Venezuela's New Cryptocurrency Is A Scam

02/25/201836 Comments

A perfectly predictable thing happened when the Great Oil Price Plunge of 2014 pulled the rug out from Venezuela's oilconomy: Foreign creditors stopped lending to Venezuela, the debt-saddled government devalued the currency to cover budget deficits, inflation spiraled out of control (entering a death spiral last November), and, perhaps inevitably, the government defaulted on some of its $US bonds. (And all this amidst devastating US sanctions of the country.)

The result, as anyone who has been even casually following the headlines coming out of Venezuela has no doubt noted, has also been predictable: Chaos. Pandemonium. Desperation. People eating zoo animals. As I say, we've all heard the horror stories.

Another predictable outcome of this economic collapse: People started turning away from the bolivar and the increasingly-pricey US dollar as their preferred medium of exchange.

But here's where things get interesting. When faced with this crisis, Venezuelans didn't trade in their increasingly worthless government-issued fiat for gold and silver and other precious metals, but for bitcoin. That's right, as the prices started to rocket out of the stratosphere, people found the loophole in the system (as they always do). Everything you need to survive in Venezuela is now cripplingly expensive: Food, clothing, medicine. But not electricity. Because of the country's socialist policies, electricity is practically free. And practically free electricity in an inflation-ravaged country in this day and age can mean only one thing: Bitcoin mining!

And so it was that thousands of Venezuelans took to mining the cryptocurrency just as it was rocketing toward all-time highs, with a miner running powerful enough equipment able to make as much as $500/month via the operation, a small fortune in Venezuela in the early part of 2017 and a sizable fortune today.

Unsurprisingly, the government reacted to this development in the way that tyrants always react when a threat arises to their monopoly of power: They cracked down. In this case, the crackdown took the form of arrests and show trials of bitcoin miners, and now a national registry for all cryptocurrency miners (which, as you might imagine, is not being taken very seriously by the kinds of people who are turning to a central bank-less, borderless, decentralized online currency in the first place).

And now the Venezuelan government is pulling another tool out of its totalitarian toolbox. In the spirit of "If you can't beat 'em, join 'em," the government of Venezuela has just launched its very own cryptocurrency, the "Petro." And while you're still wrapping your head around that, there are reports that there's a second cryptocurrency on the way next week!

As James Evan Pilato is often heard to remark on his own podcast: "What could go right?"

Learn about what the "Petro's" whitepaper reveals about this government-issued scam coin in this week's Corbett Report Subscriber newsletter.

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  1. scpat says:

    I thoroughly enjoyed watching Kal tie the liberal in a mental pretzel knot.

  2. john.o says:

    “But the bottom line is that this is not a revolution in government finance or a bold new move to subvert the supremacy of the US dollar.”

    One need not dispute a word of this to see the manipulations of that old free-market advocate, the CIA, in the timing of this ad campaign for “reform” in Venezuela.

    The use of the free market argument to interfere in another people’s affairs is older and tireder than me and I am very disappointed to hear you fall for it here. The rightness of the argument is besides the point. It is as timely as raped women in whatever country we wish to invade next.

  3. Lennart says:

    Slightly arrogant in my mind, if not cynical. I wonder what makes James Corbett see red? Oh, that’s pretty obvious – socalism.

    Ivory tower analysis has its proper place and should know its limits. Nobody is all knowing. In speculating about future outcomes you expose yourself and your credibility. Cocksure won’t make it.

    Venezuela is a special case. World’s largest untapped oil reserves. Heavily vilolent attacks on government by an opposition supported by US neocons. Like in the Middle East but with much less success in splitting the country compared to the usual cases – Libya, Syria and the rest.

    There are other articles and voices out there. These are worth listening to in my mind:

    Peter Koenig
    “Buying the Petro is a way to support not just socialism, but also anti-imperialism and the right to local sovereignty. Indeed, the Petro is the first chance provided by a bitcoin to clearly support a leftist government.”

