I read a very interesting historical case about Venezuela's so-called "sovereign cryptocurrency," Petro. Honestly, the failure process of this project can almost serve as a textbook on "how to completely ruin a good idea."

Here's the background. In early 2018, Venezuela's economy had already completely collapsed. Inflation reached nearly 1M%, and the bolívar was worth almost nothing. U.S. sanctions had almost entirely isolated this oil-rich country from the global financial system. In this desperate situation, the Maduro government came up with a "brilliant idea"—issuing Petro, a cryptocurrency backed by national sovereignty and supported by oil reserves. Sounds grand, right? In reality, it was just a political show.

At that time, the propaganda was unprecedented. The government converted pensions into Petro payments, and Christmas bonuses for civil servants and soldiers were also converted into this digital asset. Maduro even livestreamed on Christmas 2019 to give the entire retired population an "airdrop" of 0.5 Petro as a gift. Imagine a retired teacher holding a phone, trying to see how much 0.5 Petro was worth in bolívars at the time, only to find the system frequently crashing and unable to check. That was a true reflection of user experience.

The government also tried to push Petro onto the international stage. It’s said that Putin personally approved it, Russia sent two advisors to participate in the project design, and even promised investment. Venezuela even wanted to use Petro as a unified settlement currency among OPEC members to counteract dollar hegemony. The oil minister publicly claimed it would become a payment method accepted by all OPEC countries. It sounded ambitious, but reality quickly slapped it in the face.

Public reaction was just one word: indifference. Under Maduro’s announcement of Petro on Facebook, the top-liked comment was "I can't believe anyone still supports this terrible government." A Venezuelan journalist on Twitter said something very poignant: "Petro is the anesthetic for this failed country." Even more heartbreaking was the actual user experience—registration was extremely strict, requiring ID upload, detailed address, phone number, but applications were often inexplicably rejected. Even if you succeeded in registering, the "Homeland Wallet" system often crashed. A Venezuelan woman said something very representative: "Here, I simply don’t feel the existence of Petro."

The U.S. government was not idle either. Just one month after Petro’s issuance, Trump signed an executive order banning U.S. citizens from buying, holding, or trading Petro. The U.S. Treasury explicitly stated that any transactions related to Petro would be considered violations of sanctions against Venezuela. Later, the U.S. even sanctioned Moscow’s Evrofinance Mosnarbank, citing that this bank provided financing services for the Petro project. The Treasury bluntly stated: Petro is a failed project, aimed at helping Venezuela evade U.S. sanctions.

But the real fatal problem wasn’t external pressure; it was the project itself. From a technical perspective, Petro was never a truly decentralized cryptocurrency. It was just a centralized database controlled entirely by the government. What did that mean for ordinary Venezuelans? It meant that the value of Petro in your wallet wasn’t determined by market forces but could be arbitrarily changed by a presidential order.

The government claimed each Petro was backed by a barrel of oil from the Atapirire region in southern Venezuela, which supposedly had 5.3 billion barrels of reserves. But a Reuters reporter’s on-site investigation found that the area’s roads were in poor condition, oil well equipment was rusted, and the entire region was overgrown with weeds, with no signs of large-scale oil extraction. Exiled former oil minister Rafael Ramírez estimated that extracting those 5.3 billion barrels would require at least $20 billion, which was absurd for a government that had to import basic food. He bluntly said: "The value of Petro is entirely arbitrarily set and exists only in the government’s imagination."

Even more absurd, the government later quietly changed the backing ratio of Petro’s assets. From the initial claim of 100% oil-backed, it was changed to a mixed ratio of 50% oil, 20% gold, 20% iron ore, and 10% diamonds. Such arbitrary rewriting of the "white paper" is considered a stain even in the crypto world.

