Venezula Bucks Petrodollar, Announces Cryptocurrency , Backed By Oil

Months after Russia became the first country to announcethe creation of a state- backed CryptoRouble, Venezuela has followed suit , announcing the creation of El Petro , a state - sanctioned cryptocurrency to be backed by Venezuelas extensive reserves of crude oil. Venezuela has already broken free of dollar dependence months ago when Caracas announced it would be trading its oill using Chinas Petroyuan. Venezuelan President Nicolas Maduro also stated taht he would like to begin trade with Russia in the rouble.

With Venezuela heavily sanctioned by the United States , El Petro looks to be another tool which Venezuela can use to continue and conduct international commerce without relying on Dollar based financial institution. Crucially while existing Cryptocurrencies tend to create their initial value through an arithmetic process called "mining" , leaving them heavily subject to market fluctuation, El Petro will be backed by a known commodity , oil , thus giving it a clear advantage for risj - averse investors.

While the worlds most popular cryptocurrency Bitcoin, has seen its value skyrocket against the Dollar , some remain unconvinced of its long- term prospects for stability. A currency, backed by oil would, by contrast , ostensibly fluctuate in accordance with the well established global price of Brent Crude.

Maduro announced the creation of El Petro in his weekly televised address to the people, Sundays with Maduro. The Venezuelan President stated that the goal pf El Petro " to advance the countrys monetary sovereignty, to carry out financial transactions and to defeat the financial blockade against the country." He further said that EL Petro, .... will allow us to innovate towards new forms of international finance for the economic and social development of the country" An official oil-backed cryptocurrency could work in tandem with Russias soon to be launched Cryptorouble , a digital currency will ostensibly be backed by the vast resources of the Russian state.

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