Venezuela has turned to blockchain to revive the country's collapsing economy.
In October 2018, Venezuelan President Nicolas Maduro launched the Petro, the world's first digital currency issued by a federal government. The objective is to provide an alternative to the country's revamped currency, the Bolivar Sobernao, curb the black market and circumvent sanctions on financial transactions.
The government claims that the Petro is backed by the country's iron, diamond, gold and enormous oil resources, which could reduce the excessive money printing that has devalued the fiat currency. The value of the Bolivar Sobernao will be pegged to the Petro.
A government white paper revealed that the Petro uses the X11 Proof-of-Work (PoW) mining algorithm, the same function used by open source cryptocurrency Dash. Ethereum developer Joey Zhou tweeted that the system is "a blatant Dash clone", pointing to an image in the white paper that is an exact replica of one in Dash's Github repository.
Venezuelans are already among the world's most crypto-savvy citizens, with many converting their savings into bitcoin to preserve their value through the country's soaring hyperinflation, but have been slow to embrace the Petro. Critics claim that the initiative is a fundraising stunt and an attempt to illegally borrow money against the country's oil reserves.
To boost the uptake of the Petro, all government institutions have been ordered to accept the cryptocurrency. Venezuelan passports must be paid for in Petros and Maduro plans to introduce the token for oil sales in 2019.