Minimum Wage Pegged on Venezuela’s National Cryptocurrency Petro

Following Venezuela’s increment of the monthly minimum wage, president Nicholas Maduro announced that 50% of the wages would be pegged to the country’s cryptocurrency, Petro. In other words, the new monthly minimum wage is valued at half a Petro. The minimum wage was increased by 18%, amounting to 126 Venezuelan bolivars, approximately USD$28, and that is a push-up in the salary scale of workers.

The Venezuelan Petro has the features of a Central Bank Digital Currency (CBDC) because it revolves around the government’s centralization and regulations. Still, it is more or less a national cryptocurrency that is built on the DASH blockchain technology. Regrettably, Petro is not a popular cryptocurrency because little is known about it.

Is Petro Dead?

The government of Venezuela proposed Petro in 2017. A failed attempt to launch the cryptocurrency on either the Ethereum or NEM blockchain delayed Petro’s release. However, in October 2018, the government decided to use its permissioned blockchain based on the DASH blockchain network to launch the Petro. A unit of Petro (PTR) equals 80,000 VES ($15).

Since its launch, the Petro has witnessed low patronage; it seems the cryptocurrency is dead. Critics maintained that the Petro is completely dead because the government has failed to promote it. They referenced the Twitter account of Sunacrip, the organization in charge of the Petro and other cryptocurrencies in Venezuela, stating that rather than educate the people on how to use the Petro, the official Twitter account of Sunacrip is now devoted to promoting government propaganda.

Furthermore, the petro does not reflect in the daily life of Venezuelans; they barely know of its existence. Venezuelans only hear of the cryptocurrency when they receive their pensions in petro without their consent, or the government has decided to peg the minimum wage on the petro. Most times, people only have to use the petro to purchase products in government-organized events or supermarkets that have their prices listed in PTR.

Trading the Petro

Theoretically, one can buy, sell or trade the Petro with either bitcoin or Litecoin from the central bank of Venezuela or other local exchanges. However, a considerable price gap exists between the local exchange rates and the central bank’s rate. Thus, the actual worth of the Petro depends on the exchange platform one buys from.

Donald Trump’s administration declared Petro illegal in the US. To enforce the illegality of the Petro, Trump imposed sanctions on the digital currency and banned US citizens from trading the Petro. Additionally, more than half of Venezuelans do not use the petro by choice but by government’s imposition and necessity. Most times, the population receives their pension payments in PTR.