    Ramin Mazaheri
    “The Petro, a secured cryptocurrency based on energy that everybody needs, might become the precursor for an international payment and trading scheme towards a more balanced and equitable approach to worldwide socioeconomy development.”

    • phreedomphile says:

      Maduro et al are bringing the dominant globalist paradigm into Venezuela under the cloak UN Agenda 2030 and multinational corporate privatization deep capture of public resources, land, and infrastructure. I’m in personal contact with a very awake Venezuelan who is confirming this and more such as the govt selling off public land with once pristine forests to be strip mined by multinationals. And these are facts I’ve confirmed independently.

      It’s also a fact the US based oil giants were never unseated in Venezuela during all of the economic turmoil.

      Several months ago scanning English translated MSM articles from S. America, I read about a conference between officials from Bolivia and Venezuela on the implementation of Agenda 2030 in those two nations. The article described Venezuela’s intention to relocate as much as 40% of the population to dense urban corridors. This parallels China’s ambitious program to forcibly move a substantial portion of its rural population to dense urban corridors including 100 million small farmers to be relocated to the infamous stack and pack “ghost cities” by 2020. It’s already underway. That’s the endgame, total control and absolute surveillance. Doesn’t matter to TPTB if it’s fiat or energy credits.

      While we’re left doing the Karl Rove-ian dance of judiciously examining the geopolitical Kabuki theater stage “new realities” are being created to enslave humanity in a global fascist techno-commumism dystopia.

      No way any group from Venezuelan is going to go against the cabal that didn’t blink when it pulled off 9/11, assassinated JFK, RFK, MLK, the entire Polish executive cabinet, instigated world wars, and much more heinous global mafia deeds.

  4. PeaceFroggs says:

    How is BitCoin not fiat funny money also?

    — Same shit, different smell.

    • john.o says:

      Exactly. And after a better currency is put in place: WHO WILL OWN THE OIL? I offer this challenge to you armchair “anarchists” telling other people what to do with their country:

      How exactly do you propose to solve that problem? Who gets to own the oil?

      No BS Panglossian theories about perfect worlds in your head. In this world, in Venezuela, who should own the oil, NOW?

      • HomeRemedySupply says:

        In my opinion Oil is a joke.
        It takes incredible money to bring up that black goo, transport it, and process it. (I have some familiarity with the costs involved because of some family Oklahoma crude mineral rights.)

        When a person looks at the huge costs involved… much of the industry is underwritten by debt and becomes a shell game full of complexities… one realizes that in actuality it is a non-viable enterprise compared to whisky.

        Venezuela oil is crap oil, some of the worst kind.

        I advocate producing an honest product: MOONSHINE.
        Costs vary from 50 cents to $1 per gallon depending.

        • HomeRemedySupply says:

          This short segment video clip is one of my favorites.

          The exhaust from alcohol fuel is cleaner from pollutants than the intake air. Just CO2 and water.

          I have always envisioned a voucher for Moonshine Gallons.
          Most every car on the road today can easily run on alcohol. Why buy gasoline when a person could use their voucher to get alcohol?
          There is an entire “little community” which can be built around homemade alcohol production with many interchangeable products and/or co-op.
          ~ The farming of crops for the alcohol production, or the collecting of garbage for the alcohol production.
          ~ The growing of organic plants from alcohol production.
          ~ The raising of fish or crawdads from alcohol production.
          ~ Fertilizer from alcohol production.
          ~ Pest control from alcohol production.
          ~ Livestock feed from alcohol production.
          ~ Etc.

          The interchanges within the community could go on and on, with people utilizing a unit of value scrip (gallon of alcohol) to pay for the home repairs or to pay for car maintenance or get a haircut. People easily have a reference point of value by seeing the price of gasoline at the local gas station.

          Here is an average guy who made a still which produces about 100 gallons a day.