The technical issues were even more severe. Petro claimed to be based on blockchain technology, but its block explorer showed completely abnormal data. The white paper said a block should be generated every minute, but in reality, blocks were created every 15 minutes, and there were almost no transaction records on the chain. True decentralized cryptocurrencies like Bitcoin have prices determined by market forces, but Petro’s price was entirely controlled by the government. The exchange rate fluctuated from 1 Petro = 3,600 bolívars to 6,000, then 9,000. The government announced an official price of $60 per Petro, but on the black market in Caracas, if you were lucky enough to find someone willing to buy, you could get less than $10 worth of cash or goods. It was just a government-controlled tool wrapped in a blockchain shell.

The final straw was a massive corruption scandal. On March 20, 2023, a seismic event rocked Venezuela’s political scene. Key Maduro officials, including Oil Minister Tareck El Aissami, suddenly resigned. A few days earlier, anti-corruption police had arrested his close aide Joselit Ramírez Camacho, head of SUNACRIP—the national digital currency regulator, which was the core management department of the Petro project.

As investigations deepened, a huge corruption network involving billions of dollars surfaced. Prosecutor Tarek William Saab disclosed that some senior officials used a parallel cryptocurrency regulatory agency to sign oil shipment contracts "with no administrative control or guarantees." The proceeds from oil sales didn’t go into the national oil company’s accounts but were transferred via cryptocurrency into officials’ private pockets. The investigation revealed that this corruption network involved between $3 billion and $20 billion, which was used to buy real estate, cryptocurrencies, and mining farms.

In April 2024, Oil Minister Tareck El Aissami was arrested, facing charges of treason, money laundering, and organized crime. Over 54 people were prosecuted for participating in this corruption scheme. This scandal dealt a devastating blow to Venezuela’s entire crypto industry. SUNACRIP was forced to cease operations, and the government launched nationwide anti-mining campaigns, confiscating over 11,000 ASIC miners and cutting off all crypto mining operations from the national power grid. By 2024, the government had stopped Petro trading, ordered a nationwide halt to crypto mining, and shut down all licensed exchanges. A once-promoted industry was completely collapsed by a corruption scandal.

Ironically, Petro’s failure wasn’t due to Washington’s bans but because of its own rot. A tool originally intended to counter external sanctions ended up becoming a channel for corrupt officials to launder money.

This case actually reflects the entire logic of Venezuela’s governance failure. Faced with deep structural economic problems, the government chose to create a grand technological show, attempting to mask the real economic rot with digital illusions. It’s like a building with a collapsed foundation, where the managers decide to just paint a bright coat on the exterior walls. This is a classic case of "treating the symptoms, not the root cause."

The value of a digital currency always depends on the credibility of its issuer. In a country with inflation reaching millions of percent and basic necessities unavailable, what credibility does the government have? People have no confidence in the government-issued traditional currency, so how could they accept a new concept of cryptocurrency? Petro instead drained the last bit of credibility the government had left.

Imagine this scene: a retired teacher, whose life savings have been swallowed by inflation, is forced to convert her pension into Petro. She holds her phone, visiting shop after shop, only to hear "We don’t accept this" or "The system is down." That’s the real situation for ordinary people.

The root of Venezuela’s economic problems lies in structural flaws. The country is caught in a typical "Dutch disease," overly dependent on oil exports, leading to the collapse of manufacturing and an extremely single-structured economy. When oil prices fall, the entire economy crashes. Petro tried to use oil as an anchor, but it only reinforced dependence on oil without solving the structural issues.

On the technical execution side, it was a mess. The Venezuelan government lacked the basic technical and operational capacity to implement blockchain projects. From the start, the project was riddled with flaws—from abnormal block data to payment system failures and arbitrary pricing mechanisms—each detail exposing its amateurish level, even worse than a Shenzhen outsourcing studio.

Today, Petro has completely faded into history. Maduro’s "salvation" experiment ended in utter failure. Venezuela remains mired in the quagmire, and its people continue to suffer in the flames of inflation. The country’s real way out isn’t to find another "Petro"-like digital shortcut but to have the courage to face reality, return to common sense, and start the long-overdue, incredibly difficult process of genuine reform.