Written by: Xiaobing | Deep Tide TechFlow
On January 3, 2026, the U.S. navy launched a “large” assault on Venezuela, and Venezuelan President Maduro was swiftly arrested and transferred.
One commenter remarked, “The one who issued Memecoin was arrested, and the one who issued RWA Token was arrested.”
That’s certainly the case.
On February 20, 2018, Venezuelan President Maduro introduced in a televised handle the launch of the world’s first sovereign-backed digital foreign money, the Petro.
At the moment, Venezuela was mired in the worst financial disaster in its historical past, with inflation hovering to just about 1,000,000% (you learn that proper), its foreign money, the bolivar, depreciating like nugatory paper, and extreme sanctions from the United States solely exacerbating the plight of this South American oil large.
Maduro is pinning his hopes on this cryptocurrency as a final resort to avoid wasting the nation.
Nonetheless, when the Venezuelan authorities quietly terminated the operation of the Petro cryptocurrency in early 2024, the world did not even have a look at it with a lot shock.
This digital image, as soon as hailed as the “world’s first sovereign cryptocurrency,” nearly by no means actually “lived” throughout its quick lifespan. Its demise, like the silent curtain falling on a loud drama, dropped at an in depth a magical realist story revolving round crypto know-how, nationwide sovereignty, and financial collapse.
The destiny of the Petro displays the full collapse of a rustic’s governance system.
The Petro was born from the ruins.
To grasp the Petro, one should first perceive Venezuela earlier than its creation.
It was a rustic ravaged by hyperinflation, the place the outdated foreign money, the bolivar, evaporated in worth hourly, and other people’s life financial savings vanished in a single day. In the meantime, extreme monetary sanctions from the United States, like an invisible noose, tightened Venezuela’s financial lifeline, successfully isolating it from the international monetary system.
It was on this financial wasteland that the Petro was born, carrying an nearly unimaginable mission of “saving the nation”.
Its blueprint is grand and engaging.
First, the Petro cryptocurrency bypasses the US dollar-dominated worldwide monetary system by way of blockchain, opening up a very new financing and cost channel; second, it claims that every Petro coin is linked to a barrel of actual oil reserves, with 100 million Petro cash having a complete worth of US$60 billion.
In August 2018, Venezuela formally established the Petro as its second official foreign money, circulating alongside the already riddled Bolivar.
The Maduro authorities’s promotion of the Petro cryptocurrency is unprecedented in its scale.
Retirees’ pensions have been switched to the Petro cryptocurrency, and civil servants and navy personnel have additionally acquired their Christmas bonuses on this digital foreign money. Maduro even airdropped 0.5 Petro cash as Christmas presents to retirees nationwide through stay tv broadcast at the finish of 2019.
Along with its compelled promotion inside the nation, Venezuela can also be making an attempt to draw extra international locations to make use of the Petro cryptocurrency.
Time journal reported that the Petro cryptocurrency acquired private approval from Putin, and Russia despatched two advisors to take part in the venture design. Russia pledged to spend money on the Petro and think about using this digital foreign money for settlement in bilateral commerce, with the intention to collectively counter the greenback’s hegemony.
Venezuela can also be making an attempt to increase its Petro cryptocurrency to OPEC member international locations, hoping to create a de-dollarized oil buying and selling system. Oil Minister Quevedo publicly acknowledged, “The Petro will turn out to be a settlement methodology accepted by all OPEC member international locations.”
To make the Petro extra extensively obtainable, the Maduro authorities has reworked itself right into a cryptocurrency venture workforce, establishing an entire infrastructure, offering detailed buy tutorials on its official web site, growing 4 ecosystem apps, and authorizing six exchanges, together with Cave Blockchain and Bancar, to publicly promote the Petro.
However actuality shortly dealt a heavy blow to the Maduro authorities.
Public indifference and skepticism
The Venezuelan authorities’s enthusiastic promotion efforts have been met with widespread public indifference.
The most upvoted remark underneath Maduro’s Fb put up asserting the issuance of the Petro cryptocurrency reads: “Unbelievable that anybody would approve of this completely horrible authorities… They’re ruining the complete nation.” One other in style remark says: “The authorities has turn out to be accustomed to letting each silly factor fail after which blaming different international locations.”