          Corn may only get 250 gallons of MOONSHINE an acre, but cattails could get 10,000 gallons an acre.
          Watch 5 minutes.

          Here David Blume gives an agoristic/anarchist approach to ending the petro-dollar.


      • john.o says:

        An interesting theory, but the wealthy people who used to own the oil in Venezuela and have been trying to get it back since 1958, disagree with you. They and their friends the CIA disagree with you so much that your tax money is spent every year to finance operations to subvert the people who tried to take the oil back from the families who stole the country and enslaved its population from the time of Columbus.

        But I think many of us see very clearly now that it is ok on the Corbett Report to point out that the campaign in Syria is all about real estate and oil, but in Venezuela we must find other reasons because, real estate and oil are not important, socialism and voting and rules and regulations are. Here it is ok for the CIA to engineer a war and a coup.

        The problem there is that the people are just too stupid to understand the free market and Lysander Spooner.

  5. HomeRemedySupply says:

    “What could go right?” — James Evan Pilato


  6. HomeRemedySupply says:

    I liked this article by James.
    He gives a great real life example of what governments and corporations will try to do with Blockchain technology. They will attempt to use Blockchain technology to enslave us, to trap us within their system.
    Mike Maloney often talks about this too. Blockchain can either help to free us or be used to enslave us.

  7. zyxzevn says:

    Venezuela seems the target of economic hitmen. Probably because it has oil and some socialism.

    Telesur and Abby Martin show that the “opposition” is managed and some of it works together with violent gangs. The deaths of policemen caused by such gangs were in the US reported as being caused by the government. Here we see again the reversal of the official western story with the real story. (Like Syria, but less war).

    Talk with Abby Martin about Venezuela. Have a round-table with her (don’t mention 9/11). She has been there and talked with all sides in the country. Including minister of economic planning and government opposition. – talk with Economic Minister – talk with opposition – investigation of the markets
    (to see if there is free press and food in the markets) – talk with Defense Minister
    (About Trump threats of military intervention)

    This is all like a playbook of CIA/US intervention.

    According to the economic minister, the problem with the current currency is that it is manipulated [by the CIA (my conclusion)] to keep the currency low in price. Maybe the crypto-version is designed to reduce that manipulation. It would certainly help, because due to the oil, the basis-economy of the land may actually be stable.

    I don’t know whether the cryptocurrency can help them out of the economic blockage, but support from Russia might help their economy.

    But if this succeeds, the CIA and US media will probably create more violent reasons for an intervention.

  8. FlyingAxblade says:

    How did money laundering come about?

  9. mkey says:

    I don’t know what to think of this, but if the “white house says” that sanctions against a country are implemented to subvert a dictator, something must be rotten in the state of Denmark.

    The only dictators these people don’t like are those that don’t play ball.
    Dictators who like gassing people, for instance, are OK in their book, as long as they supply the gas.

  10. Rooster_Ninja says:

    That’s how beards roll!

    I really enjoyed the anarchist and Liberal debate. It was a rare and valuable experience to see two people engage in a thoughtful conversation, and not what I was expecting when I saw the title. The bearded liberal conceded to valid points and did not blindly devolve into a defensive posture when his ideas were challenged.

    For example, he said “Hmm, looks like I have to do more research on that topic.” F’in Brilliant!

    The bearded one is my new bench mark on how I will measure myself when my own ideas are challenged or new ones encountered.

    Fantastic, thanks for the link James!

  11. john.o says:

    I issue a challenge to the justly famed and rational Corbett audience. Defend this thesis with evidence:

    “The world’s oligarchs lust after the success of the Petro.”

    • HomeRemedySupply says:

      Although I may have some West Texas sand in my ears and underwear, I feel like The Petro represents An Authoritarian Cryptocurrency (as opposed to a decentralized cryptocurrency and decentralized method of exchange).

