Petro, the cryptocurrency pet project from Venezuelan President’s Nicolas Maduro, is causing headaches for the country.
Retail stores in Venezeula are protesting the Petro by refusing to accept it as a payment method, local news reports. Retailers say that no supplier accepts the “cryptocurrency,” which means vendors have to exchange it for fiat.
Ordinarily this wouldn’t be too much of a problem, but because of Venezuela‘s wild hyperinflation, it’s putting vendors in a very tight spot.
The Bank of Venezuela rolls the conversion rate from Petro to fiat back to when a good was bought. As a result of hyperinflation, the value of that good rapidly increases, vendors have reportedly found it difficult to reliably replenish stock.
Josefina Salvatierra, executive director at the National Council of Commerce and Services (Consecomercio), said this could leave retailers unable to replenish their inventory as they simply don’t have the cash.
“The Petro is a scam for the merchant,” Salvatierra told local news.
Maduro’s pet project
Venezuela’s President, Nicolás Maduro, set up his sovereign cryptocurrency a couple of years ago in an attempt to save the country from hyperinflation.
The plan was to have the Petro pegged to the value of the fiat “sovereign Bolivar;” they were supposed to be interchangeable.
That said, it’s been speculated that Maduro’s Petro is really designed to skirt around US trade sanctions, allowing it to sell its oil internationally for cryptocurrency.
Maduro has, on numerous occasions, forced his “cryptocurrency” project on Venezuelans. Back in July 2019, Maduro ordered the nation’s banks to sell Petro, insisting they adopt it for use.
However, it seems Maduro‘s plan isn’t working well for citizens.
With continued hyperinflation and the time delay to liquidate Petros for fiat, it appears to be doing little to nothing to allay the country’s economic challenges.