Skip to main content
Move the World.

Venezuela's cryptocurrency catastrophe had hopeful beginnings.

In December of 2017, Venezuelan president Nicolás Maduro announced that his regime would be implementing the world's first state-backed cryptocurrency. It was a revolutionary idea, poised to save the nation's economy by mitigating the effects of rapid inflation. How the plan unfolded is a different story. 

Venezuela's Cryptocurrency Catastrophe

In 1999, Venezuela appeared to be living the dream. The country had just introduced its first president, Hugo Chávez, and the price-per-barrel of crude oil was continuing to rise. For a country that acquired 90% of its overall revenue from oil, this meant opportunities to expand social programs and raise the quality of life for Venezuelans.

But it unfortunately led to corruption. While Chávez spent some money on social initiatives, he also revealed an authoritarian agenda, shifting government motives from empowering the people to concentrating power in the executive branch. He increased term limits for himself and, allegedly, suppressed media from parties that opposed him.

By the time of Chávez's death in 2013, the Venezuelan democracy was largely broken. Nicolás Maduro took over the presidency next, in the midst of a falling international demand for oil due to booming domestic production in the U.S. and shifting policies by the Organization of Petroleum Exporting Countries.

With the Venezuelan economy crippled by an over-supply of oil, many workers dependent on the industry were left without income. The government resorted to solving its economic woes by simply printing massive amounts of their currency — the bolivar.

This caused a huge surge in inflation while capital controls imposed by the government made it increasingly difficult for importers to participate in international trade. Scarcity ensued, rendering it nearly impossible for Venezuelans to purchase basic goods such as food and hygiene products.

Citizens tried turning to debit cards, but items were so expensive that they couldn't buy a loaf of bread without exceeding their daily limit. Out of options and desperate, Maduro looked to cryptocurrency in hopes of giving Venezuelans a new means of economic exchange, while keeping funds under government control.

Venezuela's cryptocurrency would be backed by the country's oil and mineral reserves to combat inflation and circumvent U.S. sanctions to gain access to international financing. 

What is Cryptocurrency?

A cryptocurrency is a virtual form of currency secured by cryptography, rendering it almost impossible to counterfeit. How does cryptocurrency work? Cryptocurrencies use blockchain technology and are built on decentralized networks. This protects the system from manipulation and interference by central authorities.

During this time, the people of Venezuela were already using cryptocurrencies such as Bitcoin to make peer-to-peer transactions that were immune to interference from the Venezuelan government.

Expats would use cryptocurrency to send remittances back to their home country, where family members could convert the currency into bolivars to pay their bills. Venezuela's peer-to-peer Bitcoin activity remains particularly extraordinary, with citizen distrust of the government paving the way.

When Maduro announced Venezuela's "Petro" cryptocurrency in December of 2017, however, he had very little understanding of the nature of cryptocurrency itself. The introduction of a state-backed form of this exchange was inherently at odds with what cryptocurrency was designed to do in the first place.

Maduro looked to cryptocurrency in hopes of giving Venezuelans a new means of economic exchange, while keeping funds under government control.

In fact, the creators of the Petro had hoped to implement limits coded into the blockchain to bring more transparency to the people. By doing so, they'd be able to see how the government was moving money and shed light on any existing corruption. 

The Man Behind Venezuela's Cryptocurrency

Gabriel Jimenez, the activist and entrepreneur who designed the Petro, always believed that cryptocurrency was the key to alleviating the devastating challenges facing his home country. He originally began designing the Petro prior to any interest from the Venezuelan government.

Jimenez had been speaking publicly about the potential of cryptocurrency to revolutionize Venezuela's economic system, insisting that the Petro could empower people to take control of their finances.

"They had no actual clue what they just approved. The Venezuelan government was going to implement a technology that basically was going to expose them."

Gabriel Jimenez

When Jimenez was eventually contacted by the government about his ideas, he was skeptical. He thought perhaps they were planning to arrest him for his advocacy, but to his utter shock, they were interested in adopting the technology.

At first, Jimenez says he was excited, viewing their approval of the cryptocurrency as an opportunity to create a more transparent economic system. But the tables quickly turned.

"They had no actual clue what they just approved," Jimenez explained. "The Venezuelan government was going to implement a technology that basically was going to expose them."

As the Petro's official launch date neared, Jimenez no longer had free reign over its design. Maduro's government began insisting on restrictive rules for valuing and trading the cryptocurrency. In an effort to seize control of the entire project, the regime demanded to see a white paper outlining the details of exactly how the currency would function.

The night before the Petro's release, Jimenez and his team found themselves at gunpoint — forced to hand over every piece of documentation they had on the technology. Following that night, the government removed Jimenez's authorship of the project and declared him an enemy of the state.

Fearing for his safety, he was left with no choice but to flee to the U.S. By the time the government launched the Petro in 2018, Venezuelans widely viewed it as a stunt by the Maduro regime. The Petro never took hold as a viable and safe means of currency.

The Petro never took hold as a viable and safe means of currency. Venezuelans widely viewed it as a stunt by the Maduro regime.

