Venezuela Economy: Caracas launches government-backed cryptocurrency

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Venezuela is banking on its very own version of the bitcoin. The country has become the first government in the world to launch a cryptocurrency. President Nicolas Maduro said millions have already been made in pre-sales. CGTN's Stephen Gibbs reports from Caracas.

A virtual currency is now for real.

President Maduro attended Tuesday's launch of the Petro, which his government is promoting as the solution to this country's economic woes.

Over 38 million pre-mined tokens were released for pre-sale.

The President - who prefers to quote prices in yuan, not dollars - says the new issue has been a success.

NICOLAS MADURO VENEZUELAN PRESIDENT "We have achieved the intention of purchase, now, the intention of purchase in the pre-sale of 4,777 million yuan."

That's over 735 million dollars - suggesting the tokens are being sold at a heavy discount to their official price - which is pegged to the cost of a barrel of Venezuelan oil.

NICOLAS MADURO VENEZUELAN PRESIDENT "The Petro reinforces our independence and economic sovereignty and will allow us to fight against the greed of the foreign powers that try to suffocate the Venezuelan families to seize our oil."

The launch of the Petro - the world's first government-backed cryptocurrency - is, in part, a response to U.S. sanctions on Venezuela.

Last year, after Washington accused the Maduro government of undermining democracy, Venezuela banned U.S. financial institutions from trading in new-issue Venezuela debt.

The idea is the Petro will bypass sanctions-although the U.S. treasury has warned that investors in the currency may still be breaking U.S. law.

The Petro's launch comes as conventional cash in Venezuela has lost almost all value. Inflation is forecast by the IMF to top 13,000 per cent by the end of this year.

A shortage of banknotes means people queue to withdraw the equivalent of just a few U.S. cents a day.

Worthless notes are being put to inventive use - this man makes a good living creating bags out of cash.

President Maduro has indicated the Petro will be used as a digital currency-accepted on public transport, tourist hotels, even in Venezuelan consulates abroad.

The opposition meanwhile is not backing the currency. It says investors are doing little more than making a risky loan to a troubled administration.

STEPHEN GIBBS CARACAS It will be in just under a month's time on March 20th when the Petro will go on public sale. Then we will know the price at which it is being traded, and the amount of interest there is in it, globally. Until then, we are still in the 'pre-sale' period. Stephen Gibbs, CGTN, Caracas.