On January 31, 2018 the Venezuelan Government published the White Paper of Petro (PTR) through the website elpetro.gob.ve. On this post I will explain the main aspects of this cryptocurrency.
What is Petro?
Petro is characterized as a sovereign cryptocurrency issued by the Bolivarian Republic of Venezuela and backed by oil assets. It’s based on the idea given several years ago by the Venezuelan Government of creating an international coin backed by oil.
This cryptocurrency is constructed around a federated blockchain, based on the open source platform Ethereum. A federated blockchain implies that the transaction validation is controlled by a limited group of nodes. This model is different than the public blockchain model which is the foundation of Bitcoin.
The Petro will be designed to work as: a digital platform, a way to acquired goods and services, being exchangeable for fiat money and other cryptocurrencies; and as a mean of saving and investment. The White Paper expresses that the purpose of the PTR is to stimulate the emergence of a more just global financial system, collaborative, autonomous and favorable to the growth and the exchange between developing economies.
Launch and Distribution of the Petro
According to declarations given by the Venezuelan Government in December, the total Petro that will be issued and put on sale will be one hundred million (100.000.000 PTR), so it will be a cryptocurrency of limited supply. Nonetheless, according to the White Paper the Superintendence of Cryptocurrencies and Related Activities will have the possibility of generating an incentive for proof-of-stake (PoS).
The White Paper establishes that the launch of Petro will take place in two stages: a private pre-sale and an ICO. The private pre-sale will consist of the issuance of ERC20 tokens (38.400.000 to be exact), that will have been pre-mined prior to the start of the pre-sale, by means of an intelligent contract (smart contract) created within the Ethereum platform. The reference prices stablished at this point is $60.
Before the start of the ICO, which is currently scheduled for March 20, 2018, the one hundred million Petro units (100,000,000 PTR) will have been pre-mined. Of this amount, only eighty-two million four hundred thousand units of Petro (82,400,000 PTR) will be available for sale, given that the rest, which represents 17.6% of Petro's total units, will be retained by the Superintendence of Cryptocurrencies and Related Activities.
Between the private pre-sale and the ICO 82,400,000 will be available for sale, of which 38,400,000 tokens will have been issued in the private presale, subtracting 44,000,000 PTR that will be available for direct acquisition via the ICO mechanism to be established by the Venezuelan Government. According to the White Paper, during the ICO will apply four decreasing discount levels.
Now, it is expressed in the White Paper that the funds raised in the public initial offer process will be distributed between several organism and projects, with 55% of the funds destined to the Sovereign Fund of the Bolivarian Republic of Venezuela.
Petro’s Backing
Unlike cryptocurrencies like Bitcoin that are backed by a decentralized system of nodes, El Petro according to the declarations of the Venezuelan Government, will be backed by oil and other commodities. But the reality is that, as of now, there is no explanation of how such backing would operate. Nonetheless, the White Paper does provide a formula that will determinate the Petro’s exchange rate in bolivars. An element of this formula is the Petro/Bolivar rate that will be determined through an average weighted by the volume of operations of all the exchange houses authorized by the Venezuelan Government.
Utility of Petro
According to the Petro’s White Paper, the Venezuelan Government, in order to encourage the use of Petro as a means of exchange nationally and internationally, the Venezuelan State has declared that it is committed to carry out the necessary actions to include Petros as a form of payment of national taxes and other contributions and labor benefits. The Venezuelan Government will boost the acceptance of Petro by establishing fiscal incentives to those companies that incorporate the use of Petro in their commercial operations.
Petro and US Sanctions
One of the controversial topics that the Petro has generated is the idea raised by several actors of the international community that believe that the Petro is nothing but an instrument to avoid the sanctions imposed by US Government to Venezuela that have limited its financing possibilities. The most interesting thing about that position is what effect will it have on the acceptance and commercialization of the Venezuelan cryptocurrency. It could be fatal for the life of Petro that has not even started yet, if the US Government somehow blocks the US crypto-exchanges to include Petros in their operations.
Schedule
According to the White Paper between February 20, 2018 and March 19, 2018 the private pre-sale will take place. On the other hand, the ICO will start on March 20, 2018 and it will be opened until the Petros of the first emission are exhausted.
I will continue to address this issue during the private pre-sale process as well as the ICO is running.
JABL
