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The First National Cryptocurrency is Here. But is it Working? 6 7273

A few months ago, Venezuela became the first nation to adopt a crypto as their primary currency.

Announced in December 2017 and launched in February, the Petro became official legal tender on April 9th. Unlike many tokens, the Petro is reportedly backed by natural resources. And it’s not gold. Each token sells for the price of a barrel of oil (about $74). President Nicolás Maduro claims to have raised $735 million in the initial sales of pre-mined coins, but has offered no supporting evidence.

The maneuver could pave the way for other countries to officially adopt cryptocurrencies. But the unstable situation in Venezuela makes the Petro’s future far from certain, even by crypto standards.

Petro’s Problems

The Petro, which ICO bench rates at a dismal 1.4 out of 5 stars, is “an instrument for the Bolivarian Republic of Venezuela’s economic stability and financial independence.”

Though allegedly backed by the country’s estimated 5 billion barrels of oil, the Petro’s legitimacy on global markets is shakey. President Trump reinforced US sanctions with Venezuela by signing an executive order to ban all US citizens from dealing in Petros. US officials were quick to call the cryptocurrency a scam, and some major media publications have stepped up to circulate that party line.

Vote for Petro

The Petro also faces resistance within Venezuela, notably from the opposition-lead National Assembly, part of the government’s legislative branch. The Assembly declared the ICO illegal and unconstitutional, saying Maduro did not receive their approval to launch it, a step made necessary by Venezuela’s own laws. They went even further, warning potential investors of threat. National Assembly deputy Marialbert Barrios publicly decried Petro promoters as “smoke peddlers,” while fellow deputy Jorge Millán stated “this is not a cryptocurrency, this is a forward sale of Venezuelan oil. It is tailor-made for corruption.”

So who voted this in? President Maduro, who some say fraudulently re-elected himself in May for another 6 year term, pushed the program through himself. He hasn’t pretended the Petro isn’t a way to circumvent international sanctions, calling it a crypto that can take on “Superman” (e.g. the US). But critics aren’t buying it. Some assert that in addition to not really being a cryptocurrency, Petro isn’t even backed by oil.

Can Petro Feed Venezuela?

The ICO is ostensibly a last ditch effort by the Maduro regime to salvage Venezuela’s destitute economy, which has been teetering toward total collapse over the past few years. Inflation went up 4,068 percent in 2017. Some hungry Venezuelans are crafting handbags out of the worthless banknotes they can no longer use to buy food and medicine, trying to literally weave some value out of their paper money.

The people of Venezuela continue to protest, flee the country, or struggle to survive ordinary life. Jonathan Wheeler, a former Goldman Sachs employee and Bitcoin enthusiast, has taken it upon himself to “teach Venezuelans ‘how to fish’” by sending them a Bitcoin infusion.

Clearly, a solution needs to arrive yesterday. Petro may or may not be it.

The World’s Eyes on National Cryptocurrencies

If the Petro doesn’t work, does that mean national cryptos generally won’t work? Not exactly.

Japan already accepts Bitcoin as legal currency, and many stores accept it as payment. Russia, China and Israel are all exploring the potential of a national crypto.

Tunisia was early to the table. Though not a cryptocurrency, it launched a digital form of its national currency in 2015. Sweden is developing the e-Krona for release next year.

The Petro will be a coin to watch not because it’s a good investment, but because of the larger implications it could have on the international stage. When other nations are putting the blockchain to work, we’ll get a clearer picture of the intersection between global governance and decentralized currency. But for now, we have Venezuela as the world’s first example.

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I grew up in the Silicon valley under the technological mentorship of Steve Wozniak. I'm a proud member of the Choctaw Nation, I've lived, worked and traveled all over the world, and I now write in the Pacific Northwest.

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The Bitcoin Bull Run: How It Started, How It’s Going Comments Off on The Bitcoin Bull Run: How It Started, How It’s Going 106

Wherever you stand on Bitcoin, there is no question about its impact on the role of blockchain and cryptocurrency within society.  Whether we look back to Pizza Day or to its heights in 2018, the volatile nature of the cryptocurrency has garnered much speculation and media coverage. 

While many looked at the past few years as a “Crypto Winter,” others saw an opportunity for Bitcoin.  Between COVID lockdowns, political, and fiat currency concerns, Bitcoin has been on a dream run – for a moment going over the $55,000 barrier.

Why Did Bitcoin Suddenly Explode (Again)?

Elon Musk and other influencers played a role in the recent rise in Bitcoin’s price. Tesla’s recent investment in an infrastructure to accept Bitcoin payments, and Apple Pay’s introduction of BitPay, a prepaid bitcoin MasterCard, are also major markers of market adoption. But two other events occurred that set the stage for the Bitcoin bull run: a pandemic and Bitcoin Halving.

Every four years, Bitcoin miners have their processing transactions cut in half. This reduction in supply then drives up prices based on scarcity. This occured in May 2020, when the economy was already at a standstill due to the pandemic. Since the supply of crypto coins is finite many think that there is lower inflation risk with using them – this means that it may be used as a hedge against U.S. inflation. In 2020, more than 20% of all dollars currently in circulation were printed, making crypto even more alluring. 

