Talk for Article "Venezuela state oil company to use cryptocurrency exclusively, Maduro says"

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  1. [ This comment is from a user you have muted ] (show)

    I think stories like this would benefit from some historical background about U.S. involvement in damaging these global south economies by manipulating them into ‘agreements’ that only benefit the U.S. (See “The New Confessions of an Economic Hit Man”).

    If Venezuela’s Petro doesn’t have a hard-coded upper limit of Petro’s to be mined, I wouldn’t touch it…just the same inflationary problems as printing more fiat currency.

    It would also be interesting to keep an eye on all the countries that have, are currently or are likely to experience hyperinflation, and how cryptocurrencies might mitigate some of the inherent problems with fiat currency.

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    I’ve added two articles to the project, A Short Introduction to the World of Cryptocurrencies from the ST Louis Fed and Venezuela’s Petro White Paper. The St. Louis Fed piece is eminently readable and well researched. The White paper is a fascinating portal into the realities and evolution–some might say distortion–of the cryptocurrency world.

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    Great article, painful with respect to the turmoil in Venezuela, fascinating with respect to an extraordinarily complex subject.

    One thing which might be a helpful addition to the blockchain project is a primer on the subject, which could be organized as an index with headers and links to particular subjects. You might for example have an item for tokens with minimally annotated links. You might also limit the number of entries in some fashion. As with all things Wiki, it would be community editable.

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    I think an interesting story would be whether a US citizen would be breaking the law by buying this. Blockchain generally leaves a good enough paper trail that it would often (not always) be traceable back to the person who bought it, and that could make for a pretty straightforward route to legal trouble.

    But I’d love to hear from some experts on that question.

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      Agreed, that would be an interesting angle.

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    I’m checking into this. Apparently, the technical details are fairly standard: the distributed ledger is maintained by regular users and it will be possible to mine coins in the future. There is nothing technical about petros being redeemable in oil: it’s just the Venezuelan government binding itself to honor the digital contracts stored in the block-chain. That’s why they choose Ethereum instead of Bitcoin. This will be done through the traditional legal system of courts.

    I find it quite suspicious that the first batch of coins is already mined. If this is a one-time thing, there should be no concerns. But if the Venezuelan government is considered a privileged user in the network and has direct control over money supply (essentially by decree), there will always be a high risk of rapid depreciation.

    I think I’m going to write about it.

    1. [ This comment is from a user you have muted ] (show)

      Miguel, it would be wonderful if you could write about it, I’d love to read that.

      I’m curious, where did you read users can mine it in the future? AFAIK, all the coins will be pre-mined and the government controls it. It seems to me that the government is the privileged user in this instance, but I could be wrong.

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    The “petro” is only a “cryptocurrency” inso far as it is digital and will not exist in physical form. Unlike others alt-currencies it will have backing and a redeemable, intrinsic value in the same way sterling or the dollar when they were on the gold standard.

    Interestingly it could take off as another way of trading oil as an alternative to futures and options.

    The use of the Ethereaum platform is a coup for that company but goes to illustrate the value of the underlying technology that is divorced from the value of the cryptocurrency that “piggybacks” on that technology.

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      There are many digital currencies out there that are not cryptocurrencies. This is not one of them.

      This is a cryptocurrency because it’s a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions.

      It’s a cryptocurrency by definition. Just because it’s backed by something doesn’t disqualify it from being called a cryptocurrency.

      It may have features that many cryptocurrency programmers don’t advocate, such as centralisation, but so does the likes of Ripple. And we don’t go pretending that isn’t a cryptocurrency.

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        Could you explain the distinction between an asset backed currency like the petro or one backed by gold which has intrinsic value that resides in the underlying asset and a cryptocurrency that you say is a “digital asset” but has no intrinsic whatsoever and no backing whatsoever?

        Fiat currencies have the backing of the central banks and the governments that issue them. While some may say such backing so not worth a sausage it is nevertheless more backing than bitcoin, ethereum, neo or iota etc.

        Cryptocurrencies have huge capitalisations yet have failed to contribute any value added to the global economy. The underlying technology has added colossal value added and indeed the future value added is potentially staggering. But there is no correspondence between the value of the cryptocurrencies and the technology, those who hold cryptocurrencies have no claim on the underlying technological assets.

        1. [ This comment is from a user you have muted ] (show)

          Could you explain the distinction between an asset backed currency like the petro or one backed by gold which has intrinsic value that resides in the underlying asset and a cryptocurrency

          You just explained it yourself. I don’t what’s left to explain.

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    Is it available to purchase or for citizens only?

  8. [ This comment is from a user you have muted ] (show)

    WOW! Well I am a great believer in crypto’s as a modern way of tracking and exchanging value, especially within (or even between) communities.

    Is all of the petro’s premined? or will new barrels of oil be tied to new petros?

    I’m confused when the opposition says ‘this is not a cryptocurrency, this is a forward sale of Venezuelan oil’, surely the only way Venezuela can balance their budget, in the short term at least, is to sell off their oil reserves?

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      Yeah it’s all pre-mined and the government said that the barrels of oil will be tied to the petro cryptocurrency, apparently.

      In regard to the opposition’s comment, it’s not really about the selling off oil per se, but whether the petro is considered a cryptocurrency the same way Bitcoin is. The fact that the government controls the supply will have crypto-fans fuming, since it’s completely against the original vision of what it was for.

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        I’d be interested to know how the blockchain will function in a situation like this. Will full nodes be available for anyone to run? What does the proof of work algorithm look like and are the rewards decent for miners? Or, since it’s government controlled, are there no miners and the gov’t is responsible for maintaining the ledger?

    2. [ This comment is from a user you have muted ] (show)

      I’m confused by the opposition’s comments too. They don’t want to sell oil?

      And just because it’s centralised doesn’t mean it’s not a cryptocurrency. It’s simply a centralised cryptocurrency.

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        The point they are making is that it is essentially a version of an option on the future price of oil. Separately, because it is highly fungible and untraceable it is allegedly open to corruption because it can theoretically bypass sanctions.

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          Untraceable? Contrary to popular belief, block-chain transactions are far from anonymous. Sure, wallets are not tied to an specific name, but the transaction itself is always public. In this regard, cryptocurrencies are more transparent than regular money is.

          Why bypassing sanctions is corruption? I thought sovereignty exists precisely to counter external interference.

        2. [ This comment is from a user you have muted ] (show)

          Buying a petro rather than an established contract for the future price of oil doesn’t sound appealing at all! Am I missing something or would that make the target market for Petro’s the cash rich gentlefolk who would rather the taxman didn’t know?

          Must admit bypassing sanctions imposed by the US, EU et al is something I can get behind, if the petro reduces exposure to international financial markets and allows politians to make investments in the national interest.

          Thinking about the rule of law in Venezuela, is there a high proliferation of smart phones? If the crypographic keys are all stored on relatively secure personal devices with the database assessible to revenue and customs, how efficient would the tax system be!!

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