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Petro: Risky Gamble or Golden Opportunity?

Venezuela’s “Petro” cryptocurrency will attract investments from Turkey, Qatar, the U.S., and Europe, the country’s cryptocurrency regulator, Carlos Vargas, told reporters on Friday. The Petro will be offered for sale this Tuesday, February 20th, and comes as Venezuela is suffering from quadruple-digit inflation and chronic shortages of food and medicine.

Venezuelan President Nicolas Maduro announced the launch of the Petro in December. Maduro has repeatedly said that his country is the victim of an “economic war” — prompted by financial sanctions imposed by the United States — and that the sale of the new digital currency will help the South American country circumvent this problem.

“On Tuesday, there will be quite a few announcements about the start of the process,” Vargas said on the sidelines of a political meeting in Caracas. “And there will surely be a lot of investors from Qatar, Turkey, and other parts of the Middle East, though Europeans and Americans will also participate.”

Skeptics say that concerns about Venezuela’s financial solvency will likely limit investor interes, and the U.S. Treasury Department has warned the Petro may violate sanctions against the OPEC (Organization of Petroleum Exporting Countries) nation. These sanctions — levied last year by Washington — block U.S. banks and investors from acquiring newly issued Venezuelan debt, effectively preventing the country from borrowing abroad to bring in new hard currency or refinance existing debt.

Venezuela’s Superintendence of Cryptocurrencies and Related Activities as well as the Blockchain Observatory, will regulate how the Petro, which is “backed” by 5 billion barrels of oil reserves, functions. “This is going to allow us to move forward to new ways of international financing for the country’s economic and social development,” Maduro said.

Since its inception, the Petro has been controversial. Even Venezuelan lawmaker Jorge Millan had strong words against about the coin: “This is not a cryptocurrency, this is a forward sale of Venezuelan oil,” adding, “It is tailor-made for corruption.”

But that didn’t stop the President from moving forward. In January, Maduro announced that over 800,000 Venezuelans had already been recruited to mine the cryptocurrency. “We are going to call them a special cryptocurrency team… They will set up cryptocurrency mining farms in all states and municipalities of the country,” he said.

The president even approached OPEC with his idea: “I have explained to Mohammed Barkindo [OPEC Secretary General] the goodness of the Petro. The cryptocurrency is the world of the future. I am very excited as well as the people of Venezuela,” said Maduro. It’s not surprising he would look for the organization’s support: OPEC is comprised of some of the world’s top oil producers and has enormous sway on the global oil market.

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SBI Remit is Using the Blockchain to Make Money Transfers Between Japan and Africa

SBI Remit, a Japanese money transfer company, is teaming up with a venture-backed firm to use its new treasury management service that uses the blockchain for increased transparency and liquidity to small and medium-sized businesses operating between Japan and Africa. SBI Remit and BitPesa The service is provided by BitPesa, which has raised $10 million to turn the Bitcoin blockchain into an enterprise payment rail. Normally, consumers moving money from Japan to Africa have to rely on banks and other middlemen to make their transactions, first exchanging yen into U.S. dollars or euros, then into African currencies. BitPesa, on the other hand, uses a combination of the Bitcoin blockchain and other services to create new currency pairs which greatly simplify the process. The partnership follows a path already laid out by BitPesa, and specifically targets cosmetics companies, electronics companies, and the lucrative used car market between Japan and Africa. It enables direct currency pairs between Japanese yen and the fiat currencies of Ghana, Kenya, Morocco, Nigeria, Senegal, Tanzania, Uganda, and the Democratic Republic of Congo, according to Forbes. Generally speaking, by embracing the decentralized nature of the blockchain BitPesa illustrates how useful Bitcoin is for real world applications. Not only does this system permit remittances to be completed in less than an hour — thanks to the blockchain’s fast settlement times — it will also help jump start African commerce with Japan on a larger scale by adding a much-needed layer of trust and transparency, according to Nobuo Ando, SBI Remit director. “Many companies are doing trade with African countries and they are suffering from the high cost and the slow speed and not very precise administration,” said Ando. “So this is the market that we would like to go in, together with Bitpesa.” Moving Funds from Asia to Africa Historically, individuals and businesses conducting trade between Japan and the countries BitPesa serves had to move Japanese yen through multiple correspondent banks. As noted, along the way the yen was frequently converted to more liquid intermediary currencies like the U.S. dollar or the euro, which added lofty fees each step of the way. According to World Bank estimates, the average remittance fees for this process can reach 7%, but the real cost is often much higher. It can also take several days to complete. By removing these correspondent banks and secondary currency exchanges from the process, BitPesa is able to provide similar services almost instantly for less than 3% of the total transaction. To avoid fluctuations in the price of both fiat currency and Bitcoin, Elizabeth Rossiello, BitPesa founder, said her company’s treasury services are designed to insulate their customers from risk on either side: “If it makes sense for us to settle using cryptocurrency or fiat currencies then we do,” Rossiello said. “And in this case, we’re happy that SBI feels the same way, so we’re open to using digital or fiat currencies to settle between us.” Looking ahead, the remittances market in sub-Saharan Africa it is expected to grow 7% this year to $41 billion. Although this number is just a fraction of the worldwide remittance market as a whole, with relatively little competition for African business Rossiello is confident her company can use the lower costs of the Bitcoin blockchain to help catalyze commerce between Africa and the rest of the world. Rossiello, who is among the earliest founders of a Bitcoin company established BitPesa in 2013 when the cryptocurrency was trading between around $100 and $1,000. As of today, Bitcoin is trading at over $6,600. Featured image from Shutterstock. The post SBI Remit is Using the Blockchain to Make Money Transfers Between Japan and Africa appeared first on NewsBTC.

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