Crypto isn’t going anywhere. This year, experts project increased use of crypto cards, emergence of new cases, and increased investing from traditional finance leaders.

Take a look at this visual deep dive on the rise of Bitcoin for more information:

Bitcoin: Once A Diamond In The Rough, Now A Treasure

Happy 10th Birthday, Bitcoin!! 7 110

On January 3rd, 2009, block number zero produced the first 50 bitcoins. They were mined by none other than the mysterious Satoshi Nakamoto. Thus was born the phenomenon of the decade. And on January 8th, ten years ago today, bitcoin became a public network when Nakamoto released bitcoin version 0.1.

Nakamoto announced the release via the Metzdowd cryptography mailing list, calling bitcoin “a new electronic cash system that uses a peer-to-peer network to prevent double-spending.”

Nakamoto’s description of the software that would revolutionize technology is sparing and to the point. “It’s completely decentralized with no server or central authority,” the succinct announcement goes on. “Windows only for now.  Open source C++ code is included.” It describes the proof of work as “ridiculously easy”.

It follows with a brief description of how transactions work, how many coins will be released and how they can expect to split every 4 years, along with the caveats that the software was still “alpha and experimental,” offering “no guarantees”. It’s signed with no letter closing, simply:

“Satoshi Nakamoto”

Bitcoin, This Is Your Life

My what a ten years it has been. Just to recap:

On January 12th, 2009, programmer Hal Finney, who had downloaded the new bitcoin software immediately, received ten bitcoins from Nakamoto. This was the first ever bitcoin transaction. Over a year later in May 2010, programmer Laszlo Hanyecz received 10,000 bitcoins in exchange for two Papa John’s pizzas, initiating the first real-world bitcoin purchase and thereby creating the pizza index.

Bitcoin simmered until 2017, when it’s value jolted from $900 to over $19,000, and bitcoin became a household name. Over the past year, the original crypto has settled to a more modest $4,000 valuation, and stirred up a lot of public din in its wake.

Where Were You on January 9th, 2009?

So where were you on the day of Nakamoto’s announcement? Probably on your couch watching DVDs of Pineapple Express and It’s Always Sunny in Philadelphia seasons 1 through 3, or laughing at Dr. Horrible’s Singalong Blog on your iPhone 2.

It was a simpler time. Wired was calling Google Earth the number one app on the fancy new iPhone app store. Competition was fierce with Windows 7 in beta. Facebook had recently dropped the “is” from status updates, and a fun app called Twitter (formerly “Twttr”) had just introduced a feature called Trending Topics.

Trending Topics

David Bowie was celebrating one of his eight final birthdays, while Michael Jackson and Patrick Swayze were enjoying their last few months among us mortals. Only days later, pilots Chesley Sullenberger and Jeffrey Skiles made aviation history by skillfully crash landing US Airways Flight 1549 in the Hudson River, saving everyone on board.

A burgeoning class of ennui soaked fashionistas, deemed “hipsters,” were described in Time Magazine as “smug, full of contradictions and, ultimately, the dead end of Western civilization,” a vermin who “manage to attract a loathing unique in its intensity.” They went on with this colorful character sketch:

“Hipsters are the friends who sneer when you cop to liking Coldplay. They’re the people who wear t-shirts silk-screened with quotes from movies you’ve never heard of and the only ones in America who still think Pabst Blue Ribbon is a good beer. They sport cowboy hats and berets and think Kanye West stole their sunglasses. Everything about them is exactingly constructed to give off the vibe that they just don’t care.”

Time Magazine, 2009

Is it time for any of that to come back into style yet? Maybe give it a few more years. We need a break.

Williamsburg was gentrifying and Portland was still America’s best kept secret. The streets were flooded with fixed gear bikes and the sounds of Grizzly Bear, Real Estate, Kings of Convenience, and TV on the Radio.

Animal Collective’s Merriweather Post Pavilion was just a few days old, and Fever Ray’s self titled was about to drop. The world was listening to Lady Gaga, whose single “Just Dance” hit number one on Billboard’s top 100, and Taylor Swift’s Fearless, which was the top selling album.

That same month, box offices favored the cuddly Marley & Me, while The Dark Knight swept the people’s choice awards. Audiences were still getting wowed by Avatar, paying a lot to be disappointed by Mall Cop, and getting hyped about the upcoming Watchmen movie.

Meanwhile in Washington DC, a president with a multisyllabic vocabulary was about to be inaugurated (a rarity in the 21st century, we would find out), and his kids were playing with a Wii they got for Christmas.

Here’s To Another Decade Ahead

What a time it was, the dawn of 2009. And most of us, at least for a few more years, had never heard about blockchain, cryptocurrencies, or bitcoin.

And now here we are.

So, dear reader, here’s to ten more years of crashes, booms, bubble scares, hype, derision, libertarian fanboys, pizza and moon lambos. Happy tenth birthday, bitcoin!!1

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