Despite Doubts, Here’s How Venezuela Will Charge Cryptocurrency Chase

According to reports, the Venezuelan “petro” cryptocurrency raised $750 million in the first day of the pre-sale phase of its Initial Coin Offering. The “petro” ICO is most significant as a historical milestone for distributed ledger technology adoption.

Associate professor Lee McKnight in the School of Information Studies at Syracuse University says it’s likely other nations will adopt cryptocurrency, but warns U.S. citizens to be wary of Venezuela’s moves.

McKnight says:

“I and many others have doubts on this first national cryptocurrency, and are skeptical of the trustworthiness of the present Venezuelan government. Trust is an essential ingredient of blockchained markets: this particular cryptocurrency was announced as a means to evade U.S. sanctions and avoid U.S. financial market regulation, so U.S. citizens should be very wary.

“Still the ‘petro’ launch is a significant milestone, as Venezuela is indeed the first nation to launch a cryptocurrency for official business. There will surely be more nations doing so in future. Whether out of desperation as in the case of the bankrupt, mismanaged Venezuelan government or for other reasons, nations will adopt cryptocurrencies. Much more will adopt distributed ledger technology for permissioned blockchains which do not require a currency of any kind.

“For example, the Baltic state of Estonia announced in December 2017 that they were planning to extend from their successful e-Residency program and be the first to launch a semi-official cryptocurrency, the estcoin. Estonia has already adopted distributed ledger technology for some government records and data, motivated by the many cyberattacks the nation has suffered over the years from Russia. More generally, Estonia is an early adopter of enhanced national information security practices. Venezuela is unlikely to lead in that area. However, the European Union has not been convinced yet that the estcoin is a good idea, and it has not yet launched.

“So desperate Venezuela has now beat Estonia to the launch as the first nation with a cryptocurrency, the ‘petro’, pegged to the price of a barrel of Venezuelan crude oil.
Mark that for the history books, at least.”

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