Venezuela formally launched its new oil-backed cryptocurrency on Tuesday in an unconventional and unconvincing bid to haul itself out of a deepening economic crisis.
The socialist government in Caracas put 38.4 million units of the world's first state-backed digital currency, the petro, on private pre-sale from the early hours. A total of 100 million petros will go on sale, with an initial value set at US$60, based on the price of a barrel of Venezuelan crude in mid-January.
The Latin American country has the world's largest proven oil reserves but is facing a crippling economic and political crisis. Caracas seems to think that's its own national version of bitcoin may solve its troubles.
Vice-President Tareck El Aissami said confidently that the petro will "generate confidence and security in the national and international market."
President Nicolás Maduro announced in early December that Venezuela – which is under sanctions from the US as well as the EU – was creating the digital currency.
He said he expects the petro to open "new avenues of financing" in the face of Washington's sanctions, which prohibit US citizens and companies from trading debt issued by the country and its oil company PDVSA.
Experts are sceptical about the petro's chances of success, pointing out that the country's deep economic imbalances will only serve to undermine confidence in the new currency.
Venezuela is mired in a deep economic crisis triggered in large part by a fall in crude oil prices and a drop in oil production, which accounts for about 96 percent of the country's exports. It is struggling to restructure its external debt, estimated at around US$150 billion by some experts.
The US Treasury Department threw a damper on the release yesterday, warning US citizens and companies who buy the petro that they could be violating sanctions.
Many have doubted the Venezuelan government's commitment to transparency.
"My advice would be to tread very carefully with this – especially considering the track record of the Venezuelan government," said Federico Bond, co-founder of Signatura, a digital currency start-up based in Argentina.
"They are not in a good position to obtain financing in any other way, so this could be seen as a desperate move," he added.
Maduro has touted the petro as the fulfillment of the late Hugo Chávez's dream of upending global capitalism away from the dominance of the U.S. dollar and Wall Street.
“The petro will be an instrument for Venezuela's economic stability and financial independence, coupled with an ambitious and global vision for the creation of a freer, more balanced and fairer international financial system," the government said in a 22-page white paper, translated into English, outlining its plans.
But critics point out that for now sale of the petro will only be in dollars – a sign of how much Venezuela's own currency, the bolívar, has melted under four-digit inflation.
Some bitcoin enthusiasts also question the whole concept of Venezuela, or any government, promoting a digital currency when such instruments were originally created to circumvent the controlling role of the state.
Bitcoin and other digital tokens are already widely used in Venezuela as a hedge against hyperinflation and an easy-to-use mechanism for paying for everything from doctors*visits to honeymoons in a country where obtaining hard currency requires transactions in the illegal black market.
The use of computers for bitcoin mining has also taken off, spurred by some of the world's cheapest electricity rates and widespread desperation prompted by a recession deeper than the US Great Depression.
Maduro took to the US President Donald Trump’s favourite medium, Twitter, on Monday to ask him to start a dialogue between the two countries.
"@RealDonaldTrump campaigned pledging to promote non-interference in the domestic affairs of other countries. It's time to keep your pledge," Maduro wrote, encouraging Trump to hold a meeting in Washington or Caracas.
Maduro and senior government officials, including Attorney General Tarek William Saab, have alleged that the US is orchestrating an alleged plan for a "military invasion" of Venezuela from neighbouring Colombia.
"The military bombing, the military invasion, the blood and fire occupation of a peaceful country like Venezuela are being planned," Saab charged last week, an allegation Colombia has flatly denied.