Venezuelan journalist Gonzalo’s touch upon Twitter was much more scathing: “The Petro is an anesthetic for this failed nation.”
The disastrous person expertise additional exacerbated public mistrust. Registration for the Petro cryptocurrency was extraordinarily rigorous, requiring the importing of each side of an ID card, an in depth handle, and a telephone quantity, however purposes had been continuously rejected inexplicably. Even when registration was profitable, the “Motherland Pockets” system was plagued with issues and infrequently unusable.
Even worse was the cost expertise. Many retailers reported Petro cost failures, forcing the authorities to acknowledge system flaws and supply compensation.
A Venezuelan lady stated, “We do not really feel the presence of the Petro right here.”
Externally, the US authorities additionally launched a focused assault on the Petro cryptocurrency.
In March 2018, only one month after the launch of the Petro cryptocurrency, Trump signed an govt order utterly prohibiting U.S. residents from shopping for, holding, or buying and selling the Petro. The Treasury Division acknowledged explicitly that any transaction involving the Petro can be thought of a violation of sanctions in opposition to Venezuela.
The scope of sanctions expanded quickly. In 2019, the United States added Moscow-based Evrofinance Mosnarbank to its sanctions checklist, citing the financial institution’s function in financing the Petro cryptocurrency. The U.S. Treasury Division bluntly acknowledged that “the Petro was a failed venture that tried to assist Venezuela evade U.S. financial sanctions.”
Aircoin disguised as oil
The most deadly drawback with the Petro is that it’s untenable each technically and economically.
The essence of true cryptocurrency lies in the belief that comes with decentralization. Petro, nonetheless, is a centralized database utterly managed by the authorities.
For an peculiar Venezuelan, which means that the worth of the Petro in his digital pockets will not be decided by the market, however could be arbitrarily modified by a decree issued by the president.
The Venezuelan authorities claims that every Petro cryptocurrency is backed by one barrel of oil from the city of Atapirire in the Ayacucho area, with reserves estimated at 5.3 billion barrels. Nonetheless, a Reuters reporter’s on-site investigation revealed dilapidated roads, rusted oil nicely gear, and overgrown weeds all through the space, displaying no indicators of large-scale oil extraction.
Whereas in exile, former Venezuelan Oil Minister Rafael Ramírez estimated that extracting the authorities’s promised 5.3 billion barrels of oil would require an funding of at the very least $20 billion, a pipe dream for a Venezuelan authorities that imports even fundamental meals objects.
Ramirez bluntly acknowledged: “The Petro was set at an arbitrary worth; it solely exists in the authorities’s creativeness.”
Much more absurdly, the Venezuelan authorities later quietly modified the property backing the Petro cryptocurrency, altering it from 100% oil backing to a combination of oil, gold, iron, and diamonds backing it in a ratio of 50%, 20%, 20%, and 10%, respectively.
This follow of arbitrarily modifying “white papers” is taken into account a foul follow even in the cryptocurrency world.
The technical points are equally critical. Petro claims to be based mostly on blockchain know-how, however the information displayed by its block explorer is extraordinarily anomalous. The white paper states that Petro ought to generate a block each minute, like Sprint, however the precise block interval is quarter-hour, and on-chain transaction data are nearly zero.
Not like the value fluctuations of actually decentralized cryptocurrencies like Bitcoin, the value of the Petro is completely managed by the authorities. The change price was initially set at 1 Petro to 3600 Bolivars, then arbitrarily adjusted to 6000, and later to 9000.
Though the authorities introduced the official value of the Petro at $60, on the black market in the capital Caracas, folks can solely change it for items price lower than $10 or US {dollars} in money if they’re fortunate sufficient to search out somebody prepared to just accept it.
Petro is actually a management instrument disguised as a blockchain.
The last blow: inside corruption
If the life of the Petro was slowly fading away, then the last straw that broke the camel’s again was a stunning inside corruption scandal.
On March 20, 2023, a political earthquake struck Venezuela.
Tareck El Aissami, a key member of Maduro’s authorities and Minister of Oil, instantly introduced his resignation.
A couple of days in the past, Venezuelan anti-corruption police arrested his right-hand man, Joselit Ramírez Camacho, head of SUNACRIP, the nationwide digital foreign money regulator and the core division answerable for the regulation and operation of the Petro cryptocurrency.
