In the past years, Venezuela has been in economic decline. They blame sanctions put on by the United States not letting people or businesses buying new Venezuelan government or PDVSA (petroleum of venezuela) bonds. Extreme hyperinflation has also led to their local currency, the bolívar, becoming nearly worthless. In an effort to fix this severe economic depression, Nicolás Maduro, the dictator of Venezuela, announced on his weekly TV segment that Venezuela would soon be moving to a cryptocurrency called the “petro.” A cryptocurrency is a digital form of currency, usually operating without relying on banks or governments.

To give the petro economic value, it will be backed by the nation’s oil, gold, gem, and diamond reserves. By moving to the petro, the inflation rate will not be as bad (the bolívar dollar compared to the US dollar is a ratio of about 10:1). With inflation down, the cost of everyday items will go down in price. Henkel Garcia, director of consultancy at Econometrica, stated, “You can build [the petro], but trust, acceptance, and use is what will determine the cryptocurrency’s success. For me, it will be quite limited. The bolívar is also backed by reserves and has no strength.” This raises many problems with switching to the cryptocurrency. One of the biggest problems is that 81 percent of the population of Venezuela live in income poverty, according to data from the latest Venezuela Living Conditions Survey. Due to an overwhelming majority of the population being in poverty, most people wouldn’t have access to the technology required to use the cryptocurrency, according to the Econometrica.

Many people believe that Maduro is doing this because of the popularity of another form of cryptocurrency, the Bitcoin. In 2017, according to research produced by Cambridge University, between 2.9 and 5.8 million people are using cryptocurrency. This is largely because Bitcoin is not managed by any government or state, making it a completely independent form of currency. Another appeal to Bitcoin is that the exchange of the currency is untraceable; there is no virtual record kept of the exchange between two people trading the currency. But, in recent years, the United States has done something interesting regarding the Bitcoin. In legal contracts, Bitcoin can now be used to transfer money from one person to another, making it a form of currency recognized by the United States and legitimizing it.

Other impressive events have happened with Bitcoin. Like with any form of currency, there are people who want as much of it as possible, so Bitcoin casinos were formed. Since there are no laws regulating Bitcoin casinos, most sites give little to no chance at all of actually winning your Bitcoin back, let alone winning more. People also have purchased pets, cars, houses, and other essential goods with Bitcoin.

Because there is little information available about the petro, it is  unknown if the new system will be as limitless as the Bitcoin is. Making the cryptocurrency work will be difficult with many Venezuelans not having access to the internet. We don’t know if the petro will have any positive or negative effect of the state of the Venezuelan economy. Only time will tell if the currency works, or if it can even be fully implemented.