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LbCoin and the Petro Are they related?

August 20, 2020

State-owned cryptocurrencies, named for their issuance and government support, have become a global trend, and many countries have announced their plans to launch their own cryptoasset.despite the questions many of these governments have raised regarding this type of currency.

The reasons for starting these projects are varied and They range from circumventing international sanctions, replacing the use of cash and promoting the mass adoption of cryptocurrencies, to adopting financial technology. This is the case in Lithuania with LbCoin and in Venezuela with Petro.

Now there is a bias in the spirit of cryptocurrencies that is evident in Euronews Daniel Varnagy, professor of political science at Bolívar University in Venezuela and organizer of the forum “Let’s talk about cryptocurrencies and blockchain”. Since eIn the special case of these two cryptocurrencies, they break with the actual non-governmental nature of crypto assets.

LbCoin and the Petro Are they related?LbCoin and the Petro Are they related?

It is known that cryptocurrencies were created in order not to be controlled by a central body such as a government or a central bank. However, the blockchain technology that most of them support can be used by the same entities to create their own alternate currency. As a result, it causes an undesirable variant that can bring problems into the crypto world that were originally intended to be circumvented, such as corruption, bureaucracy, economic manipulation, etc.

Lithuania and the launch of LbCoin

Lithuania entered a new financial era with the introduction of LbCoin, a digital currency issued and supported by a central bank.

The Bank of Lithuania announced the launch of the world’s first collectible cryptocurrency called Lbcoin in July. The regulator stated that the coin was issued using the latest technology. The issue of the coin is dedicated to the Lithuanian Independence Act of 1918 and twenty signatories.

Lbcoin contains six digital tokens and one physical currency. Initially, the Bank of Lithuania issued 4,000 Lbcoin (24,000 digital tokens and 4,000 collectible silver coins weighing 36.36 grams).

Each card shows one of the 20 signatures that remain under the Independence Act. The files are divided into six categories according to the activities of the signatories (priests, presidents, diplomats, industrialists, scientists, community officials). They are only available after purchasing the digital tokens, which are sold in six-packs for 99 euros.

For Varnagy, LbCoin “It is not a fully formed currency but a first step “taken” with a relatively small amount in the issue and a fixed reference price for the euro is set. ” just like he mentioned in the Euronews interview.

Venezuela and the creation of the Petro

The Venezuelan government’s motivation for bringing the Petro to market was the need to strengthen its economic independence from the dollar and United States sanctions.

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

Its main goal is “economic independenceAnd avoid the international sanctions that the international community is imposing on the Caribbean country. Mainly, the petro is a stable coin that is anchored in the price of a barrel of Venezuelan oil and can be purchased through government agencies. In addition, several exchanges have been set up to allow purchases with other cryptocurrencies such as Bitcoin and Litecoin.

Venezuela is one of the first countries in the world to issue its own cryptocurrency.

However, Varnagy claimed that: “When the Petro hit the market, it was because of the loss of absolute trust in the Venezuelan monetary system and an economic break with the dollar.”.

The main problem, explains the professor, is that the petro did not create trust. “It doesn’t belong to the same portfolio of interests as Bitcoin and the other existing crypto assets.” In addition, there are all regulatory problems that may arise from the issuing governments of these crypto assets.

Handling regulations

And it is one of the problems that can arise with the intervention of the state in this medium that in its purpose of supporting a cryptocurrency and creating the appropriate laws for its operation it exceeds the actually required regulations for the proper development of the crypto assets themselves and thus for the inclusion of these new digital assets in a position already similar to that of the traditional financial system.

However, Varnagy made it clear that the introduction of the Lithuanian virtual currency caught his attention as, unlike the Venezuelan Petro, it is not a cryptocurrency created as an alternative to replacing a system.

Despite all of this, the Venezuelan government is ready to push ahead with the introduction of its indoor digital currency.

Recently, local council leaders affiliated with the national government in the oil-producing country’s provinces agreed to join a national plan to expand the introduction of Petro, despite the lack of technology in some municipalities.

As Cointelegraph reported on August 12, the Bolivarian Council of Mayors signed oneNational Tax Harmonization Agreement “ for 305 municipalities in the country, which allows residents of these cities to pay taxes and fines using the national cryptocurrency Petro «PTR».

The news is part of the efforts of the national government in the Caribbean country to promote the adoption of the Petro, which, according to the Venezuelan government, has worked very well since June, when it turned out that almost 15% of payments made by this cryptocurrency were at gas stations fuel produced across the country.

The ease of use and the success or failure of the Petro could be a benchmark measure for Lithuania that will enable it to successfully consolidate its national project for LBCoin.

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