Petro cryptocurrency. Opinion. Long read.

El Petro

To start with, let's make it clear, what Petro is:

The Petro is the first cryptocurrency ever backed by a State, according to the official website. The first. Ever! And this is so controversial and groundbreaking that is totally worth knowing about.

Venezuela is the country that had it's currency lose 99,99% of value the past 6 years. Inflation is reaching unbelievable highs and the economy is in terrible condition. El Perto is supposed to fix economic problems. This cryptocurrency is supposed to be used as means of payment inside the country, for deals with the state petrol company PDVSA, to attract new forms of international financing and as the way to get around the US sanctions.

Website

It might seem strange to judge the book by its cover, but in the crypto world, this is like the official building, almost headquarters of the cryptocurrency project.

I do understand that it's clearly a typo but not in the second sentence of the main page. Anyway, I've seen thing worse than that. Let's just keep in mind that primarily this website is made for Spanish-speaking population and I hope there are no typos in the Spanish version of the website.

The second thing that worries me a bit is that the website is not using the secure connection, HTTPS protocol, so you'd better "not enter sensitive information on this site" as adviced by Google Chrome browser and me personally. Actually, the website is for informational purposes only, so secure connection isn't really needed - there's no place for you to enter any information anyway, even in the search form, that is absent, by the way. Well, there's not much information that you will need to use the search for.

On the other hand, the address of the website, containing .gob.ve means that it is the government-related website and you cannot just simply register such a website, so we are safe from getting scammed here by anyone except the government of Venezuela and governments, in general, are not famous for scamming people.

By clicking here and there, we can find out that the "Blocks Explorer" link leads us to the website, returning the "connection refused" error. The website is down and the problem is definitely with the website itself. The same link at the Spanish version of the website leads back to the homepage. Let's add here, that the English version of the whitepaper has only one page, with words "Petro whitepaper". The very detailed whitepaper, isn't it?

Technical details

It seems that the first idea to create Petro as Ethereum token was abandoned for good. This idea wasn't great. At all. And there are few reasons for that: national cryptocurrency shouldn't be dependent on some external blockchain, it has to have its own blockchain. If to consider the main purpose of this cryptocurrency to be the means of payment in daily life and will rely on Ethereum network, this will leave a lot of space for disasters, like hunger of hundreds of thousands of people caused by new CryptoKitties, for example.

Using NEM wasn't a great idea either. "Big boys" make their own blockchain. And it seems that Petro will have its own blockchain. With the hybrid Proof-of-Work and Proof-of-Stake verification algorithm based on the X11 algorithm. X11 is a great choice, as it is known to be the safest. Sounds like good news for miners! But 100% out of maximum to exist 100 000 000 coins are pre-mined what means, there's nothing left to be distributed as the reward.

Interesting facts

$3,3 - 3,6 billion was claimed to be already raised. Out of 100 million coins that should cost $60 - as claimed in the whitepaper or around $66 according to the current price. So, the "hard cap" should be around either $6 billion or $6,6 billion. And, according to the whitepaper, 49% of the coins to be distributed and 51% should go to different reserves. There's either some mismatch in figures or claims.

Only one crypto exchange agreed to list Petro - Coinsecure. Bitfinex officially banned the token from its platform in the wake of US sanctions. Other exchanges – including Coinbase, Bittrex and Kraken – reportedly declined to comment as to why they have chosen not to list the Petro. Speaking of US sanctions, don't forget that around 60% of cryptocurrency owners are citizens of USA, that are prohibited to buy Petro.

According to Reuters, Petro, is 50% backed by crude oil, rely on the oil field Ayacucho I Bloc, next to Atapirire. The thing is, the oil field is abandoned and has no infrastructure. Some may note, that $6 billion is a huge sum of money and everything is possible with that. Let's use some random data of some random company. Let it be Chevron. This is what the report says:

Chevron is leading a combined initial investment of $84 billion in the Gorgon and Wheatstone natural gas projects and together these represent the largest single investment by a company in Australia’s history

Yes, there are two projects and it is Australia, that's why logistics to Venezuela might cost less. So, we will use only half of that amount and deduct, let's say, 20% that might be spent on logistics to Australia. We will get 84/2 - 20% that equals to $33,6 billion of investments so a single natural gas project. Yes, salaries in Australia are high, so let it be $30 billion for Venezuela. But the hard cap of the Petro project is five times less! What is it? A joke?

April 29 was a disaster for Petro. The Business Standard article says:

Venezuela offers India 30% discount on crude ... oil purchases made in Petro

Isn't it too much?

Conclusion

No matter how hard I tried to stay optimistic about Petro, it seems to be a major fail by now. Checking the results of Petro project activity in 9 months, we can see that nothing has been made. Even the website is in terrible condition, comparing to an average ICO website. Why I pay so much attention to the website? Because there's nothing else showing that some work had been done. The homepage says:

The Petro is for everyone everywhere, it offers all the safety and transparency for your transactions

But, in reality, it is nowhere, for nobody and it's impossible to measure or even see the transparent and safe transactions.

We've seen things worse, we've seen huge project failing to launch their mainnet after getting $4 billion of investments, there are more examples and fails in the crypto world. But all those projects were never made by governments. Instead of something great and professionally - made, we see only great disappointment. Let's hope that Iran will be more successful or, at least, more prepared.

It seems that nothing can save the ruined reputation of Petro now.

Let's see how the public sale goes.

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Posted from my blog with SteemPress : https://coinatory.com/2018/10/08/petro-cryptocurrency-opinion-long-read/

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