Venezuela's President Announces USD $5 Billion Pre-Sale

Venezuela's President Announces USD $5 Billion Pre-Sale

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Bloomberg reported that this presale will be private, and the probable discounts the country offers to the investors remains unclear.

In brief:

Venezuela’s president Nicolás Maduro has announced the pre-sale of his country’s national, oil-backed cryptocurrency the ‘Petro’, will begin on February 20th.

Nicolas Maduro, the president of Venezuela, has announced the pre-sale of his country's national, oil-backed cryptocurrency, the ‘Petro’. Starting from March 1st, 38.4 million Petros, out of the ordered 100 million, will go to institutional investors in a month-long presale. Petro is backed by the country's oil reserves, although there is no way to trade the Petro for the crude.

Maduro said, "This is the moment to accelerate the entry of the Petro, to have faith in what we've created, and in the technological and intellectual capacity of our country. The Petro will have a great impact on how we access foreign currencies for the country and in how we obtain goods and services that we need from around the world."

Bloomberg reported that this presale will be private, and the probable discounts the country offers to the investors remains unclear. Earlier it was reported that institutional investors will be offered a discount of up to 60 percent. Now, the final draft of the Petro whitepaper reveals that the transactions will be private.

Once the presale is over, 44 million Petros will be sold to the public. Thus, in order to fuel early demand, after the month-long presale, the Petro will be sold to the public at decreasing discounts. For every 5 million Petros, there will be four levels of small discounts, until a final 24 million tokens are sold at around $60 each and the remaining tokens will be held by the Venezuelan Superintendence of Currency.

According to the cryptocurrency's whitepaper, the government may introduce a proof-of-stake model, although Petro will be premined. The whitepaper states its value in these transactions will "use as a reference the price of the barrel of the Venezuelan basket of the previous day with a percentage discount."

Further, the Petro will be accepted as payment for taxes and fees and it may get included into the "card of the fatherhood," which is used to claim subsidies and foods from the government.

The Petro will be an Ethereum-based ERC-20 token with each Petro divisible into 100 million parts. "Mene" will be its smallest unit, which will be worth 0.00000001 PTR. This implies that Petro may find a place on decentralized exchanges like EtherDelta or IDEX.

The Venezuelan government will assign 55 percent of the raised funds through the token sale to a sovereign fund, and 15 percent will be allotted to develop technologies in other areas. Further, to develop the Petro's ecosystem, 15 percent will be put aside and remaining 5 percent will fund the Petro's development.

It is to be noted that in wake of the deepest recessions the country has ever seen, cryptocurrencies have become a means of survival for the Venezuelan citizens.

‘Petro’ will be the first government issued cryptocurrency, and it will be extremely interesting to see how this event unfolds. If the ICO is successful, the Venezuelan government will become a major holder of the Ethereum token. Will Venezuela’s government backed ICO be successful and mark the beginning of the government backed token ICO’s? We will soon find out.

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