As the investigation deepened, a large fraud involving billions of {dollars} got here to gentle.
Lawyer Normal Tarek William Saab revealed that some senior authorities officers used cryptocurrency regulators to function in parallel with oil firms, signing oil loading contracts “with none administrative management or assure.” The corresponding funds after the oil gross sales weren’t made to the nationwide oil firm, however had been transferred to non-public pockets by way of cryptocurrencies.
Investigations revealed that the corruption community concerned between $3 billion and $20 billion, with the ill-gotten beneficial properties used to buy actual property, digital currencies, and cryptocurrency mining farms.
In April 2024, Oil Minister Aisami was arrested and confronted a number of fees, together with treason, cash laundering, and prison syndicate involvement. Greater than 54 folks had been indicted for allegedly collaborating in the corruption scheme.
This corruption scandal dealt a devastating blow to Venezuela’s cryptocurrency business. SUNACRIP was compelled to droop operations, and the authorities subsequently launched a nationwide anti-mining marketing campaign, confiscating greater than 11,000 ASIC miners and disconnecting all cryptocurrency mining farms from the nationwide energy grid.
By 2024, the authorities had halted buying and selling of the Petro, ordered a nationwide shutdown of cryptocurrency mining, and closed all approved cryptocurrency exchanges. An business as soon as closely promoted by the authorities collapsed utterly underneath the affect of corruption scandals.
The Petro experiment failed utterly, not as a result of of Washington’s ban, however as a result of of its personal decay.
A instrument designed to fight exterior sanctions has finally turn out to be a instrument for laundering cash for corrupt officers.
A microcosm of nationwide failure
The failure of the Petro cryptocurrency nearly mirrors the failures of Venezuela’s nationwide governance.
It is a “deal with the symptom, not the trigger” coverage. Confronted with deep-seated financial structural issues, the authorities chooses to create a glamorous facade, making an attempt to make use of numerical illusions to cowl up the actual financial decay. It is like dealing with a constructing tilting attributable to a collapsing basis, whereas the managers are portray the exterior a shiny coat of paint.
The Maduro authorities’s try to resolve systemic issues by way of know-how is essentially flawed. The worth of digital foreign money nonetheless rests on the credit score of the issuing entity. In a rustic with inflation in the tens of millions and fundamental requirements unavailable, what credibility can the authorities probably have? If the public would not even belief conventional government-issued foreign money, how can they probably settle for a very new idea like digital foreign money?
The Petro cryptocurrency, on the opposite, has utterly exhausted the final remaining traces of authorities credibility.
Think about this situation: a retired instructor, whose life financial savings have been eroded by inflation, is now compelled to change her month-to-month pension for Petro cryptocurrency. She walks from retailer to retailer together with her telephone, solely to be met with the similar reply: “We do not settle for this,” or “The system is down.”
The root of Venezuela’s financial issues lies in basic flaws in its financial construction. Venezuela suffers from a basic case of “Dutch illness,” with over-reliance on oil exports resulting in the decline of its manufacturing sector and a particularly singular financial construction. When oil costs fall, the complete nationwide financial system collapses. The Petro cryptocurrency, which makes an attempt to anchor itself to grease, has solely exacerbated the financial system’s dependence on oil, failing to deal with the structural issues.
In follow, the Venezuelan authorities lacked the fundamental technical and operational capabilities to implement blockchain tasks, leading to quite a few flaws from the outset. From irregular block information and cost system malfunctions to the arbitrariness of the pricing mechanism, each element uncovered the incompetence of the rapidly assembled workforce, even falling quick of the capabilities of a Shenzhen outsourcing studio.
Right this moment, the Petro has utterly disappeared into the dustbin of historical past, Maduro’s “experiment to avoid wasting the nation” resulted in a disastrous failure, Venezuela stays mired in its issues, and its folks proceed to endure from the raging fireplace of inflation.
The possible way out for this nation clearly doesn’t lie to find the subsequent “petro”-like digital shortcut, however in whether or not it will probably muster the braveness to face actuality, return to frequent sense, and provoke the actual change that ought to have been carried out way back however has been extremely troublesome.
