India’s stance on cryptocurrency has, to date, been cautious. It may be time to reconsider this position, however: it was announced yesterday that Venezuela would sell crude oil at a discount of 30% to India, provided it paid in the nation’s state-issued Petro cryptocurrency. The Petro, which raised upwards of $3 billion during its pre-sale, is said to be backed by Venezuela’s abundant oil and mineral reserves.
The Petro has been met with significant controversy. Some have expressed concern over the long-term viability of the new monetary system (set to become the official currency of the nation by 2020), due to the huge international debt and failure of the bolivar. It has already been met with hostility abroad, with critics pointing to its lack of proper decentralisation, and the U.S. placing a ban on its use.
In spite of this, I believe the offer should be taken very seriously. India is the world’s third-largest importer of oil, and its steadily climbing price is problematic for the government — at time of writing, this averages at around $75 a barrel.
Going on last year’s figures, the discount offered would result in savings in excess of $24 billion for the government.
This is a colossal amount that could be put to good use in revitalising Indian infrastructure — particularly given the Indian authorities’ pledge to foster financial technology as a means to accelerate national development.
India’s tech sector shows promise, with huge potential for the exploration of fintech (upwards of 300 million monthly payments are conducted with mobile wallets). It is an industry that could benefit from the adoption of blockchain technologies and cryptocurrencies. The Venezuelan offer should at the very least prompt a reevaluation of their place in the nation (perhaps research could be funded with some of the savings made by transacting in Petro).
On the grander scheme, the announcement is hugely significant for the cryptospace as a whole. There’s a disparity in government perception of cryptocurrencies around the world, and this is the first time that one has offered to trade in digital assets — if anything is going to change a nation’s stance on cryptocurrency, it’s an offer of this magnitude.
This will not only impact India — it encourages a more serious consideration of the space on a global scale.