Venezuela’s Petro Coin Could Spur a Broader Rally in Cryptocurrency Prices

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Venezuela launches Petro Coin today – almost 84 million tokens are initially available for sale. The government expects to circulate 100 million tokens in total, in a bid to generate over $6 billion.

Several virtual currencies claimed to be back by the dollar, but backing Venezuela’s Petro coin is crude oil.

Carlos Vargas, the official in charge of managing the token, said investors could buy these tokes against “hard currencies” and cryptocurrencies, excluding fiat currency such as the bolivar.

Petro Coin Is Developed to Raise Cash

Though President Maduro faced a lot of criticism from opposition parties, he looks optimistic to support the nation’s cash position by offering oil backed tokens.

He said, “Petro is born, and we are going to have a total success for the welfare of Venezuela. … The largest and most important companies and blockchain in the world are with Venezuela, we are going to sign agreements.”

Venezuela has been suffering from a severe financial crisis, and the government isn’t in a position to fulfill even basic necessities for its people. The minimum monthly wage declined to $1, while the inflation level is expected to reach 13,000 percent by the end of this year. The U.S. sanctions and the plunge in oil prices were blamed for the social unrest. Thus, the government is taking initiatives like this Initial Coin Offering (ICO) to raise the cash.

>>Don’t Invest In Crypto To Make Money

But It’s Been Controversial Since Inception

The country’s opposition party has been strongly opposing petro coin and declared it illegal; they believe the government sells these coins against the nation’s oil reserves – which is against the laws and their constitution.

Legislator Jorge Millan said, “This is not a cryptocurrency, this is a forward sale of Venezuelan oil.” Some of the opposition members claim the scheme is meant to support corruption.

Analysts are showing their concerns over the long-term success of petro coin, as the U.S. has already denounced this cryptocurrency.

U.S. senators: Rubio and Menendez said: “It is imperative that the U.S. Treasury Department is equipped with tools and enforcement mechanisms to combat the use of cryptocurrency to evade U.S. sanctions in general, and in this case in particular.”

Petro Coin Created a Broader Rally in Cryptocurrency Prices

Venezuela launches Petro Coin

The launch of petro coin strengthened bull’s sentiments across the market. Bitcoin (BTC) price rose almost 4.17%, and its market capitalization is close to hitting the $200 billion levels. The oil-backed cryptocurrency could help bulls in lifting market sentiments – petro coin is launched by the government and this creates a vote of confidence on cryptocurrencies.

Featured Image: twitter

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects.
Siraj is a published financial analyst on the world’s leading websites including SeekingAlpha, TheStreet, MSN, and others.

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