The effect of the cryptocurrency market on the mainstream financial ecosystem has been a hotly debated topic. While some claim that digital assets will never match up to fiat currencies, the other camp is confident that crypto is ‘the next big thing.’
In a recent report by the Foundation for Defense of Democracies titled, “Crypto Rogues: US State Adversaries Seeking Blockchain Sanctions Resistance,” the organization touched upon a few countries that were at the forefront of cryptocurrency adoption, for better and for worse.
One of the major countries covered in the report was Venezuela, the South American country currently overrun with hyperinflation. The report pointed out the shortcomings of the Nicolas Maduro government in implementing the state-backed Petro. It said,
“President Nicolas Maduro’s attempt to create a sovereign cryptocurrency was a highly publicized, but failed, experiment to mount blockchain sanctions resistance. From the outset, the U.S. Treasury Department noted that President Maduro hoped that “the Petro would allow Venezuela to circumvent U.S. financial sanctions.”
According to the aforementioned report, Petro’s shoddy and mismanaged launch, coupled with wrong intentions held by the government is to blame for the project’s failure. The study is of the opinion that Petro’s failure is a lesson for other countries like Iran, China and Russia, regions aiming to go big in the digital assets industry.
A key factor behind the failure of the state-backed ‘Sovereign Bolivar’ was the sheer number of “indecisions” that plagued its creation and execution. Crypto Rogues added,
“Maduro’s original announcement said the Petro would be based on the Ethereum blockchain, an open software protocol widely used for creating new digital tokens. However, in February 2018, the Petro white paper said the token had been built on the NEM blockchain, another open source protocol popular in East Asia. The white paper was completely revised in October 2018 and outlined an entirely different software protocol, which appears to be a clone of another blockchain protocol called Dash.”
Another major example of Petro’s failure was brought to light when the Venezuelan government backtracked on its own decision to buy defense trucks from Russia, using Petro. This executive decision never came to fruition because Russia’s Deputy Finance Minister clearly underscored that the nation never had plans to use the digital asset to conduct trade with Venezuela.