The Petro, the shackle of the 21st century

By Luis Manuel Aguana

I open 2020 with the confession of a typo: I confess that I was wrong about the headline, almost 2 years ago, a note related to the launch of the Petro in the following way: The Petro: Sovereign Cryptocurrency died at birth  (see note in http://ticsddhh.blogspot.com/p/the-petro-sovereign-cryptocurrency-died.html). In my defense, when I explain why something that was not really dead but rather in a party, as we usually say in Venezuela, is still alive, kicking and stronger than ever, I can argue that each of the arguments described in that note to reach that conclusion of the alleged death of Petro as a financial mechanism for international exchange were rigorously true. But as the police say when they drag you into a cage anyway: you are right but you are in jail!

In fact, with the assumptions that the regime made and gave to us Venezuelans, when it announced the birth of Petro that experiment would not have gone far. The regime initially came up with this mechanism to evade the sanctions imposed by the international community, trying to impose an international mechanism of oil payments that at that time was unfeasible to accept for any international economic factor. But like any virus, the Petro's approach mutated. It changed its scenario and objectives. They realized that it was impossible to try to eat the whale in one bite and they rethought it.

And that's where my mistake lay, thinking it would stay there. I focused my analysis on a photograph, in other words, as the economists say, "ceteris paribus", if the variables remained the same, that invention would not have had results. My mistake was in not focusing my analysis on the film that was starting to be shot. Two years later we have cancer within the country in full operational capacity. And to have achieved that, my dear friends, the regime required time to put it together and develop it, and like any cancer it grew. And the official opposition has given it all the time in the world to do so, and it plans to give it even more this new year with the election season. As the doctors say, "cancer is curable if diagnosed in time". And of course it's only curable if it's treated in time.

The Petro experiment, now national, is more ambitious than people think. The regime has placed three fundamental objectives in this project: a) the destruction of the national payment system and of the bolivar as a currency; b) the neutralization of the hyperinflation that is undermining the bases of its sustainability; and c) the transformation of the country into a gigantic laboratory to test something that has never been done in the world: that a sovereign cryptomoney be the main currency of exchange. The latter would create an economic distortion of unforeseeable consequences, which would begin by making Venezuela official as a gigantic dirty money launderer, completely outside the traditional control systems of international banking.

Since the original proposal to make the cryptocurrency internationally accepted was not feasible, the regime made a major change to its internal use: "After a pre-sale tour that, according to information published by local and international media, was not as successful as expected, the Venezuelan State began to announce a series of measures with which it sought to legitimize and promote the use of Petro within the country: In the first instance, it made the digital currency official as a means of official payment and equated minimum wages with their associated value, and then demanded it as currency for services provided by public agencies, a trend that has been joined by some popularly known shops and businesses.” (see in Spanish Analysis of the Petro, the crypt currency to which very few have had Access https://www.diariobitcoin.com/index.php/2018/11/22/analisis-sobre-el-petro-en-venezuela-la-criptomoneda-a-la-que-muy-pocos-han-tenido-acceso/).

From a strictly technical point of view, the Petro, unlike the rest of the crypt coins, is not generated by mining. The regime has complete control over its generation. No one "mines Petros" like the miners of the rest of the cryptosystems do. And of course the regime - no one else - has control over who spends them and how they are spent. Since its start in early 2018, when they used platforms with algorithms based on existing blockchain chains (Ethereum, NEM), the regime has mutated into generating its own technological architectures: "It started using them with the Venezuelan State's Plataforma Patria in November 2018, but it was only recently (July 2019) that the APIs and exchange mechanisms that allow an ecosystem of services traded in petros became known" (see in Spanish The Petro and the new monetary architecture in Venezuela http://www.portalalba.org/index.php/areas/economia/finanzas/22244-el-petro-y-la-nueva-arquitectura-monetaria-en-venezuela). These APIs (or Application Programming Interface) are the key to an entire ecosystem of exchange and transformation of Petros back and forth into other cryptosystems and then into US dollars.

What has the regime done with all this time as a result of not yet having resolved the "cessation of usurpation"? Screwing itself up, consolidating an instrument that can only be developed with time. It has made Venezuelans more and more dependent on a monumental system of State donations that is not backed by any official reserve in the Central Bank of Venezuela. But in order to start up this ecosystem, it was necessary to create a market large enough to function.

And then for that initial test appeared the Petros nominated bonuses and allowances in purses created for all public servants, retirees and Social Security pensioners. Imagine, millions of people able to generate a large enough demand for goods and services. Businesses emerged within the country in agreement with the regime by accepting the Petro, while the regime forced the payment of taxes, fees, and any state service in the cryptocurrency, including passports.

The next natural step is the transactions between the Petro and other cryptocurrencies. But that's no good if people don't have Petros. With the December mass distribution of ½ Petro created the market. Little by little the exchanges will begin to move to the regime authorizing international exchange platforms to trade with Petros and thus transform Petros into Bitcoins or other cryptocurrencies (see in Spanish Venezuela authorizes 6 exchange platforms to trade in Petroshttps://noticias.bitcoin.com/regulacion/venezuela-autoriza-6-plataformas-de-intercambio-para-comenzar-a-vender-la-criptomoneda-nacional-el-petro/) and from there the changeover to international currency is immediate. These platforms are outside the orbit of financial sanctions on the regime.
We do not know how far this experiment that began in Venezuela in early 2018 will go, and whether they will succeed in displacing the country's payment system. But one thing I am completely sure of: Petro started two years ago as a crazy idea, with all the economic and technology experts -including me- thinking that it would not work (and in fact it would not have advanced much if the promised trilogy had been realized on January 23, 2019), and the truth is that now we see that by the end of 2019 international news channels were reporting lines of thousands of people waiting to be served in stores authorized by the regime, paying in biometric equipment, food and other goods in Petros. The technological development of the systems has been unstoppable. In spite of the crisis, the regime has not spared any technology to carry out this development that Maduro is seeing as its economic lifeline.

If the regime deepens in 2020 the use of Petro, as it seems to be announced in one more year of coexistence between official opposition and the regime, we Venezuelans will have been the guinea pigs of a new virtual monetary system, unique in the world, which according to some experts has the unproven promise of zero inflation, and absence of speculative bubbles (see in Spanish The Crypto currencies, inflation and debt systems https://steemit.com/cryptocurrency/@juanfb/las-criptomonedas-la-inflacion-y-los-sistemas-de-deuda).

However, in a communist system, which by definition destroys the productive base of the private sector, we believe that this promise is unlikely to be fulfilled, even knowing that virtually the entire labor base of the country depends in one way or another on the state. However, the Castro-Chavista-Madurist-Socialist criminals who are in power will squeeze every last ounce of drugs and gold out of the Mining Arc to sustain this new system, laundering the profits produced, and introducing them into that gigantic and sophisticated washing machine that Venezuela will have become, generating a mirage of economic well-being that will directly affect any electoral result that the official opposition negotiates with Maduro and his narco-regime.

Every minute that the regime is in power is another turn that tightens the screws of the shackles placed on the feet of every Venezuelan, making the Petro the shackle of the 21st century. The official opposition and the government in charge of Juan Guaidó had better think about that. Any solution that is "on the table" cannot wait another minute and must be applied now...

Caracas, January 2, 2020

Email: luismanuel.aguana@gmail.com
Twitter:@laguana (currently suspended)

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