Are LbCoin and Petro related to each other?

State-issued and government-backed crypto-currencies have become a global trend, and many countries have been announcing plans to launch their own crypto-currency, despite the questions that many of these governments have raised regarding this type of currency.

The reasons for launching these projects are varied and range from avoiding international sanctions, replacing the use of cash and promoting the massive adoption of crypto currencies, to being at the forefront of financial technology. Such is the case of Lithuania with LbCoin and Venezuela with Petro.

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However, there is a distortion in the spirit of cryptomonies that is highlighted in Euronews by Daniel Varnagy, professor of Political Science at the Bolivar University of Venezuela and organizer of the forum “Let’s talk about cryptomonies and Blockchain”. In the specific case of these two cryptomonies, they break with the intrinsic non-governmental essence of cryptoactives.

It is well known that crypto currencies were created not to be controlled by any centralized entity such as a government or a central bank. However, the blockchain technology that underpins most of them can be used by these same bodies to create their own alternative currency. As a result, it causes an unwanted variant that can bring to the cryptographic world problems that were originally intended to be avoided, such as corruption, bureaucracy, economic manipulation, etc.

Lithuania and the launch of LbCoin

Lithuania began a new financial era with the launch of LbCoin, a digital currency issued and backed by a central bank.

The Bank of Lithuania announced in July the launch of the world’s first collectible cryptomoney called LbCoin. The regulator explained that the currency was issued using the latest technology. The issue of the coin is dedicated to the Law on the Independence of Lithuania of 1918 and twenty signatories.

Lbcoin includes six digital tokens and one physical coin. To begin with, the Bank of Lithuania issued 4,000 Lbcoin (24,000 digital tokens and 4,000 silver collectible coins, weighing 36.36 grams).

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Each card shows one of the 20 signatures remaining under the Independence Act. The cards are divided into six categories according to the activity of the signatories (priests, presidents, diplomats, industrialists, scientists, municipal officials). They can only be obtained after purchasing the digital tokens, which are sold in packs of six for 99 euros.

For Varnagy, LbCoin “It is not a fully formed currency, it is a first step that is being taken with a rather small amount in the issue”, “and it comes with a fixed reference price on the euro”, as he mentioned in the interview to Euronews.

Venezuela and the creation of Petro
For its part, the Venezuelan government’s motivation for launching the Immediate Edge oil was the need to boost its economic independence from the dollar and from U.S. sanctions.

Let’s remember that, on December 3, 2017, Nicolás Maduro, President of Venezuela, announced the creation of “Petro”. According to the president, the Petro is a new digital monetary system backed by the country’s mineral reserves: oil, gold, gas, diamonds and coltan.

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Its main objective is “economic independence” and to avoid international sanctions imposed on the Caribbean country by the international community. Petro is mainly a stablecoin anchored to the price of the Venezuelan oil barrel and it is possible to acquire it through government entities. In addition, several exchanges have been created to allow its purchase using other crypto currencies such as bitcoin and litecoin.

But its development and implementation is still limited, Venezuela is one of the first countries in the world to issue its own cryptomoney.

However, Varnagy said: “When petro was launched, it was because there was an absolute loss of confidence in the Venezuelan monetary system and the economic break with the dollar was sought.

The main problem, explains the professor, is that the petro has not been able to generate confidence. “It is not in the same interest portfolio as bitcoin and the other cryptoactives that exist. In addition to this, there are all the regulatory problems that can arise from the governments that issue these cryptoactives.