Those who held the Petro when it went to zero would absolutely want to see Maduro's outcome today. The Petro is the most absurd, tragic, and memorable failure in cryptocurrency history. What happens when a country uses cryptocurrency as a cure for absurd policies?
The first "state-issued cryptocurrency" in history was born.
In late 2017, Venezuelan President Maduro announced a globally groundbreaking plan in a national televised address:
"We will issue the world's first cryptocurrency backed by a sovereign government, the Petro."
Every Petro is backed by one barrel of Venezuelan crude oil!
The whole world was stunned.
This was in 2017, when Bitcoin had just broken the $20,000 mark, the ICO craze was sweeping the globe, and everyone was talking about how blockchain would change the world. And now, a national government is going to personally issue its own cryptocurrency?
It sounds incredibly avant-garde, innovative, and futuristic.
But if you think carefully about Venezuela's situation at the time, you'll realize that this wasn't innovation at all, but desperation.
A nation's doomsday dilemma
In 2018, Venezuela was on the verge of economic collapse.
Their fiat currency, the "strong bolivar," is no longer strong; it has depreciated dramatically. Inflation has reached astronomical levels.
It's not 100%, not 1000%, but an inflation rate in the millions.
What does that mean? A cup of coffee costs 500,000 bolivars in the morning, but it might cost 1 million in the afternoon. People go out to buy groceries with a bag of cash, and the cashiers are too lazy to count it, so they just weigh it.
Worse still, the United States imposed severe economic sanctions on Venezuela, cutting off their access to the international financial system (SWIFT). This means:
Unable to conduct international trade using US dollars
Unable to obtain loans from international banks
Unable to export oil to earn foreign exchange
Venezuela is an oil-producing country with the world's largest oil reserves, but it can't sell them due to sanctions. It's like a person sitting on a mountain of gold, yet starving to death on that mountain.
So the Maduro government came up with a "brilliant" idea.
Since the dollar system won't let us play, let's use cryptocurrency to bypass it!
In February 2018, the Petro cryptocurrency officially began pre-sales.
A design that sounds wonderful
The official explanation is as follows:
Each Petro (codename PTR) is backed by a barrel of Venezuelan crude oil. This oil comes from the Ayacucho 1 oil field in the Orinoco Heavy Oil Belt, and was initially priced at approximately $60 per barrel at the time. Other collateral includes oil, gold, and diamonds.
Moreover, this is blockchain technology, which is decentralized, immutable, and transparent!
Sounds perfect, right?
A stablecoin backed by real assets and endorsed by a national government—isn't this the "mass adoption" that cryptocurrencies have been dreaming of?
But the devil is in the details.
This is not a real cryptocurrency at all.
When the tech community began studying the Petro's white paper, they discovered a host of problems:
Question 1: Technical specifications repeatedly delayed
Initially, the official statement said that Petro was based on the Ethereum blockchain. A few months later, they changed their tune and said it was based on NEM (New Economy Movement). Later, they said they would build their own private blockchain.
It's like when you're buying a car, the salesperson tells you that this amazing pre-sale model "is a Tesla," the next day they say "it's actually a Niu Tou brand," and the day after that they say "sorry, we made our own Yulon."
Question 2: Complete centralization
Although nominally a cryptocurrency, it is entirely controlled by the Venezuelan government. You cannot buy or sell it on mainstream crypto exchage like Binance and Coinbase, nor can you create trading pools on decentralized platforms; it can only be traded on government-designated platforms.
This is not decentralized at all. It's just a government-issued digital token with a blockchain veneer on top.
Question 3: "Petroleum-linked" contracts do not actually yield any petroleum.
The official statement claims that each Petro is backed by one barrel of crude oil. But here's the question: can you actually exchange a Petro for a barrel of physical crude oil?
The answer is: No.
The so-called "oil backing" is just a concept, a slogan, a digital IOU issued with government credit.
You hold Petro, but you'll never get your hands on that barrel of oil.
It's like buying a "gold-backed" voucher, only to find that the voucher just says "we guarantee this voucher is valuable," but you can never redeem it for gold.
The government began to mandate its promotion.
What if no one is willing to use the Petro?
It's simple, but I'm forcing you to use it.
The Maduro government has begun a series of crazy actions:
Apply for a passport? Use Petro.
Want to travel abroad? First, you need to pay a passport fee of 2 Petro (about US$120). No Petro? Then you can't go anywhere.
Pay taxes? With Petro.
The government mandated that a portion of taxes must be paid in Petro cryptocurrency. This was a disaster for the public; they first had to find a way to buy Petro, but the government-controlled trading platform frequently crashed, and the exchange rate fluctuated wildly with the government's whims, subjecting them to arbitrary price cuts.
Pay salaries? With Petro.
Civil servants' bonuses and a portion of their pensions are being forcibly distributed in Petro cryptocurrency. The problem is, where do you spend your Petro after receiving it? Merchants simply don't accept it. So it's basically like receiving worthless cryptocurrency.
Currency reform? Peg to Petro
In 2018, the Maduro government introduced a new legal tender, the "Sovereign Bolivar," because the previously strong bolivar exchange rate was too absurd. It pegged the exchange rate to the Petro cryptocurrency in an attempt to stabilize the value of the legal tender.
And the result? Both collapsed.
It's like two people who are about to drown hugging each other, thinking that they can float up that way.
International reaction: The United States directly banned it.
The Venezuelan government thought its Petro cryptocurrency could bypass US sanctions, but the US response was very simple and brutal:
In March 2018, the Trump administration signed an executive order that directly prohibited all U.S. citizens and companies from buying or trading the Petro cryptocurrency.
This was a fatal blow.
