Sometimes it feels like we’re living in a sci-fi movie.

Governments vs. hackers. Digital currency. And now, government-issued digital currency.

Venezuela has officially launched the presale of its “petro” cryptocurrency. According to the government, more than $735 million has been raised in the presale in just 20 hours. (I wonder how that compares with the country’s last bond sale…)

Venezuela plans to issue 100 million tokens in total, each backed by a barrel of oil. The starting price for each token is $60, and the presale ends March 19.

Apparently, the coins will be used to purchase deliverable oil from state-owned companies. The country also says that citizens who use the coin to pay taxes will get a 10% discount.

I’m very curious as to who’s buying these early tokens. Is it industrials that plan to actually use them for oil purchases? Venezuelan citizens, who are sick of hyperinflation wiping away their savings? Neighboring countries that trade with Venezuela?

By the way, the U.S. Treasury has issued a statement saying that Americans should not participate, as it would probably violate sanctions against Venezuela.

Hinting at Crypto’s Potential

We don’t know if the Venezuela experiment will work. It certainly could because people who have suffered through horrific inflation tend to seek out alternatives: gold, silver, real estate… and now cryptocurrencies.

A government-backed digital currency could be attractive to both companies and people, especially when compared with the old, hyperinflated, nearly worthless currency, the bolivar. So even though the government has a bad financial record, local citizens, at least, may be willing to overlook it.

However, this is the first time a centralized power has released a cryptocurrency. It could go horribly wrong, in many ways.

We don’t know if they plan to “fix” the price of the petro to the price of oil, for example. That would take some serious engineering since there may be more demand than supply or vice versa.