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Venezuela continues to be an intriguing case in the world of cryptocurrency. Its interest for innovation led the country to develop a cryptocurrency that has been plagued by several events that raised some concerns about its transparency.

Petro (PTR) Logo
Petro (PTR) Logo

The Venezuelan project began as the tokenization of a futures contract for a barrel of oil. For this, 100 million ERC-20 tokens would be issued, each representing one barrel of oil. The first Whitepaper mentioned that it would run under the Ethereum network.

To oversee the project, Chavist President Nicolas Maduro appointed Carlos Vargas, prominent political opposition to the Venezuelan government, as maximum authority. Mr. Vargas is known for being president of the leading Venezuelan opposition party “Un Nuevo Tiempo,” with which he became a deputy in the National Assembly for the state of Anzoategui.

Before his Designation, Carlos Vargas was a Prominent Personality among the Venezuelan Opposition

During the act of delivering 1,900,000 homes to citizens of extreme poverty, President Maduro announced the appointment of Carlos Vargas as the person who would be in charge of the project.

The First Whitepaper signed by the president stated on its first page that it was only a Beta version of the project. In the Venezuelan tradition, the signing of documents, especially in the public administration, gives them a mandatory character.

After the release of the first whitepaper, and without prior notice, the Venezuelan government announced that Petro would now be a Mosaic running under the NEM blockchain. They said they were working with the NEM Foundation, something the NEM team denied.

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Likewise, while the President announced that all interested Venezuelans could mine the Petro, the white paper announced that the Petro was 100% pre-mined.

Petro: Is It  Backed By Oil, Is It A Fund Backed by Other Commodities, Or Does It Have No Backing At All?

It is also important to note that at that time the Petro was establishing a token value of one barrel of oil at the time of its trade-in. However, the legal document creating the Petro (Decree N° 3.196 Dated December 8th, 2017) stipulated that it was supported by other commodities such as gold, diamonds and other metals.

In addition to these inconsistencies, many politicians and media personalities were devoted to saying that the value of the oil was merely referential, something that was completely opposed to the legal document that established by decree a stable value and the right to exchange the token for physical petroleum or its fiat value.

After this process, Petro had a few months of silence until a few weeks ago President Maduro decided to establish this crypto as a reference for the minimum wage, which was set at 0.5PTR. He also announced the launch of the Petro on October 1.

Suprise, Surprise! A Brand New Project Not Yet Publicly Available

The new surprise came when the Venezuelan government made it clear that the Petro was not yet available, but that a registration process would begin on October 8 to implement its use by the end of the year.

However, this was not the most shocking thing. The Petro changed its Whitepaper on the day of its launch. Here are some of the most critical points:

  • The new official website is petro.gob.ve while the old one was elpetro.gob.ve (no longer active)
  • The Petro went from being PoS to using the standard X11 algorithm found in highly popular cryptocurrencies used in Venezuela such as DASH and Onix.
  • Petro went from not minable to minable
  • Petro went from being conceived as a token running on the Ethereum Network, to run under the NEM blockchain to being a token running on a proprietary blockchain.
  • The Petro went from being the tokenization of a contract of purchase/sale of a barrel of oil to being a kind of fund composed 50% of oil and the other 50% by a basket of Gold, Diamond and Iron to diversify risks (The president said that the basket contemplates Aluminum; however this is not listed in the whitepaper).
  • Petro went from having a fixed emission to allowing the successive emission of several batches until reaching its limit.
  • The exchange formula of the previous Petro established fixed values and weighted averages, whereas the new formula features a “Correctional Factor” that can modify the price of the Petro since its determination formula is unknown and it is very likely to be a subjective value to be determined by the Venezuelan government.
The First Formula to Determine the Price of a Petro in Venezuelan Bolivars: The variables are fixed and only contemplate oil market and the average of venezuelan petro/VEF rate according to exchanges
The new formula contemplates a basket of commodities multiplied by a “correctional factor” whitout a clear formula for its determination. A Discretional Change on this factor can completely alter the Price of one Petro in Venezuelan Bolivars

Legal Decree Commanding The Creation of Petro and Designation of Carlos Vargas as Authority to foresee Venezuelan Cryptocurrency Activities Available here

Ethereum-based Petro Whitepaper Available here

NEM-based Petro Whitepaper Available here

New Whitepaper Available here