Petro Demonstrates Decentralization of Power on the Global Stage
This article was originally published on PerpetualGrowthCrypto
Venezuela launched their oil-backed cryptocurrency known as the Petro this week in an attempt to circumvent economic sanctions placed on the government as punishment for their refusal to back down from failed economic policies that have caused massive devaluation of the Bolivar and widespread poverty. President Nicolas Maduro claimed on Tuesday that the token raised $735 million on its first day of presale with no proof available to verify the funds. Advocates of the decentralization enabled by distributed ledger technology tend to promote individual freedom, so how can we as a community respond when a centralized entity like the Venezuelan government uses this technology to decentralize power in a way that harms its citizens and affects the balance of global power?
Maduro’s administration has repeatedly attempted to use the country’s oil reserves to fuel economic growth and pay for oversized social programs, resulting in horrific reports of starvation. The National Assembly of Venezuela previously declared the project illegal and some members have continued to voice their disapproval, asserting that the token will be used to fund illegal activity and describing it as “illegal” and a “fraud” and a bipartisan group of U.S. Senators have called on the U.S. Treasury Department to create a plan to prohibit use of the digital currency.
Oil production has hit record-lows in Venezuela and exports have increasingly been shifted away from the United States toward China, India, and destinations less interested in attaching political conditions to their trade deals. Success of the Petro will depend on whether or not any of these destinations decide to use Petro to conduct trade without the U.S. being aware. The NEM Foundation has confirmed that Petro will be deployed the NEM blockchain but so far any major supporters have chosen to remain anonymous.
The Maduro administration’s historical incompetence inspires little confidence in the success of Petro, however, this experiment underscores the possibility that governments may use distributed ledger technology to conduct trade with complete anonymity and evade sanctions or the repercussions of trading outside of existing agreements. In spite of the similarities in the scheme behind Petro and the failed policies pursued by the Maduro administration, the possibility that Petro could be used to circumvent economic sanctions poses a new and problematic feature of decentralization.
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