Because if Americans can't touch the Petro, then international investors won't dare to touch it either. Who knows if they'll be blacklisted by the US government one day?
Major cryptocurrency exchanges (Binance, Coinbase, Kraken) have all refused to list Petro.
Lacking liquidity and an international market, the Petro is essentially a "government social credit" that can only circulate within Venezuela.
Even the Venezuelan people don't want to use it.
The public's real reaction: Nobody believed it.
If you were Venezuelan, would you trust government-issued cryptocurrencies?
The answer is: Absolutely not.
This government has already ruined the fiat currency; inflation has reached astronomical levels, and people's savings have vanished within a few years. Now the government is launching a new digital currency, claiming "this time it's guaranteed to be backed by oil"—who would believe that?
The more practical problem is that the technical threshold is too high.
Most Venezuelans have no idea what blockchain, wallets, or private keys are.
The government-launched "Patria" wallet platform frequently malfunctions, crashes, and is inaccessible.
Merchants are also unwilling to accept the Petro. Why? Because they don't know what to do with it. Exchange it for Bolivars? That's worthless paper. Exchange it for US dollars? The government won't allow it.
Therefore, in reality, people would rather use Bitcoin, USDT, US dollar cash, or even barter than touch the Petro.
The final straw: corruption scandals
In 2023, the final straw broke the camel's back for the Petro.
Venezuela has been rocked by the "PDVSA Crypto" corruption scandal that has shocked the nation.
PDVSA is Venezuela's state-owned oil company, and "PDVSA Crypto" is their department that manages cryptocurrency related to oil revenues. Investigations have revealed that billions of dollars in oil revenues were embezzled and misappropriated by officials through cryptocurrency channels, using USDT.
This money was supposed to be used to support the value of the Petro, but it all ended up in the pockets of corrupt officials.
Sunacrip, the government agency responsible for overseeing the Petro cryptocurrency, was purged, and a large number of officials were arrested. The Petro subsequently came to a standstill.
On January 15, 2024, the Venezuelan government officially announced the termination of the Petro cryptocurrency project.
All remaining Petro currencies were forcibly converted into severely devalued Bolivars. Holders' assets? Essentially worthless.
What does this experiment tell us?
The failure of the Petro was not merely the failure of a cryptocurrency project, but a disastrous failure of a national-level financial experiment (or implementation). It exposed several harsh truths:
1. Trust is more important than technology.
Blockchain, cryptocurrency, decentralization—no matter how advanced these technologies are, they are nothing without trust as a foundation.
The Maduro government has lost the people's trust. When your fiat currency experiences inflation in the millions, when you and your officials are rife with corruption, and when you constantly break your promises, no matter how dazzling your technology is, it's useless.
2. Centralized "cryptocurrencies" are not currencies at all.
The core value of cryptocurrencies that can be widely used by the public lies in their decentralization, censorship resistance, and immutability.
However, the Petro is entirely controlled by the government, which can change the rules, exchange rates, and force conversion at any time.
This is not cryptocurrency; it's just a government-issued digital credit disguised as blockchain.
3. The claim that "asset-backed" assets cannot be redeemed is just empty rhetoric.
The Petro cryptocurrency claims to be backed by oil, but you can never actually exchange it for that barrel of oil. It's like issuing a "gold coin" and saying that each one is backed by one ounce of gold, but you can never actually get the gold, so what's the point of this "backing"? Thanks to Tether for setting a good example.
True asset backing requires verifiable reserves, transparent audits, and a viable exchange mechanism. The Petro lacks all three.
4. Government-issued currency is not a bad thing, but timing and implementation are very important.
Some might say, "See? Government-issued cryptocurrencies are a joke!"
But that conclusion is too arbitrary. China's digital yuan (e-CNY) is functioning well because it has a clear positioning (a digital version of fiat currency), a sound technological infrastructure, and the credit support of the government. At least Zhongnanhai and many experts think it's good; I'm not endorsing it.
The problem with the Petro is not that it's "state-issued currency," but rather:
- The country that issues the currency has gone bankrupt.
- The purpose of issuing currency is to evade sanctions (violation of international law).
- Issuing currency only brings deeper suffering to the people.
- The technical implementation was a complete mess.
- There is no transparency or accountability mechanism.
5. Seeking innovation in despair often only leads to greater disaster.
When a country or large organization is desperate, it will try anything that seems like a lifeline, even if it is simply not feasible.
The Petro is a case in point. It wasn't a well-thought-out policy, but a gamble born of desperation. And when the gamble fails, it's always the people who foot the bill. Or, in Venezuela's case, the people were already losers before the gamble even began.
end
In January 2024, the Petro cryptocurrency officially became history.
From its announcement to his death, less than six years passed. It did not help Venezuela circumvent sanctions, stabilize its currency, attract international investment, or improve people's livelihoods. It didn't even help Maduro himself.
Its only achievement is becoming the biggest joke in cryptocurrency history and a major lesson for the crypto industry.
Those who held Petro (mostly government employees and ordinary citizens who were forced to hold it by the government) all lost everything.
Those who initially believed in "oil support" eventually discovered they were only holding onto an empty promise from the government.
Those corrupt officials had already laundered their money overseas.
This story teaches us that technology cannot solve the trust problem, blockchain is not a panacea, and when a country's government loses its credibility, no matter what kind of currency it issues, it will be useless. We should maintain and urge normal government and public representatives.
Petro should have a blockchain tombstone inscription, with the last block saying:
"Here lies the world's first state-issued cryptocurrency. It was born of despair and died of corruption. It could have changed history, but in the end, it merely repeated it. When power is unchecked, any noble ideal becomes a disaster."
However, no nodes are operating anymore; everything has fallen into the eternal silence of the digital world. Opening the block explorer reveals only a blank page.
