The Petro. first cryptocurrency recognized by a government

President Nicolás Maduro announced on Sunday the creation of a cryptocurrency, the Petro, which will be backed by the country's reserves of oil, gold, gas and diamonds. "I want to announce that Venezuela is going to implement a new cryptocurrency system based on oil reserves"

Elements and conditions of cryptocurrencies. Cryptocurrencies are called in this way because they are based on cryptographic, encrypted codes (from the Greek, cryptos, (hidden), and grafe, (writing), literally (hidden writing) .In the case of Bitcoin, each bitcoin is associated with a single address, belonging to a person (a virtual wallet) The bitcoin address indicates who owns the digital currency, it is like an email address, which allows you to send X bitcoins to the selected address, and you will have your money. Virtual, which only exists on the Web and is used through a system of encrypted electronic payments without the need for intermediaries.Cryptocurrencies use a technology called "Blockchain" (string of blocks in Spanish) generated by cryptographic algorithms. sort of "decentralized and encrypted digital accounting book" where all transactions are verified by an extensive network of computers without any need and institutions that compensate or settle payments between the parties.

Cryptocurrencies are a fiduciary money that lacks support. The value of fiduciary money depends on the trust (Fiat Money) that others accept as a means of payment and the possibility of being converted later into dollars, euros or other currencies. Cryptocurrencies are not controlled by any State or by any central bank. Your transactions are anonymous. Cryptocurrencies do not have a country of origin or are issued by governments and do not have a single legal backing. They are only electronic platforms that allow transactions. Cryptocurrencies are decentralized: they do not depend on a server, a bank or a country to regulate their value. In other words, no individual, government or financial institution controls it. Its decentralized condition is a challenge to the globalized political and economic power because in principle it threatens the monopoly of the States through the central banks of minting coins and printing bills.

Bitcoin network how it works

Every participant in the Bitcoin network has an electronic wallet that contains an arbitrary number of cryptographic keys. From the public key, the Bitcoin address is obtained, which functions as the sender and receiver entity for all payments. Your corresponding private key authorizes payment only for that user. The addresses do not have any information about their owner, they are generally anonymous and do not require any contact with the nodes of the network for their generation.The digital currencies, unlike the bank currencies, are not mandatory, that is, nobody You have to accept them if you do not want to. In addition, there is no guarantor in the last instance. In the case of "real" currencies, central banks continue to give credit when nobody else is willing to do so. Cryptocurrencies are based on blockchain technology. A chain of blocks is a decentralized database bank, formed by units designed to avoid its modification once a data has been published. This allows to identify the participants in the monetary transfers and ensures a detailed documentation of the processes.

Is Petro then a cryptocurrency?

If we take the elements analyzed above, it could be argued that the Petro might not qualify within the concept of cryptocurrency. So far, the government has not reported in detail on how Petro will be implemented, the operational structure, legislation and its operation. Of the EX trading platforms that will be required and how the emissions will be estimated (supply size, ICO) formation of the price of the Petro in the market depending on the supply and demand or the price of the underlying asset (Oil, gold, gas ) and in what currency it will be traded.

ETF is a better option. As it was raised by President Maduro in Petro's characteristics, in my opinion, these characteristics and purposes of Petro fit more closely with an Exchange Traded Fund (ETF) that is used as an investment vehicle in international securities markets. This investment instrument would be much more versatile, easier and faster to establish and strengthen the national stock market, while generating a significant volume of investment in dollars for the country while democratizing the investment of natural resources between Venezuelans, small, medium and large investors. There are alternatives available, the important thing is to know and know the most appropriate options and how to implement them