Through all of the criticism related to its status as a stable coin, Petro has subsisted, at least until now. As of Wednesday evening, reports have surfaced that suggest the existence of a much more specific reason to doubt Petro’s viability.
More specifically, Wired Magazine UK put forth the idea that Petro has always been a false stable coin with a value that is inflated by the illusion that it is backed by actual cash reserves. In essence, according to Wired UK, Petro amounts to a scam that is propped up by another scam.
If this is in fact true, then one can only wonder what the future of Venezuela’s economy will be given that $60 is roughly now equal to 3,600 of its newest version of the Sovereign Bolívar. With Venezuela’s economy forecasted as shrinking up to 18% this year, the outlook does not look good, to say the least.
What the major problem boils down to here is that it has been claimed that Petro’s reserves cannot even be treated as usable. To recap, Petro is supposed to be a unique kind of stable coin in that it is backed by oil reserves, instead of cash.
What Wired and other reports like that which was released by Cointelegraph on Wednesday suggest is that these oil reserves are real but also not usable, due to the company that owns them being in debt.
More specifically, the barrels are apparently owned by PDVSA, which is effectively the oil company that is directly backed by the Venezuelan national government. The problem with this company is not just that it is in debt, but in reality, that its debts apparently total around $45 billion.
When considering this, Wired’s comparison to Germany’s Rentenmark scam in the 1920s seems apt, given that it was also meant to lower inflation, when it was actually, effectively a worthless currency that was backed by land and businesses, which had already lost most of their values.
All in all, this revelation that Petro is backed by a business that should have already failed only adds to the chaos that has been surrounding it since its inception.
By: BGN Editorial Staff