      One recent example of the oligarchs lust
      – Fortune magazine – Feb 2018
      This Big Cryptocurrency Acquisition Could Create a Wall Street-Style Financial Giant
      Circle, a cryptocurrency-focused financial-services firm, will announce today that it is buying crypto exchange Poloniex—a move that immediately makes Circle one of the largest and most influential companies in the industry.

      (Circle)…attracted big investors—including Goldman Sachs, Chinese Internet giant Baidu, and venture capitalist Jim Breyer, one of the earliest backers of Facebook….

      • john.o says:

        I am with, I believe, PeaceFroggs, who does not grasp the difference between the Petro and Bitcoin, eagerly endorsed by all those well know anarchists like Al Gore and Bill Gates, hen it comes to reliance on power, wealth and ownership in the real world.

        At the end of the day, the value of your bitcoin is tied to and held up by a big huge Oil & War Economy, like it or not. With guns and laws and rules and guys who OWN stuff and will kill you if you try to take it away from them, and many who will kill you to take yours, especially if properly inspired by an IDEAL (e.g. “free market”).

        Bitcoin ownership, like all ownership and value in the world of trade, involves force. That does not make it “evil” in my book, but if it hides behind a false extra-moral mask of a “free market” and trades in slaves and serfs anonymously, in the name of “anarchy,” I call bullshit.

        • HomeRemedySupply says:

          I must have missed your concept of why bitcoin is tied to and held up by a big huge Oil & War Economy.

          To me “Bitcoin” is a token. A non-authoritarian token which can be exchanged anywhere by anyone. No Central Authority nor Government issues it. The token can represent a value for goods and services, whether they be pizza or gold or dollars or drugs or hitman fees.

          2 pizzas = 10,000 bitcoins (2010)

      • john.o says:

        And it seems to me, HRS, your link is quite on my side. Please correct me if wrong, but that is an exchange where Bitcoin and other hallowed “decentralized” currencies will be traded inside the confines of the US slave machine like any other investment. It will be traded by people on their laptops and over servers and networks built by the slaves.

        You will eat by and by
        And someday your children they won’t have to cry
        Just please do wait
        till Governments Die
        You’ll Eat Pie in the Sky By and By

        True, the land and the air and the oil will still be owned by those whom nature has chosen to rule over you, because that’s the way the division of labor cookie crumbles in the free market, folks.

        Don’t worry. It’s the Market. The Friendly Butcher Baker and Candlestick Maker with their magic subjective values. It’s Nature. The Great Architect of The Universe, as Adam Smith called “the Hidden Hand.” The “foundation of our civilization,” James calls it.

        And remember: it is the Petro that threatens you.

        • HomeRemedySupply says:

          I agree. That is why I posted the link. The Goldman Sachs-Circle link represents “oligarchs lust”. The authoritarians are trying to hijack a decentralized system.

          Read the article…
          At an early Bitcoin conference in London, Allaire and his cofounder, Sean Neville, Circle’s president, laid out their vision before a rowdy throng of crypto-anarchists and libertarians. One audience member asked whether they, if presented with a subpoena requesting customer information, would hand over data. Allaire didn’t hesitate in his response—”Hell yeah, of course!”
          The confab nearly broke out into a brawl, Neville recalls, with one rabble-rouser rushing the stage, pumping his fist, and shouting to the others, “I will go to jail for you!”

          • mkey says:

            I’d just like to point out that, according to me, there won’t be any global solutions for local problems just as there won’t be any technological solutions to societal problems.

            These issues we are having are purely societal. People fail to understand.

            • HomeRemedySupply says:

              These issues we are having are purely societal. People fail to understand. –mkey

              Cassius says:
              Men at some time are masters of their fates.
              The fault, dear Brutus, is not in our stars
              But in ourselves, that we are underlings.

              (and continuing on in an anti-authority bent)
              Brutus and Caesar—what should be in that “Caesar”?
              Why should that name be sounded more than yours?
              Write them together, yours is as fair a name.


