The call for digital solutions was trumpeted by state-owned enterprise Petróleos de Venezuela S.A (PDVSA) which is apparently sitting on its own secret stockpile of bitcoin. The energy behemoth manages the country’s vast oil and natural gas reserves.
Four anonymous officials have confirmed PDVSA’s request to store and use cryptocurrency as a viable medium of exchange when paying its suppliers.
How Big Is the Stash?
Unfortunately for onlookers, no intel on the size of the stockpile was given.
One Venezuelan on the ground, however, points out that the government itself has likely mined a significant amount of crypto from confiscated hardware.
Embattled Venezuelan President Nicolas Maduro finds himself at odds in the crypto landscape. On one hand, he’s heavily promoting his state-run Petro cryptocurrency and, on the other, actively searching for real store-of-value alternatives.
International reserves for the dictatorial regime are dwindling to lows not seen in some 20 years. To make up the losses, the state is actively pursuing every avenue of payment. Only last month the PDVSA received a large settlement of $700 million in Chinese yuan.
Venezuela has suffered from more than decades worth of U.S, sanctions and the West’s influence over the SWIFT international payment system.
Bitcoin – The Power of Censorship Resistance at Work
Bitcoin and Ethereum act as viable international alternatives in the current environment.
For one, settlement on a decentralized ledger takes place in a matter of minutes compared to international wires which can take anywhere from a few days to a few weeks to clear.
Secondly, decentralized cryptocurrencies provide ample censorship-resistance making them ideal for bypassing sanctions.
Many Obstacles Still to Overcome On the Road to Adoption
Furthermore, the state will have to convince their counterparts to accept crypto as a means of payment. And then also to possibly foot the hefty exchange bill when converting to their local currency. Unless of course they too accept cryptocurrency outright.
The Venezuelan Bolivar is reeling from the effects of hyperinflation and locals have limited access to the more stable U.S. dollar.
In dollar terms, bitcoin may be spiraling to levels not seen since June. The local currency, however, continues its parabolic decline against just about everything else.
PDVSA may soon have little choice but to stockpile even more bitcoin in the hopes of preventing financial disaster.
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