or Ethereum.”
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