PETRO AND CRYPTOCURRENCIES: MYTHS AND REALITIES (II)
This writing is a complement to the considerations that we published on 12-02-18 on the same subject, considerations that are fully valid and unanswered, so we invite you to take them into account in their entirety, along with the following:
The official propaganda on the subject raises inaccuracies, half truths and arguments antagonistic in their essence.
What is appropriate in the case in which a Nation-State issues a currency is that it prohibits and pursues the circulation in its territory of any other currency, even for elementary reasons of competition, as, in fact, China, Russia and other members did. of the BRICS Group.
Despite the security and monitoring mechanisms immersed in the block chain, the cryptocurrency exchange in Tokyo filed for bankruptcy in February 2014 claiming that close to 500 million dollars in bitcoins would have been stolen.
A similar situation arose in Hong Kong with the theft of US $ 65 million in the digital currency of the Bitfinex stock exchange in 2016.
In November 2017 the case of the company Parity was reported where illegal access froze hundreds of millions of US dollars in the Ethereum cryptocurrency.
The company The DAO lost US $ 50 million in Ethereum.
The company NiceHash, specialized in the "mining" of cryptocurrency announced on December 7, 2017 that they had stolen all the content of its virtual wallet: 4,736 bitcoins, with a value of US $ 63 million.
As established to date, the US $ value of each Petro will be around US $ 55 in the primary placement of the initial issue. At what exchange rate with respect to the bolivar (VBF) will Petro initially be auctioned? Note that the State will only receive the initial income of the counter value that is established for the initial placement; future eventual assessments would only benefit the holders of the Petro.
With the initial placement, the Venezuelan State loses the possibility of applying future more favorable exchange rates of the US $ and other currencies in the conversion with respect to the VBF, because already the oil (or other good of support) will be sold.
It is obvious that if the exchange rate established in the initial placement of the Petro is perceived as low, arbitration by buyers will be inevitable, with resale in other currencies in the "illegal" market, as happened with securities issues. sovereigns of Venezuela denominated in foreign currency, a matter that, curiously, has not been investigated and not even commented on by the State's control bodies.
On the contrary, if the auction exchange rate is high, it could be an official validation of the market exchange rate ¿illegal?
In any case, private transactions with Petros can not be prevented from or from any other currency, including VBF, based on the cross rate with the US $ and Bitcoin, according to the market values ¿illegal?
We put "illegal? between interrogative signs, because we are not clear now the Venezuelan legal situation in monetary and exchange.
Are we facing a disguised derogation of exchange control?
In fact, if as it has been established, the Petro will circulate freely and legally within the country with purchasing and liberating power, this implies the implicit repeal by the State of the up to now constitutional and legal monetary sign of Venezuela, the Bolívar (VEF).
The foregoing implies the de facto dissolution of the Central Bank of Venezuela; It has already resigned its statistical and centralization powers from the International Reserves and has the operation of the Casa de la Moneda out of operation, as unfeasible. If it now fails to exercise its exclusive and mandatory powers (CRBV, Article 318) in monetary and exchange, the object of existence of the BCV is without effect.
It is ordered, for now, the emission of 100 million Petros, and it is said that they will be worth, according to their support, the same as the average value (we assume) of the value of 1 (one) barrel of the Venezuelan export oil basket ; that is, that the initial issuance will be equivalent to approximately US $ 5,500 million.
The above means, in gross terms, the indirect sale of the equivalent of six months of net exports of Venezuelan oil, excluding the commitments in Petrocaribe and the Chinese Funds.
Have you thought about the feasible possibility that some investor funds acquire Petros in the secondary market, even with a premium, with the intention of claiming support in oil?
Is it thought that the exploitation and simultaneous sale of the regular extraction of PDVSA and subsidiary and associated companies will be feasible, operationally and commercially, and of the additional extraction necessary to honor the claim of the support of Petro by the holders thereof?
Does the scenario outlined above fit into the hard-fought battles of OPEC?
If, as has been established, the generation (mining), exchange and, above all, circulation with liberating power of any cryptocurrencies is legally permitted within the country, the capitalization value of them, to date, would exceed size of the Venezuelan GDP; and if the equivalent value according to the market is assumed to be illegal? of foreign currency, the holders of these crypto currencies could, at least in theory, acquire, for example, all the private real estate wealth of Venezuela.
For what valid reason any State-Nation must allow, encourage, promote and support that individuals issue their own currencies practically out of nothing and without consideration, competitors of the currency issued by that State; in the Venezuelan case, taking advantage of the electricity subsidy? How is this activity different from the falsification of currency or the Ponzi Schemes (vulgo "pyramids")? These questions have been obviated by the relatively low relative weight of the aforementioned activities; but the picture tends to change.
The foregoing should not be confused with the issuance of the so-called "communal currencies", which, as indicated by their generic name, are agreed upon, issued, distributed and exchanged by a community, for their exclusive use, and without particular profit.
The primary gain that the miners and intermediaries will actually have (which there are, despite what the interested parties maintain) due to their activity, as well as the eventual gain from appreciation or arbitrage with other currencies that the holders of the crypto currencies may have. , all, including Petro, will it be controlled and subject to taxes according to Venezuelan laws?
If a State legalizes, endorses, promotes and supports the mining, exchange and free circulation of private cryptocurrencies, will it institutionally assume the moral and financial risk associated with possible frauds, losses, thefts and blocks of said cryptocurrencies? To answer this question, consider, by analogy, banking activity.
Apparently, the obvious macroeconomic and monetary aspects of the issuance and massive circulation of cryptocurrencies are being ignored, including the creation of additional monetary liquidity through particular channels. As we have already said, the aggregate effects of cryptocurrencies have been disregarded until now due to their relative low weight.
28.In the Venezuelan case, what body or entity will receive and administer what is perceived by the initial placements of Petro? Note that when Petro has a different support than International Reserves, the amount received for these initial placements will not be sterilized, that is, there will be no equivalent decrease in the Monetary Liquidity (M2), as it does when the BCV sells currencies of those that make up the International Reserves.
In the previous article, we already pointed out that the recent decisions of China and Russia to issue their own crypto currencies, are different from both Petro and the cryptocurrencies of private issue, because both will have support and free and immediate convertibility in Monetary Gold already extracted, refined and certificate.
We believe that it is not the case to invoke "creativity", a concept that necessarily implies viability and global improvement with respect to what already exists. Some things theoretically raised are not implemented by the failure in terms of the attributes cited.
The video where Comandante Chávez appears talking about Petro, does not constitute full proof, as it is said in Law. There is a video where Chávez declares that "he is not a Marxist or a communist"; although there is another, we assume that later, where he declares the opposite. As for Petro, the question is why Chávez did not implement it in the years of better foreign exchange earnings and higher oil prices. On the contrary, we have spoken with several eyewitnesses that
Comandante Chávez gave up on the idea, because of the issue of support for unavailable assets that we already explained. For something, China and Russia, and Libya at the time, approach it with traditional support of available goods, which have not been previously monetized, and which are in Reserve and from which they can be detached.
To close, abstain in this case, to appeal to the epithet "squalid", since we are not, or the insult of "dinosaur", favorite of those who think they are smarter than the rest, since we are system analyst and expert in planning, with an informed holistic vision and we have vast experience in finance and central banking.
