Digital currency "Petro": What is its value and function?

The Venezuelan economy has undergone several changes that have been of great importance for the country. In particular, the birth of the new digital currency implemented by the National Government. This implementation has attracted the attention of the press, both nationally and internationally.

Specialists in economic matters can only comment and analyze about this new Venezuelan economic system.

However, the citizens have not been entirely clear on what the creation of this virtual currency consists of and what its operation will be.

An important means of social communication conducted an interview on this topic to the Venezuelan professor and economist Alfredo Rincon, expert in finance. The full interview follows:

• I would like you to give me a simple description that can serve the common reader about what is the petro

Well, a simple answer is not going to be because the same definition of cryptocurrency calls is still being discussed by some specialists. For some it is a means of reserve, for others it is a stock exchange, but in general it is a non-physical currency that is handled in electronic media. I do not consider that the petro is a cryptocurrency, I believe that around this new currency there is a mixture of concepts.

• What is a cryptocurrency?

Crypto means something like secret, because it is not known who issued it, it is not seen in an electronic way and because it is not effective by government or bank, it is based on the trust of the currency itself. That is why the petro by definition is not a cryptocurrency.

• According to what you tell me, do not you know who invented a world reference currency like the Bicoint?

• No. This currency was born in December 2008 in the wake of the housing and financial crisis of banks and mortgage centrals in the United States and Europe, which collapsed. Then, someone with a Japanese surname raised the Bicoint. He was thought to be a Japanese, but about two years ago it was revealed that he was an Australian. The first operation registered with Bicoint that was made was that of a man who paid with this currency for some pizzas in Florida. He could not imagine how valuable a transaction of this kind would be in the future.

Today the Bicoint is today a world power. These types of currencies rely a lot on the fact that operations are secret, that nobody knows about the bicoints one has, which one they buy and not even who is behind it.

• How many electronic coins are there in the world?

• In general, there are about 1,200 electronic coins in the world, but none with the characteristics of the petro. In reality, very few people know that an electronic currency has been operating in Venezuela for some time now. It is called Onyx, it is a cryptocurrency that had value a few days ago of $ 0.043, although these values ​​are not guaranteed by anyone and is a coin of very little use.

• Are there differences between the 1,200 coins existing worldwide and the petro?

• Petro is the first electronic currency established by a State. Not even Saudi Arabia has done it officially. The cryptocurrencies, as I told you, nobody knows who creates them and the petro was established by the national government. It is promoted by the media. Cryptocurrencies have no more support than their stability and the confidence they project, while the petroleum is backed by natural minerals such as oil, gold, gas and diamonds.

• How reliable can the petro be for investors?

• We have a currency promoted by the State of a country that is in crisis, it could be a parallel to all the obstacles that have put the government or it could be a failure in the absence of security that investors have due to the national economy.

I see difficulties for the petro. I think where it can have some success is in Venezuelans who have properties outside and prefer to sell them for fear of being confiscated. For example, if I am a Venezuelan and I have an apartment in Dubai that is worth 20 million dollars or more and I see that they are doing sanctions in Europe and the United States, I may be interested in buying petro which, after all, would have a certain guarantee. And then I deal with Venezuela. I sell you the apartment because I do not have dollars in cash or I have a dollar account but I know they can confiscate it. I sell it to you and you give me petro. That can be important from the financial point of view. I also have my doubts that the corrupt politicians themselves want to negotiate with petros.

As I explained, cryptocurrencies have to be secret and generate confidence. The government announces the petro and once assigned a superintendent, in addition it gives a guarantee based on minerals that, until the National Constituent Assembly, does not make any amendment would be violating the current Constitution that prohibits using reserves as backup of something. - If it is not a cryptocurrency, what is petro then?

• The petro is a currency different from the bolivar, but electronic, not physical, it is not seen. Despite the fact that there are many spokespeople talking about the petro, none give a clear idea of ​​what it is. We are almost the only one of the 195 states that make up the world, which are members of the United Nations (UN), which does not emit figures of gross domestic product, inflation, or even production. So how are we going to inspire confidence if all the American, European and Asian countries give those figures and we do not? I find out about inflation in Spain the following week ended the month. In Venezuela, the latest figures were from 2015.

• What could the State do to build trust?

• That works on political outputs to the current system that can establish the country, stop inflation, release the dollar and build confidence in investors. Anyone can buy and sell petros. Its value will be governed by that of the oil barrel. It could be a brilliant idea or a failure failure.