    • HomeRemedySupply says:

      – One Corbett sentence or statement –
      I am having second thoughts on spending so much time revolving around one sentence which Corbett writes in an article.

      I understand the general message and communication of the article.
      I grasp the intent of the concept being relayed by James Corbett.
      For me personally, that is enough.

      In life, I sometimes run across a person who phrases things very poorly, but is relaying a concept which I understand despite the wording.
      And in life, sometimes I attempt to communicate a concept with well phrased nomenclature but the receiver just doesn’t grasp a duplicate of the idea I am trying to relay.
      And that is part of life.

      So, the bottom line. I walked away with a concept from the Corbett article. I grabbed a concept which I think he was relaying. I am fine with that. I am moving on.

  12. sjb says:

    I’m with you john.o strange James hits on Venezuela who. I’m trying to sign up for few Petros, show some support

    • Mielia says:

      That sounds literally stupid to me. Showing support to some government gangsters, not even sure how exactly it will look like rather than to some concrete Venezuelan people or a charity where at least more concrete is outlined how the support should arrive.

      • john.o says:

        I do not see a choice between government gangsters and a charity. It is an investment. I see an INVESTMENT choice between Bitcoin and the Petro.

        James argues (kind of) that the Petro is a badish one – even if you can make short term gains – for various reasons. He has argued (kind of – there is always a hedge) that Bitcoin is at least something worth considering, sometimes.

        That the government of Venezuela is a gangster in some way that Chevron, or whoever owns any major oil in the world, is not, is the first question. For me the answer is no. In fact, that government has a greater claim to the oil in my book. Perhaps someone can explain to me: who in particular SHOULD own this oil? It’s all great to say collectives are bad, but what private person or corporate entity should replace it? Please be specific.

        And as to the comparison with Bitcoin, it is simply a private corporation masked as a non-profit. It is as decentralized as any other part of the market is. That is to say, the overall game is controlled by the big players to a large extent, whenever they want to step in and control it.

  13. HomeRemedySupply says:

    Very relevant to this Corbett article…
    Mike Maloney defines ANARCHY and talks of Blockchain
    (4 minutes)

    Cassius talks about Anarchy.

    Cassius says:
    Men at some time are masters of their fates.
    The fault, dear Brutus, is not in our stars
    But in ourselves, that we are underlings.

    (and continuing on in an anti-authority bent)
    Brutus and Caesar—what should be in that “Caesar”?
    Why should that name be sounded more than yours?
    Write them together, yours is as fair a name.

  14. john.o says:

    HRS, I understand your decision to move on from such a conversation, and do not question its wisdom for you personally. I do the same thing all the time. When it is a proper one is each individual’s unquestionable choice. In this day and age more than ever.

    When someone possessing power in a situation fails to respond to a challenge (such as the CIA or a Government or a Corporate Board, or even, sometimes, a Journalist or Commentator) that is a different matter and it often takes on a different meaning. But it is still just part of human life to be looked at carefully case by case, as to what it might mean, or whether there might not be a good reason for it. Reasonable people will differ.

    Unfortunately, I cannot agree with your assessment of this being a minor dispute about some one interpretation by James Corbett of a word. It continues to be of fundamental importance.

    James is giving advice that affects the real world of international intrigue over the issue of who owns the land and oil in Venezuela. He gives very clearly his logic for making such a pronouncement: the alleged non-economics of the Mises Institute. He gives clearly his understanding of the basis of Civilization, as being “mutual exchange between friends, with “Government” and “economics” simply removed from the equation by deductive argument.

    I won’t belabor all that here. I still want to thank you for actually engaging me in this CHALLENGING conversation and tell you that by doing so, you restored some of my faith that people here really do wish to think and not just have pre-packaged ideas memed out to them by James to meme out to the Universe unquestioned.

