The launch on Tuesday comes amid a deep economic crisis and a crackdown on democratic freedoms that have left President Nicolás Maduro's socialist government politically isolated and cut off from most global financing.
Bobby Ong, the co-founder of CoinGecko, a cryptocurrency ranking website, said the sale of the petro fits into a growing trend of asset-backed cryptocurrencies as investors look for digital coins backed by real-world assets. The government is trying to sell $2.3 billion worth.
President Maduro has said the total offering will be now worth $6 billion, making it by far the world's biggest digital currency launch of its kind, although initial sales are expected to be at a heavy discount in order to attract interest.
The government of Venezuela has so far revealed only little details about the crypto currency offering. According to reports, petros won't actually be redeemable for a barrel of crude (there's no mention of a mechanism to do so in the financial documents provided).
Government officials hope the currency could help combat hyperinflation in the country, which the International Monetary Fund has warned could spiral to 13,000% in 2018. The government also aims to complete any adjustments necessary for its network by the end of March, with full use of the token expected to begin in April. Right now when you pay with a card or through your phone, the money generally has to pass from one bank or financial services firm to another.
Petro, the Venezuelan state-sponsored oil-backed cryptocurrency, will be offered to prospective buyers beginning tomorrow, after President Nicholas Maduro had announced the idea in December of 2017.
"The Venezuelan government is looking to take advantage of one of the key features of cryptocurrencies - decentralisation", Matthew Newton, an analyst at trading platform eToro said in an email.
The logic is that by doing so, Maduro will feel the pressure to restore the country's Constitution and hold free and fair elections. Even though Venezuela is economically feeble, these ambitions are something Washington must pay attention to, he said. Venezuela has suffered a lot from the USA sanctions. That has made the situation incredibly hard for Venezuela.
Venezuela launched the presale of its own cryptocurrency, the petro, today.
The petro is also supposedly backed by storehouses of gold and diamonds, Maduro has said, according to Bloomberg.
Hyperinflation, a sign of the government's lack of ability to manage its own economy, has made its existing currency just about worthless. The MUD demanded the government set a date that provided ample time to appoint new electoral authorities and invite worldwide observers, but as talks broke down the ruling socialists did exactly the opposite: Election Day was accelerated under current conditions.