The Venezuelan government recently opened the pre-ICO sale of Petro its cryptocurrency. The coin will be backed by the country’s petroleum reserves, placing it in the league of asset-backed cryptocurrencies. Venezuela makes history as this is the first government to release its own cryptocurrency.

Asset-backed cryptocurrencies have their value based on actual assets, not a prototype. The government also claims to have raised over $750 million so far, making it one of the biggest pre-Initial Coin Offering (ICO) sales this year.

In a pre-ICO sale, select investors are able to buy a coin. Proceeds from the sale will be used to carry out further developments in the roadmap such as hiring staff.
Venezuela has had to deal with crippling sanctions by the United States, and a foreign exchange crisis that has seen the country struggle to import basic items such as groceries and provisions.

Here is our take on the coin and a few observations surrounding the pre-sale, which will end on the 19th of March.

Who’s bought so far?

While the government claims investors have signified intentions to invest over $700 million, there is no concrete evidence provided. 100 million coins have been pre-mined (created), but about 82.4 million will be initially released. 38.4 million coins will be offered during the pre-sale.

No social media

Cryptocurrencies usually have a very active social media community. This helps not only with marketing the coin but provides a means of monitoring progress made on its roadmap or white paper.

Aside from the ICO website, there is no form of social media. No Twitter. Telegram. Discord. Reddit.

NEM or Ethereum? 

There appears to be some confusion about what platform the coin is based on. While the buyer’s manual states it will run on the NEM blockchain, the white paper states ethereum or ERC20 blockchain. Both are two different blockchains, and a hybrid could take some time before being integrated by major exchanges.

Crude oil prices are volatile

The prices of the petro coin will be largely determined by the price of crude oil. While crude oil is forecast to trade within the 60-70 Mark nothing is certain.

A Boycott is possible

Cryptocurrencies have gradually come under some form of regulation around the world. Many view Venezuela’s move as a means of circumventing sanctions. Authorities in the United States have kicked against it and US citizens are barred from the ICO. Other countries could decide to follow suit. A lack of mass adoption would affect the price of a coin going forward.

Where will the coin be listed?

The Venezuelan government in its roadmap stated that petro will be listed on government-approved exchanges. The top 5 exchanges globally may be unwilling to list it to avoid any possible sanctions by the United State. Large ticket investors could decide to shun the offer and this could hinder the price going forward.

Venezuela’s government is unpredictable

Venezuelan government was recently rocked by protests and has faced several challenges. A change in government to one not supportive of the coin could send its value tumbling. The government could also decide to unilaterally increase the volume of coins depending on the level of participation.


Venezuela launching a cryptocurrency brings more awareness about them and would have been a great one if the country was not dealing with a barrage of sanctions. The lack of clarity about the coin and its adoption going forward, make even a short-term speculation a risky task.

At $60 a coin, it seems rather overpriced and would require a significant rise in crude oil prices or an improvement in Venezuela’s macroeconomic fundamentals to appreciate.

The key role the government is playing in this offer makes it the antithesis of everything cryptocurrency stands for. Purists may have a problem with that.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via


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