In a truly inspired way of bypassing the use of the country’s shattered currency and avoiding US trade sanctions, Venezuela is offering a 30% discount on all deals done for the purchase of their crude oil with cryptocurrency, preferably Bitcoin and Ethereum. While this deal is officially only with India, Venezuela are currently hawking the offer to any interested countries.
Venezuela’s offer of a 30% discount for crude oil purchases made in cryptocurrency come just two months after the country released its own national crypto – the Petro. Thus far, presale of the Petro has raised $3.3 billion in new capital, of which $1 billion will go straight in to stimulating Venezuela’s crippled economy.
30% Discount For Oil Purchases Using Cryptocurrency?
There have been several cases of Venezuela clearly indicating that it would prefer purchases of its oil done in crypto currency – preferably in Venezuelan Petro – and anyone that does so gets a 30% discount. Officially this deal has only been sealed with India, one of Venezuela’s biggest oil customers, but the reality is the same deal is on the table for any other nation or company wishing to purchase cheap crude oil from Venezuela.
Back in March, experts from Venezuela’s blockchain department visited India and reached an agreement with Delhi-based Bitcoin trading firm Coinsecure. The deal allowed Coinsecure to sell the Venezuelan cryptocurrency Petro in India. According to Business Standard, India’s leading business publication and website, Venezuela wants to add the Petro as a cryptocurrency on Coinsecure to trade Petro against Bitcoin.
According to Coinsecure CEO Mohit Kalra (as quoted by Business Standard):
“They (Venezuela) are going to many different countries and making similar offers. The offer that they have given to the Indian government is: you buy Petro and we will give you a 30 per cent discount on oil purchases.”
The introduction of cryptocurrency – the Petro in particular – is seen by many political observers as a means in which Venezuela can outflank US trade restrictions imposed on the country, and upheld as recently as February 2018 by president Donald Trump.
What Is Venezuela’s Current Relationship With Cryptocurrency?
Out of sheer necessity, Venezuela has had to accept and even embrace cryptocurrency unlike any other nation in the world. The fact that its own fiat currency is literally not worth the paper it is printed on means that cryptocurrency is more viable and useful for purchasing even the most menial of things like a loaf of bread and petrol for the car.
The Venezuelan Petro might be the first and at the moment only cryptocurrency born out of the necessity of a nation. At least the value of the Petro is legitimate. Each Petro is levied against Venezuela’s vast oil reserves, and that’s not going anywhere anytime soon. There are a reputed five billion barrels of oil reserves in Venezuela’s Orinoco Belt alone.
Aside from Petro, all crypto currencies accepted in the cafeterias, bars, restaurants, hotels, supermarkets, shops and gas stations in Venezuela, with particular onus on Bitcoin and Ethereum.
What Is Venezuela’s National Currency?
The national currency of Venezuela is the Bolivar Fuerte, known simply as the bolivar. At the time of writing this article, the bolivar was in truly dire straits, and actually a recent report had shown it to be 30% weaker than was previously believed. While it was thought that there were 251,000 bolivar’s to one US dollar, it would now appear the figure is more like 362,000. Incredibly, as recently as 2010, one could only get 10 Venezuelan bolivar’s to one US dollar.
However, that figure itself is somewhat deceptive; the Bolivar Fuerte was only introduced in 2008 as a replacement for the original bolivar, which was so overinflated as to be almost useless. The reality is that Venezuela as a country has been suffering for many years and has been in economic freefall for the past two decades.
How Did Oil-Rich Venezuela Become So Poor?
Several factors came to play at the same time. The collapse of the former Soviet Union during the late 1980s/early 1990s saw the sudden independence of several oil wealthy republics such as Azerbaijan, Georgia, and the Ukraine, while Russia itself also had an abundance of oil.
Oil was also discovered and developed in several African republics during the 80s and 90s. In this millennium, fracking has resulted in America itself discovering vast amounts of crude oil on its own land. On top of all that, the Saudi Arabian royal family, already more wealthy than they would never need to be, were quite happy to lower the price of oil so as to undercut the opposition.
The result was that Venezuela, who had been at one point the world’s second largest oil producer behind only Saudi Arabia, were no longer major players. Their time in the sun had been tarnished by their leader Hugo Chavez’ long running war of words with the US which, while turning him into an icon in Latin America, had largely ostracized his own nation, turning it into something of a pariah state. Chavez may have died in 2013, but his legacy still lives on.
The result is in 2018, Venezuela are desperately poor, this once thriving nation now has horrific scenes on global TV of hospitals full of sick and needy people and noble doctors desperately trying to attend to them and yet the bankrupt nation means the hospitals have no drugs and no electricity.
Is There Light At The End Of The Tunnel For Venezuela?
If Venezuela is awaiting for help from the United States, it may have come when Barack Obama was in charge, but barring a miracle, that is unlikely to happen with Donald Trump as president. Ironically, the salvation of Venezuela – plus many other South American and Central American nations – could well be China, who have recently stated their ambition of spending billions of dollars in the region in order to stimulate its economy and bring it into the 21st century, while establishing long-standing trade and economic links with the area.
Meanwhile, let us hope that small things like the acceptance of cryptocurrency as a valid and vital option to the Venezuelan bolivar can help the decent people of a once proud nation provide for themselves and get by until things improve.