By Willey Penuela
CARACAS, Jan. 12 (Xinhua) -- Venezuela's newly unveiled oil-backed crypto currency, the Petro, is poised to substantially boost revenues for the cash-strapped South American country, according to a Venezuelan expert.
Carlos Rivas, an expert specializing in the field of big data and digital trends, said that the Venezuelan government "could generate an initial sum of 5.7 billion U.S. dollars" that could help alleviate some of the country's pressing financial needs.
Additionally, the convertibility of the crypto currency "will lead to a progressive opening up of the currency exchange market," he said.
UNIQUE CURRENCY
In early December last year, Venezuelan President Nicolas Maduro announced the launch of a crypto currency backed by the world's largest oil reserves, as well as Venezuelan gold, gas and diamond deposits, to counter U.S. sanctions that choked off his country's access to dollars.
Crypto currencies are unique in a way with no direct intervention by any states, authorities, institutions or banks. Nor are they backed by gold or other physical assets. The crypto currency is also unique as the only virtual currency in circulation today that is backed by natural resources.
However, since the Petro was floated by Venezuela, it's likely to encounter a politically-motivated backlash, said Rivas.
"In the next few hours, a global campaign to discredit the Petro will be unleashed" to undermine confidence in the digital currency, he warned.
Still, "if the government simplifies its operations," the Petro's launch will be a total success, since "the markets are eager for assets," and the projected returns on crypto currencies by far surpass those on standard currencies, he said.
The Petro is bound to have a positive impact, leading to a sufficient initial influx of foreign capital to reactivate raw materials imports and supplies needed "to energize Venezuela's battered economy," said Rivas.
What's more, "if the government decides to promote the creation of online exchange houses to carry out transactions in the Petro and other crypto currencies, it could charge small commissions for each transaction and that represents an income," he added.
UNCERTAIN FUTURE
Meanwhile, the Venezuelan economy, under the ruling socialist party, has been the target of global "financial persecution," which is not likely to change in the area of crypto currencies, the expert predicted.
"The administration of (U.S. President Donald) Trump will try to pressure exchange houses" that deal with digital currencies to boycott the Petro, said Rivas.
The currency may also become the target of hacking attempts, though tracking crytpo currency transactions is not easy, which is one of the advantages of the so-called blockchain system, he said.
One factor in the government's favor is timing, he noted, since it picked "the ideal time to launch a crypto currency (as) there's a global boom in the field."
Venezuela is set to host a national gathering of investors on Sunday to present a white paper on the Petro and its procedures.
