Trump Issues Action Blocking Venezuelan Government Cryptocurrencies | Hacker News Reader

Trump Issues Action Blocking Venezuelan Government Cryptocurrencies

bloomberg.com

75 pointschollida119 comments

As a Venezuelan I welcome these measures. Petro coin would not have helped the people and it was meant to launder money.

Also it is a lie that is backed by PDVSA's oil [1].

[1] https://www.caracaschronicles.com/2018/02/27/petro-truly-bac...

A country in an economic disaster attempting to adopt a cryptocurrency to salvage it's destroyed fiat currency is very Mr Robot-esque.

There's probably some other analogies here as well, with Venezula's famous small group of elites pulling the strings in the background, with self-preservation valued over the publics interests.

It's barely an attempt to salvage their economy. It's a capital influx for the state. It won't have any impact on the day-to-day for the people except that the state might not crackdown on them as much for hoarding TP and other things.

The majority (vast majority?) of Venezuelans won't be able to participate in this ICO.

> “It’s a pretty big blow,”

I disagree. Very few people in the cryptocurrency space took it seriously.

They claim to have raised $735 million by doing a token sale on NEM. I can't find a single source that identifies where on this public blockchain that $735M would be. The 24h volumn is ~100M so they'd have real problems liquidating that supply.

$735 million would be 2.6B XEM. The largest account has 9M http://explorer.ournem.com/#/accountlist

If I had more time on my hand's I'd pull the recent NEM tx and see if there even was that volume of tx during that time.

> Maduro created the currency to try to salvage his country’s failing economy, where inflation is estimated to spiral to 13,000 percent this year.

That is a shocking statement. 1) I did not know Venezuela is in such a bad state. 2) I cannot believe that a freaking government is trying to "create" money through an ICO.

Venezuela has more proven oil reserves than Saudi Arabia. That latter country's leadership saw the writing on the wall and began diversifying their wealth holdings before the big price downturn in 2014. Hugo Chavez did no such thing by the time he died a year earlier, unfortunately for his people.

It would have failed eventually, it just would have taken longer. Venezuela is incredibly corrupt and more money would not have fixed that.

One could argue that sanctions only serve to increase corruption by eliminating non regime sources of income for the local populace.

Same could be said about Saudi Arabia, but that one has been working, in a fashion, for quite a while.

Venezuela's economic crises and food shortages started well before the oil prices declined. Chavez's failed economy theories created this problem.

The high price of oil was merely masking the disaster he created. It allowed massive cash injections and lavish spending on social programs to compensate for serious issues that price controls, import/export controls, corrupt nationalized businesses, mass emigration of top business talent, etc caused.

The problem goes beyond Chavez. Venezuelans have known about the issues of depending on only one export for decades. Thing is, no one was able or willing to do anything about it. Obviously the socialist doctrines that took hold of the venezuelan government weren't going to solve it, and as expected, made things much much worse.

Edit:

I think that there are two big problems with having your country depend on a single easy to obtain resource.

First, it doesn't provide incentives for society to improve its values, since the export doesn't require too much people with good values, and the consequences of failing to improve won't be felt immediately.

Second, it gives a big incentive to groups of corrupt individuals to seize power. If you control the money making machine, then you're set, you can make away with people since they're largely not part of the equation.

It's probably the least shocking statement ever if you know basic history, socialism/communism always fails.

Putting all power into the hands of the government will always be inefficient and prone to corruption. Coincidentally comrade Chavez's daughter is the richest person in Venezuela.

If you look at history, every government and economic system fails. Except for the ones that haven't yet.

This goes even deeper than that, I just listened to a Podcast called The Daily (from the NYT) which did a two part episode on the Venezuelan opposition leader Leopoldo Lopez. It would seem that Venezeula is quickly descending into an authoritarian state. As a point of illustration, the jailing of Leopoldo Lopez is one of the few things Obama and Trump both outspokenly agree.

What about an ICO to fund a hostile takeover (coup)?

As in the coins would be for oil but you'd have to invade first. The ICO money would go towards funding a private army like Acadamy (Blackwater).

It may be possible to do it in such a way that there are fewer deaths than not doing it, and much of the local populace could be coopted by promising them stability and a portion of the treasure. The better the deal offered the cheaper and easier the takeover.

Just a thought.

Predictions I make HN hates:

- Crypto is going to be worth billions

- A country is going to issue it's own digital currency

- The future of crypto is commodity backed assets, for example - petro coin!

Things that are going to happen that HN refuses to consider:

- Blockchain based government

- Decentralized voting mechanisms

- P2P based political party

The irony is this place being called Hacker News.

I'm going to take the other side on that prediction of a country issuing it's own digital currency. I think it is conceivable that governments find some use for the technology, no doubt, but I do not under any circumstance see any government that uses a fiat based monetary system ever using crypto to issue the country's main currency (i.e. the one they demand taxes be paid in). This will not happen because to do so goes against the fundamental concept of fiat and being able to print whatever you want as credit and creating money from thin air. With crypto, the rules are set hard and fast in terms of monetary creation, so if they hit a jam and want to inflate, they will be unable to do so. For this reason alone (and there are many), they will never do it as they hate having their hands tied with hard and fast rules. It acts as handcuffs on their power and therefore it will never happen.

The rules of the chain are arbitrary. Variables can be controlled by government officials. The state could could cut out payment processors and collect taxes on every transaction. This tech could also become a tool for mass surveillance and oppression which I'm sure Venezuela is much more interested in. But I think the blockchain experiment has shown we overvalue the role of currency in facilitating trade.

Here's what changed. Trade is a function of information bandwidth. Traditionally you needed a medium of exchange because you can't trade crude oil for a sandwich quickly enough to be useful. But if the merchant could accept oil certificates and convert it to an alternative certificate at checkout, any in-demand certificate could be money.

"But if the merchant could accept oil certificates and convert it to an alternative certificate at checkout, any in-demand certificate could be money."

This is true and, in fact, used to be the case in the US with how the banking system was originally set up. In the old days each individual bank would issue certificates ("notes") as claims against their own deposits. Currently all our notes are Federal Reserve Notes which are from the central banking authority. But back then, every bank issued their own notes.

What distressed countries like Venezuela lack is trust, making the prospect of a responsible central bank a pipe dream. I see asset backed certificates being more capable of facilitating trade than unsecured IOUs. Reduce the level of trust required to trade, trade goes up. In that aspect Petro coin will be very interesting. I'm smelling a regime change in Venezuela's near future.

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