CARACAS, Feb. 24 (Xinhua) -- Venezuela's oil-backed Petro, the first cryptocurrency to be issued by a state, is generating "high expectations in the crypto asset market," according to an expert in digital currencies.
What's more, interest in the Petro, which is currently in the pre-sale phase, is running "much higher than for any other launching of a similar asset," Saul Osio told Xinhua recently.
"The important thing is that the launching of the crypto asset attracts investors in the development of the Petro project, and possibly that is happening," said Osio.
On Thursday, the second day of the pre-sale period, Venezuelan President Nicolas Maduro said the initiative had already raised more than one billion U.S. dollars in purchase intentions.
Cryptocurrency experts have been closely following the Petro's launch, with some complaining the government did not release enough details of how the digital currency will function.
But Osio said "they have been very wise not to provide more details than necessary to guarantee the crypto asset's technical development."
However, he acknowledged "greater technical precision will be needed to catch the attention of the more demanding investors and guarantee greater reliability in the crypto asset markets, which are being pressured to prevent the Petro's commercialization and tradability."
What threats could derail the initiative, which aims to counter U.S. economic and financial sanctions designed to cut Venezuela off from international capital markets?
"They are very diverse and practically the same as those that all crypto assets face today: hacking, regulatory persecution in some countries and a fluctuating market, among others," said Osio, noting the Petro additionally faces "persecution by the U.S. government."
Still, measures targeting the Petro "will not be very effective, as they haven't been in the case of other crypto assets, because they are all decentralized," said Osio.
"The main threat it could face is a lack of confidence and that springs from the subjectivity of investors, that's why they need a successful marketing campaign ... to prevent media currents from scaring off investors," added Osio.
"The U.S. State Department has made a major effort to undermine confidence ... in the Petro, but so far it has failed to have a neutralizing effect," Osio said.
"Once it (the Petro) becomes publicly available and it's traded on secondary markets, it will be more difficult to ruin, that's why the attacks will intensify in the next two weeks," he warned.
As a consultant, what advice would Osio give the government to improve the initiative?
"They must reinvest in the development of the blockchain (the digitized and decentralized record of transactions) and the Petro's own ecosystem to boost the crypto asset's reliability and benefits," advised Osio.
"It's also necessary to establish a legal framework to guarantee the investment in the crypto startup, without it having to be very coercive, and in that way succeed in attracting international investment in various cryptocurrencies," said Osio.
While launching the Petro, and potentially a gold-backed digital currency called Petro Oro, should help Venezuela generate much-needed foreign revenue, these crypto assets are not a cure-all, noted Osio.
"By itself, it won't improve the situation for Venezuelans, in the same way that other cryptocurrencies have not helped other societies overcome their economic troubles," said Osio.
To have any impact on the life of Venezuela's people, the Petro "needs to be accompanied by other decisions in the area of tax and monetary policy that will complement the Petro's development and massify the unfettered use of the Petro and other crypto assets in Venezuela," said the expert.