"The project failed," said Jimenez. "I failed. I failed to my investors, to my coworkers, to my family, to everyone." But despite the outcome of Venezuela's cryptocurrency experiment, Jimenez remains hopeful in the power of this technology to ignite social change in his home country.

Today, he is still working on making cryptocurrency more mainstream in Venezuela, and he has every intention of returning as soon as he is able to.

"(The Petro) was a spearhead. It gave the opportunity of this regularization of the crypto industry within the country and that was a positive impact," notes Jimenez. "I learned from my failures, and now I have way more reasons to try harder."

Coded: Season 3

There's an invisible war being waged online, but a new generation of hackers is rising up to fight back. Presented by Tomorrow Unlocked, this new season of Coded takes us from farms to space to meet the people using technology to change the world.

Watch more stories of technology creating a better future on the Tomorrow Unlocked YouTube channel.

More From Coded

A new generation of hackers is rising up
Coded
From Multi-Millionaire Bitcoin Entrepreneur to Inmate and Back Again
From Multi-Millionaire Bitcoin Entrepreneur to Inmate and Back Again
Coded
From Multi-Millionaire Bitcoin Entrepreneur to Inmate and Back Again
The story of how Charlie Shrem built his business as a Bitcoin pioneer, lost it all, and is now clawing his way back.
By Michael O'Shea

The story of how Charlie Shrem built his business as a Bitcoin pioneer, lost it all, and is now clawing his way back.

Coded
The Lawyer Who Defends Anonymous
The Lawyer Who Defends Anonymous
Watch Now
Coded
The Lawyer Who Defends Anonymous
Jay Leiderman isn’t your normal defense attorney. He’s committed his career to defending hackers, including...
Watch Now

Jay Leiderman isn’t your normal defense attorney. He’s committed his career to defending hackers, including Anonymous, the world’s most secretive and famous hacking organization.

Coded
How an Exiled Cryptographer is Protecting Journalists in His Native Ethiopia
How an Exiled Cryptographer is Protecting Journalists in His Native Ethiopia
Watch Now
Coded
How an Exiled Cryptographer is Protecting Journalists in His Native Ethiopia
An exiled blogger teaches journalists in his native Ethiopia how to avoid capture
Watch Now

In Ethiopia, the main prison is divided into eight zones. Many refer to the rest of the country as “Zone 9.” But Endalk Chala is fighting back. Chala moonlights as an encryption expert, helping bloggers in his native Ethiopia escape capture and torture.

Coded
Erasing Your DNA
Erasing Your DNA
Watch Now
Coded
Erasing Your DNA
Is a spray that can mask your DNA the frontier of personal privacy or a tool for criminals?
Watch Now

There is an incredible amount of data in your DNA. Heather Dewey-Hagborg wants to make sure you have control over that data. She developed a spray that masks your DNA wherever it’s left. Is it a new frontier in personal privacy or a handy tool for criminals?

Coded
Disrupting Money
Disrupting Money
Watch Now
Coded
Disrupting Money
Can a bitcoin entrepreneur on house arrest convince the world it’s the currency of the future?
Watch Now

Charlie Shrem went from multi-millionaire to having almost nothing. Shrem was a Bitcoin pioneer. And it paid off big time. Until he was sent to jail for allowing a customer to resell bitcoin on Silk Road. Now, he’s out and wants to convince the world that Bitcoin is the future of finance.

Coded
Hacking the Future
Hacking the Future
Watch Now
Coded
Hacking the Future
How do we make sure the next generation of hackers uses their talents for good?
Watch Now

In our hyper-connected world, hacking is a superpower. And Nico Sell wants to make sure that power ends up in the right hands. She started Rootz Asylum to teach kids how to hack and encourage them to use their new-found talents for good.

Coded
The People’s NSA
The People’s NSA
Watch Now
Coded
The People’s NSA
Hackers and journalists team up to expose crime and corruption around the world
Watch Now

At an undisclosed location in Sarajevo, a group of hackers are working with journalists to expose organized crime and corruption. But those engaged in illicit activity respond with cyber attacks and other intimidation tactics. Can the group fight off the attacks and help journalists bring the truth to light?

Coded
The Unhackable Email Service
The Unhackable Email Service
Watch Now
Coded
The Unhackable Email Service
Edward Snowden’s email service of choice wants to make mass surveillance obsolete.
Watch Now

Ladar Levison’s email service counted Edward Snowden among its users. But, when the FBI demanded Levison hand over Snowden’s communications, Levison destroyed the company’s servers. Now, he’s back with a more secure version of the service that could make mass surveillance obsolete.

Coded
Coded Trailer
Coded Trailer
Watch Now
Coded
Coded Trailer
Meet the programmers on the frontlines of the war over security and privacy.
Watch Now

There’s an invisible war being waged. Foreign governments are hacking major corporations. Major corporations are collecting massive amounts of consumer data. And the NSA is listening to everything. But a new generation of programmers armed with powerful technology is rising up and fighting back.