The Petro Coin is a very exciting project announced by Venezuelan President, Nicolas Maduro. What makes this project interesting is a bunch of firsts, this coin would be the first staterun cryptocurrency and is also backed by physical assets, namely 5 Billion Barrels of Crude Oil, Gold and Diamonds. This is a solid coin and currency in its own respect.
Back in the days when fiat currency was significant, valuable and important, there was the “gold standard” where essentially the amount of currency in circulation and value was a direct reflection of how much gold it was backed by. If executed as promised, the Petro Coin would achieve exactly this as a first in the crypto world.
Why do I think this coin will succeed if executed and implemented as marketed and planned?
Russia, China and Iran. 2/3 (Russia and Iran) are currently sanctioned and China has been threatened with sanctions. Since the Petro Coin was founded as a way to restore wealth, prosperity and escape the sanctions guess who, as an ally of Venezuela and also parties with a vested interest would both profit directly and indirectly from the Petro Coin’s success? I anticipate massive amounts of money would pour in from Russia, China and Iran even if it is discreet and indirect. If I am right I would expect that this coin could be hugely successful and a top coin.
On top of this President Maduro has recently asked allies in the region to get on board with the Petro project.
What are some downside risks?
Judging from social media some are very averse for various political reasons to this coin. Another risk would be that this coin would almost certainly have trouble, be outright prevented, or removed from any Western based exchange. Being listed on major exchanges is a key success because if no one can buy or trade your coin then it’s not going anywhere fast. However, there are enough overseas exchanges to take care of this issue, and I suspect Venezuela would have enough resources to create their own exchanges to solve this issue. However, the boycott and difficulty in trading this coin are potential risks, especially if as I anticipate, some governments would simply just make it a crime for their citizens to hold or trade in this coin. It would be interesting to see where this all heads.
It’s also been reported that Venezuela’s Congress (the opposition) has declared this currency and coin completely illegal. However, it also appears that this has no legal bearing and will not prevent the project from moving ahead.
Should I invest in this coin?
I can’t answer that because only hindsight can clearly show us. I am planning to invest in it as long as the project is executed as marketed and planned. Politics aside I think this could be a win-win for people inside and outside of Venezuela. If this coin helps Venezuela escape sanctions this would almost certainly lead to an improvement for the people of Venezuela since sanctions mainly end up hurting the people (especially the poor).