Having created its own crypto currency, Petro, Venezuela is trying to improve its bad economy by combining its forces with AirTM and Zcash. So, is this all going to work?
Venezuela is an oil-intensive country. When oil prices fell in the 1980s, Venezuela suffered destruction. People lost their jobs and inflation rose to over 80 percent. While Venezuela’s GDP rose slightly in the 1990s and 1991, unemployment remained high and wages remained low.
The country’s dependence on oil has always continued. When this dependency merged with a troubled government, inflation reached 100 percent in the mid-1990s. The country also suffered a banking crisis in 1994.
In the first few years of Hugo Chávez’s term of office from 1999 to 2001, oil prices soared and the Venezuelan president changed the country’s policies in a socialist-democratic direction. This change made the South American country even more dependent on oil.
The country has been in recession since 2002, and with Chávez’s death in 2013, it ranked first in the misery index. Misery index is calculated by considering the factors of unemployment and inflation.
The Venezuelan economy is in the grip of bolívar, its currency. Currently, inflation in the country is estimated to be over 4000 percent with prices doubling every month.
Among the member states of the United Nations, Venezuela ranked 37th in the 2017 GDP ranking. GDP has shrunk over 10 percent consistently over the last three years.
Unemployment is above 30 percent and more than 85 percent of Venezuelan citizens live below the poverty line. As of this year, Venezuela owes more than 34 percent of GDP.
The country is currently unable to repay its debts.
The Venezuelan government has a plan to revive the country’s economy. This plan is being formed around the crypto currency, which is still a new technology.
Today we will look at what the Venezuelan government is planning for the country’s economy and the possible effects of these plans.
What’s Happening in Venezuela?
The Venezuelan Constituent State Assembly recently approved a bill aimed at raising Venezuela. The bill was proposed by Venezuelan President Nicolás Maduro.
Among the various provisions and over 60 articles, the bill approves and legalizes crypto currencies for daily transactions. More importantly, this bill also allows Petro to be used commercially.
Petro is the country’s most important asset, a crypto currency supported by oil.
Venezuelan citizens can buy Petro in two different ways. It is possible for nationals to purchase the crypto currency from a public office or from the government’s official website
The approved law also changed a number of anti-money laundering laws aimed at encouraging Venezuelan investment in the country.
The Venezuelan government hopes to revive the country’s troubled economy by using Petro for trade and to regain US confidence.
The US is Venezuela’s largest export and import partner. Nevertheless, the relationship between the two countries is very tense and shaky. Because American companies and diplomats were expelled from Venezuela and the US has already imposed sanctions against the country.
Venezuela believes that the crypto currency, Petro, will guarantee the company’s operations against the economic blockade that the US wants to implement against the country.
AirTM and Zcash Assistance On the Road
It is not only the Venezuelan government and Oil that are working together to revive and grow the country’s economy; The two major players of the crypto industry are reaching out for this purpose.
AirTM, a Mexican crypto wallet service, promises to provide $ 100,000 support to Venezuelan users. The service plans to give each buyer $ 10. At first glance, 10 dollars might sound like a little money, but it’s a significant amount for Venezuela. In the country, one week food, one week rent or one month of medication needs can be met with 10 dollars easily.
However, the company in charge of the crypto currency Zcash has promised a ”sizeable bağış donation for Venezuela’s goal.
So, what does all this mean?
Crypto currency Petro and Venezuela plan to support trade with other countries. In this context, there are already plans for promoting the use of Petro.
First, Venezuelan companies can now legally and commercially use the crypto currency. For example, payments will be made to Roraima, a Brazilian state near the border, with Petro for the purchase of goods and services.
Second, Petro Venezuelan’s currency will certainly not replace bolívar. Instead, Petro will be used to stimulate business, support trade activities and increase bolívar’s purchasing power.
Venezuelan economy is quite difficult because its economy is shaky, the crypto currency is relatively unsuccessful and these plans depend on a crypto currency. But the fact is that Venezuela clearly shows us that we are entering a stage where countries are turning to crypto currencies to solve economic crises.
Needing to grow its economy, Venezuela is now trying to join forces with the crypto currency Petro, AirTM and Zcash. We’il see what’s going on together.