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Venezuela set to Launch a new Crypto-tied Currency on 20th August

Venezuela set to Launch a new Crypto-tied Currency on 20th August

The president of Venezuela announced yesterday that the country will be launching a new version of its currency. Nicolas Maduro, the president of Venezuela, said that the new currency will be called the Bolivar, which will be officially tied to its state-backed cryptocurrency – the petro.

This is done in an effort to curtail the rampant inflation in the economy. Further, the president explained how the new currency will be rolled out. He said,

The new bolivar will be issued on August 20th and will be tied to the petro…We will also knock five zeros off the bolivar.

Since the beleaguered South-American economy began its collapse in 2014, it has experienced shocking levels of inflation. The collapse in 2014 was after a crash in oil prices which had destabilized the socialist economic system of Venezuela.

Venezuela reported an annual inflation heading for 1 million percent. The president of Venezuela, Maduro, had originally planned to cut only three zeroes from the Bolivar but now the new measure seems to be stemmed out of an increasing desire for drastic action.

The cryptocurrency has not had a smooth beginning. Although no details have been put forward regarding how precisely the new Bolivar will be linked to the oil-backed petrol.

US President Trump has banned American citizens from investing in the cryptocurrency as it is declared unconstitutional by the country’s national assembly.

Maduro touts the new coin as a means of circumventing sanctions. Apart from this, Maduro also makes the dubious claim that the petro raised $5 billion in the first few weeks of pre-sale. It now seems that cryptocurrency experts are highly skeptical of the Petro and its ability to save the Venezuelan economy.

Venezuela’s government has shut down two cryptocurrency exchange operators—both allowing customers to convert between a number of bolivars and cryptocurrencies and to send the remittances abroad—under its “Operation Paper Hands”.

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