The history of OilCoin's demise, a microcosm of Venezuela's failure

Written by: Deep Tide TechFlow

On January 3, 2026, the U.S. military launched a “large-scale” attack on Venezuela, and President Maduro was swiftly arrested and transferred.

Some commented, “A Memecoin issuer has arrested the issuer of an RWA Token.” And indeed, that is the case.

On February 20, 2018, Venezuelan President Maduro announced the issuance of the world’s first sovereign-backed digital currency, the Petro.

At that time, Venezuela was deep in its worst economic crisis in history, with inflation soaring to nearly 1,000,000% (you read that right), and the national currency, the Bolivar, was depreciating like worthless paper. U.S. sanctions further worsened the situation, choking the economy of this South American oil giant.

Maduro hoped that this digital currency could be the last straw to save the country.

However, in early 2024, when the Venezuelan government quietly terminated the Petro, the world hardly paid much attention.

This digital symbol, once hailed as “the world’s first sovereign cryptocurrency,” almost never truly “lived” during its brief existence. Its end marked the silent curtain fall of a noisy drama, drawing a line under a surreal story revolving around cryptography, national sovereignty, and economic collapse.

The fate of the Petro reflects a comprehensive collapse of the country’s governance system.

On the Ruins, the Birth of the Petro

To understand the Petro, one must first understand Venezuela before its birth.

It was a nation scorched by hyperinflation, with the old currency, the Bolivar, losing value by the hour, wiping out citizens’ lifelong savings overnight. Meanwhile, severe U.S. sanctions acted like an invisible noose tightening around Venezuela’s economy, isolating it from the global financial system.

It was on this economic wreckage that the Petro was born, carrying an almost impossible “national salvation” mission.

Its blueprint was grand and alluring.

First, the Petro aimed to bypass the dollar-dominated international financial system through blockchain, opening a new channel for financing and payments; second, it claimed each Petro was backed by one barrel of real oil, with a total of 100 million tokens valued at 60 billion USD.

In August 2018, Venezuela officially established the Petro as its second official currency, circulating alongside the battered Bolivar.

Maduro’s government promoted the Petro with unprecedented effort.

Pensions for retirees were paid in Petro, and Christmas bonuses for civil servants and soldiers were also converted into this digital currency. Maduro even livestreamed a Christmas “airdrop” of 0.5 Petro to the entire retired population in late 2019.

Beyond domestic promotion, Venezuela also sought to rally more countries to adopt the Petro.

Time magazine once reported that the Petro received personal approval from Putin, with Russia dispatching two advisors to participate in the project design. Russia promised to invest in the Petro and consider using it for bilateral trade settlement to counteract dollar hegemony.

Venezuela also tried to promote the Petro among OPEC members, aiming to build a de-dollarized oil trade system. Oil Minister Quvedo publicly stated, “The Petro will become a settlement method accepted by all OPEC member countries.”

To encourage wider use, Maduro’s government transformed into a crypto project team, establishing complete infrastructure, providing detailed purchase tutorials on the official website, and even developing four ecological apps. Six exchanges, including Cave Blockchain and Bancar, were authorized to sell Petro publicly.

But reality soon delivered a heavy blow to Maduro’s government.

Public Apathy and Skepticism

The government’s enthusiastic promotion met with collective indifference from the people.

Under Maduro’s Facebook post announcing the Petro, the most liked comment read: “Unbelievable that anyone still supports this terrible government… they are destroying the entire country.” Another popular comment said: “The government is used to letting every stupid thing end in failure and blaming other countries.”

Venezuelan media personality Gonzalo’s comment on Twitter was even sharper: “The Petro is the anesthetic for this failed country.”

User experience disasters further eroded public trust. Registering for the Petro required uploading ID front and back, detailed address, phone number, and other information, but applications were often inexplicably rejected. Even when registration succeeded, the “Homeland Wallet” system frequently malfunctioned, often unusable.

Worst of all was the payment experience. Many merchants reported failed Petro transactions, and the government had to admit system flaws and offer compensation.