    As it so happens your excellent challenges to me about Bitcoin’s nature will be taken up by me in the “Why Economics is Always wrong.” thread. It gets to the alleged completely “subjective” nature of valuation, which I believe is an easily debunked notion. This is not some pedantic distinction. It is at the heart of how James Corbett sees the world of trade, at least, if not life, and he makes that clear not just here. but as a fundamental principle that guides his worldview.

    I will take up the “Centralized vs “de-Centralized” argument in more depth too. It is very relevant to a belief in “the hidden hand” and especially its alleged benevolence.

    Thanks again, and for all you do for “Truth.”

    • HomeRemedySupply says:

      Dang! You are such a cool guy! I am with ya on what you are saying and the same back to ya. Thanks man!

  15. john.o says:

    At base this is about a comparison of the Petro, stigmatized as “centralized,” to Bitcoin, which James has certainly never denounced, and is presented as “decentralized.” The Petro is a “scam.” Bitcoin is not a “scam.”

    Certainly not definitive, but it’s always worth quoting doubters, even from wikipedia:

    “Decentralization…Bitcoin was designed not to need a central authority and the bitcoin network is considered to be decentralized…However, researchers have pointed out a visible “trend towards centralization” by the means of miners joining large mining pools to minimise the variance of their income….other parts of the ecosystem are also “controlled by a small set of entities”, notably online wallets and simplified payment verification (SPV) clients….decentralization of the network requires that no single miner or mining pool obtains 51% of the hashing power, which would allow them to double-spend coins, prevent certain transactions from being verified and prevent other miners from earning income….As of 2013 just six mining pools controlled 75% of overall bitcoin hashing power….In 2014 mining pool obtained 51% hashing power which raised significant controversies about the safety of the network. The pool has voluntarily capped their hashing power at 39.99% and requested other pools to act responsibly for the benefit of the whole network….”

    Correct me if I am wrong, but at 66% the entire Bitcoin game is owned. The whole thing is protected by private “promises” to protect the market.

    No worries. It’s not Government. It was founded in secret by Satoshi Nakamoto, and in order to scale, it needs to be constantly engineered by a team containing a known psychopath led by a guy who somehow got the code from Satoshi Nakamoto but seems confused about who he was. Nothing to see here. Move along. The Market.

  16. john.o says:

    Unless it’s an economic war of escalation in which BIG $$$ (the friendly hidden hand of subjective value) can buy the processing power to mine to the last Bitcoin and then, maybe, Bitcoin value will stabilize and can be split forever, and all is cool, as long as nobody controls 66%…maybe not

    Most buyers of bitcoin do not see it as anything other than a currency hedge on their other holdings, not a way to exit any system in place, centralized or decentralized, other than taxes, which is fine with me, but it mostly defers taxes. One way or another it is just another taxed and controlled exchange of wealth produced in a taxed controlled grid of ownership. I am not against it. It’s just another way to OWN wealth. And wealth is not bad in my book, but I am not canonizing Private Property and the Market as Saint Friendly Natural Law or telling Venezuelans to hand their oil to the highest bidder, and spinning the market to confirm my theories.

    UPDATE: Bill Gates WAS a Bitcoin supporter. Now it kills people. I do not agree. At least no more, and probably less than the average transaction, but Al Gore is till solid for Bitcoin. I doubt he is supporting the Petro though because he has is own petrocurrency.

  17. HomeRemedySupply says:

    March 2018
    Cambodia Reportedly Planning National Crypto Coin; Government Denies Rumors

    Cambodia is one of the poorest countries in the world.
    I am somewhat connected with helping to start a school over there called Texas State International Academy .
    A photo of my wife and I with the Founders hangs on a wall at the school.

    Originally, the Founders wanted to call the school “American International Academy” or “United States International Academy”. The Founders wanted to position/link the school to something in America, because Cambodians have an elevated view of “American Education”.

    My wife and I told them that “America” is a bad choice…it is full of corruption and bent on dominating the world.
    Use a name which has a cleaner, more free image.
    Thus “Texas”.

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