Venezuela scraps state cryptocurrency

Venezuela will scrap the Petro today, the country’s official cryptocurrency.

President Nicolas Maduro launched the oil-backed cryptocurrency in 2018 because of inflation and a US embargo on Venezuelan oil. Despite a brief period of success early on, a corruption scandal and failures in the currency’s blockchain have debilitated the currency. After today, all remaining Petros will be converted to Venezuelan bolivars.

Last year, Venezuela saw an inflation rate of 189%, a slight improvement from 234% in the previous year. The Venezuelan Financial Observatory attributed the change to a lesser depreciation rate of the bolivar and a policy of salary reduction. Additionally, the months of October, November and December saw the lowest inflation rates in months for the Latin American country.

Eliminating the cumbersome cryptocurrency is likely to inspire greater confidence in the Venezuelan bolivar as citizens return to it, the currency being more utilized than the Petro anyway. Additionally, a gradual decline in inflation is expected to continue unhindered by the end of the Petro which was unsuccessful in curbing inflation and sidestepping US sanctions. Maduro’s decision to depart from the Petro may encourage regional neighbors like El Salvador to follow suit in favor of simpler and more traditional currencies that citizens are more likely to have trust in.