Venezuela’s Petro Oro: A Sign of Things to Come?

Will Venezuelans accept the petro?

Fresh on the heels of the introduction of the oil-backed petro cryptocurrency, the Venezuelan regime has indicated that it intends to launch yet another cryptocurrency, the petro oro, this time backed by gold. Could this indicate that asset-backed cryptocurrencies may become the wave of the future?

Venezuelan President Maduro’s announcement of the petro oro came at a curious time, as the petro hasn’t even yet gotten off the ground, it has only been subject to a pre-sale. It’s almost certain that investors who viewed an oil-backed cryptocurrency with skepticism would be a little more trusting of one backed by gold, so one would expect the petro oro to steal the petro’s thunder. But the allure of a gold-backed cryptocurrency could give other cryptocurrency entrepreneurs some ideas.

While Bitcoin has taken some flak in the past for not having any backing, in that respect it isn’t any different than fiat currencies such as the dollar and the euro. Especially for a cryptocurrency that is intended to be used as a means of exchange, asset backing can be a drawback if those assets have to be moved from place to place every time a transaction or a settlement takes place.

But for stores of value, asset-backed cryptocurrencies could provide some real utility to investors. They offer the potential to monetize assets of all types, from gold to oil to jewels to other durable commodities. In fact, if everything ends up being monetized, or turned into some sort of backing for a cryptocurrency, that could potentially obviate the need for a medium of exchange, as all goods would be easily and instantly exchangeable through cryptocurrency markets.

Obviously we’re a long way from that scenario, and obviously the petro oro, given Venezuela’s track record, won’t be the cryptocurrency to usher in that type of world. But Bitcoin IRA investors who are looking for the next big thing may just want to keep their eyes open for new developments in asset-backed cryptocurrencies.

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