El Petro is the first cryptocurrency to be issued by a federal government. According to the Venezuelan government, el Petro is an oil-backed token issued as a form of legal tender that can be used to pay taxes, fees and other public services/needs.
The Government described its plans for el Petro on a Website built exclusively for the cryptocurrency, hosted by the country's Ministerio del Poder Popular para Educación Universitaria Ciencia, Tecnología (MPPEUCT).
According to the government's website, el Petro's price will be ultimately attached to the price of a barrel of Venezuelan, derived from the previous day’s price.
To put it simply, el Petro will have three main facets:
1) MEANS OF EXCHANGE: El Petro (PTR) token will be used to buy goods and services, pay taxes and other public services. It can be traded for fiat money or other cryptocurrencies through digital exchange houses, and can also be used as a payment method for Venezuelan oil via direct exchange of PTR to real oil dispatch.
2) DIGITAL PLATFORM: El Petro will feature a digital platform that will allow to issue and trade crypto assets backed up by raw minerals, and also create other digital instruments to trade nationally and internationally.
3) SAVINGS AND INVESTMENT FACILITY: El Petro will be available in electronic exchange houses, with zero trading fees, and will have the essential characteristics to be traded using Atomic Swap technology, in a completely safe environment and in accordance with the Venezuelan legal framework.
The Bolivarian Republic of Venezuela assures the acceptance of el Petro as a payment method of national taxes, fees, contributions and public services, using the price of the Venezuelan barrel in the previous day as a reference.
To increase the adoption the government created a special discount index, named 'Dv', that will at least give a 10% discount.
The above information indicates, that it would be at least 10% cheaper to pay taxes using el Petro at the current exchange rate than it is in Bolivars.
According to the government, in the future, the use of el Petro is planned to grow into other payment markets promoting its use in the world as a currency backed by a real resource. The white paper reads:
“The Venezuelan government is committed to promoting the use of el Petro in the domestic market and making efforts to encourage its acceptance throughout the world.”