President Nicolás Maduro recently said that Venezuela will hold the presale for its oil-backed, state-issued cryptocurrency, the petro, on February 20, and that the government will distribute mining equipment to universities, savings banks, and other institutions.
On January 30, Venezuelan president Nicolás Maduro announced that the presale of the state-issued cryptocurrency petro will take place on Feb 20. He made the statement at a meeting in which he signed the petro whitepaper.
It was previously reported that Venezuela’s fiat currency, the bolivar, would not be accepted in the presale of the petro, but that other national currencies and some virtual currencies would. Venezuela’s digital asset is expected to be backed by 5.3 billion barrels of oil (and possibly other natural resources), leading some opposition legislators to declare its issuance an illegal “forward sale of Venezuelan oil.”
At the Tuesday meeting, the president also revealed plans for a “petro container,” a shipping container with mining equipment inside that can be easily transported. He said that the units would allow the government to bring “mining farms” to “universities, high schools, community councils [which are local government bodies, and] people’s savings banks.” Later in his presentation, he clarified that “every savings bank in the country can have a mining farm and participate in the petro,” and a press release on the Ministry of Popular Power Through Communication and Information’s website projected that the government would establish these facilities in every university in the country.
The whitepaper was briefly posted to the petro’s website, according to the online news publication CriptoNoticias, and then taken down, perhaps because it lists the presale’s start date as March 1. The news site downloaded the document before it was removed and has made it available.
During the presale, the whitepaper says, participants can buy ERC20 tokens on the Ethereum blockchain, which will later be burned and exchanged for tokens on a petro network.
A roadmap on the petro’s site suggests that the digital asset may be launched on a Counterparty platform in July 2018. An older iteration of the whitepaper, viewed by CriptoNoticias, reportedly indicated that the cryptocurrency would live on a fork of the Decred blockchain, but the current document contains no reference to Decred.
The tokens will be sold at a price equivalent to $60, a figure which is subject to change depending on fluctuations in the price of a barrel of oil, to which the value of the petro is intended to be fixed. During the presale as well as the subsequent token offering, or ICO, a discount (which could reportedly be as high as 60 percent) will be applied to at least some purchases of the digital asset.
The text of the paper relates that the petro will be issued by the state on a “federated blockchain.” The mining scheme that Maduro proposed would seemingly suggest that, at least at first, a proof-of-work (PoW) consensus mechanism will govern the platform.
By press time, Venezuelan officials had not responded to an ETHNews inquiry about what role the ostensibly PoW-based mining would play in the federated network. Without providing a conclusive explanation, the whitepaper does offer some clues. For example, the “Venezuelan state will not be able to conduct new issuances of the Petro cryptocurrency. The design of the [Petro] network includes the possibility” to eventually switch over to a proof-of-stake consensus mechanism, a change which can only be implemented by the “Venezuelan Cryptocurrency Superintendence with the approval of Petro holders.”
Maduro has indicated on several occasions, including at the Tuesday meeting, that the move to introduce the petro is, at least in part, an attempt to soften the effects of US-levied sanctions on Venezuela’s economy. If the token holds its $60 unit value, then the mining operations it supports will bring further funds into the country’s economy on top of the crypto and fiat currencies that the government acquires during the presale and token offering.
The whitepaper says that the eventual market capitalization of petro will be 100 million tokens, and that “there will be no extra issuance.” Of these tokens, 34.8 percent will be made available during the presale, 44 percent during the token offering, and 17.6 percent will remain with the Superintendence, presumably for eventual mining. During his January 30 presentation, Maduro had said that “the total number of petro issued into circulation during the first year will surpass 100 million.” This statement contradicts the all-time cap of 100 million referred to in the whitepaper, and it’s currently unclear which is accurate.