BOGOTA, Colombia -- Did Venezuelan President Nicolas Maduro just conjure up a cutting-edge solution for the nation's economic problems or create another distraction in his country's tanking economy?
After Maduro said his government would launch a national cryptocurrency called the petro to break through the U.S. "financial blockade," experts, including some of the government's advisers, debated whether it will work.
John Villar, a Caracas-based cryptocurrency entrepreneur who has been an informal adviser to the government, said the petro has the potential to solve several of the nation's problems.
Not only would it allow the socialist administration to skirt economic sanctions -- allowing money to flow around the U.S.-dominated financial system -- but also help weed out corruption.
While cryptocurrencies provide anonymity, the underlying blockchain technology also maintains a complete ledger of transactions, providing a degree of transparency that has eluded government finances, Villar said.
"This could make transactions traceable and auditable," said Villar, who was in Bogota attending the Latin American Bitcoin and Blockchain Conference. "This would be a way to fight corruption."
On Sunday, Maduro said the petro would be backed by the country's oil, gas and diamond reserves. But people close to the project said the details are still being debated.
"This is very much a work in progress," said Gabriel Jimenez, CEO of The Social US, a Venezuelan tech incubator that specializes in cryptocurrency applications and which also is advising the government on the project. "There is nothing that has been 100 percent settled upon."
While backing the digital currency with hard assets might give it the sheen of legitimacy, Villar said doing so will make the petro prone to graft.
In recent weeks, for example, the government has arrested more than 60 executives of state-run oil companies, some of them for lying about production figures. A digital currency whose value is backed by oil reserves could also be vulnerable to that type of "commodity fraud" and manipulation, Villar said.