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Because cryptocurrencies such as Bitcoin are born with the objective of being decentralized and anonymous mechanisms, they are not issued by any government, central bank or other authority. Nobody controls them.
But Maduro's government announced since its creation that the petro was backed by oil reserves of the Caribbean country and to tell the truth, real cryptocurrencies base their value on trust. People use them because they trust them.
Petro cryptocurrency is backed by Venezuelan oil. Venezuela is neither producing nor trading enough oil to meet its current obligations.
What value does oil really have in the ground, if the only way to extract it is through a poorly managed joint venture with PDVSA.
In Venezuela, the government registers its cryptocurrency miners. And, not content with that, the petro cryptocurrency cannot be mined and is awarded through auctions.
The government controls the mining, the government supervises the operations, the government sets the price.
Creating a new cryptocurrency is not difficult nowadays. Almost all existing crypto currencies are open source projects with open programming codes.
But to protect it from hackers and attacks from the outside, you need a reliable user base and many miners which can explain the miners' registry.
The miners provide the system with the processing power of their computers. Thus, in a way, they form a decentralized control authority.
The more users and miners a cryptocurrency has, the more secure it becomes. And that is exactly what the petro cryptocurrency may lack.
First, because mining requires a lot of computer capacity and, therefore, electricity, cheap in Venezuela, but with many failures. And second, in Venezuela, nobody trusts what the government does, especially when it comes to currency.
Maduro's petro cryptocurrency even violates the laws that its own issuer is supposed to uphold. Article 12 of the Venezuelan Constitution, the Magna Carta of the Republic, establishes that the country's oil reserves and wealth are inalienable.
In the plain meaning, it is a new indebtedness on the part of the Republic. The petro cryptocurrency is a forward sale of the Venezuelan oil.
Recording transactions on a blockchain and adding some cryptocurrency does not make it a cryptocurrency. It is not decentralized, it is not anonymous, and it is not used to buy and sell goods and services in Venezuela.
And, above all, its value depends on the reliability of a government that is already in breach of its international obligations.