A Venezuelan woman said, “Here, you can’t feel the existence of the Petro at all.”

Externally, the U.S. government also targeted the Petro precisely.

In March 2018, just one month after its launch, Trump signed an executive order banning U.S. citizens from purchasing, holding, or trading the Petro. The Treasury Department explicitly stated that any transactions involving the Petro would be considered violations of sanctions against Venezuela.

Sanctions quickly expanded. In 2019, the U.S. sanctioned Moscow-based Evrofinance Mosnarbank, citing its role in financing the Petro. The U.S. Treasury bluntly called the Petro a failed project attempting to help Venezuela evade U.S. sanctions.

The Aircoin Cloaked in Oil

The most fatal flaw of the Petro is that it is fundamentally unviable both technically and economically.

True cryptocurrencies rely on decentralization to build trust. The Petro, however, is a centralized database fully controlled by the government.

For an ordinary Venezuelan, this means the value of Petro in their digital wallet is not determined by market forces but can be arbitrarily changed by a presidential decree.

The Venezuelan government claimed each Petro was backed by one barrel of oil from Atapirire, a small town in the Ayacucho region, with reserves of 5.3 billion barrels. But a field visit by Reuters reporters revealed dilapidated roads, rusted oil well equipment, overgrown weeds, and no signs of large-scale oil extraction.

In exile, former Venezuelan oil minister Rafael Ramirez estimated that extracting the 5.3 billion barrels of oil promised would require at least 20 billion USD in investment, which is impossible for a government that needs to import basic food.

Ramirez bluntly stated, “The Petro is set at an arbitrary value; it only exists in the government’s imagination.”

Even more absurd, the Venezuelan government later quietly changed the backing assets of the Petro from 100% oil to a mixed backing of oil, gold, iron, and diamonds in proportions of 50%, 20%, 20%, and 10%.

Such arbitrary modifications of the “white paper” are notorious even in the crypto world.

On the technical side, problems are equally severe. The Petro claims to be based on blockchain technology, but its block explorer shows highly abnormal data. The white paper states that the Petro should generate a block every minute like Dash, but the actual block interval is 15 minutes, with almost no on-chain transaction records.

Unlike truly decentralized cryptocurrencies like Bitcoin, the Petro’s price is entirely controlled by the government. The exchange rate initially was 1 Petro to 3,600 Bolivars, then arbitrarily adjusted to 6,000, and later to 9,000.

Although the government announced an official price of 60 USD per Petro, in Caracas’s black market, people could only exchange it for goods or cash worth less than 10 USD, if they were lucky enough to find someone willing to accept it.

Essentially, the Petro is a control tool disguised as a blockchain.

The Final Blow: Internal Corruption

If the Petro’s life was slowly fading, the last straw was a massive internal corruption scandal.

On March 20, 2023, a “seismic” event shook Venezuelan politics.

Core government figure, Oil Minister Tareck El Aissami, suddenly resigned.

A few days earlier, anti-corruption police had arrested his close aide, Joselit Ramírez Camacho, head of the National Digital Currency Regulator SUNACRIP, the agency responsible for Petro’s regulation and operation.

As investigations deepened, a staggering scam involving billions of dollars surfaced.

Prosecutor Tarek William Saab disclosed that some high-ranking officials used the crypto regulator and oil companies to sign “administratively uncontrolled or guaranteed” oil loading contracts. The proceeds from oil sales were not paid to the national oil company but transferred via cryptocurrency into private pockets.

Investigations revealed that this corruption network involved between 3 billion and 20 billion USD, with the illicit funds used to buy real estate, digital currencies, and crypto mining farms.

In April 2024, Oil Minister El Aissami was arrested, facing charges of treason, money laundering, and organized crime. Over 54 people were prosecuted for alleged involvement in this corruption scheme.

This scandal dealt a devastating blow to Venezuela’s crypto industry. SUNACRIP was forced to suspend operations, and the government launched a nationwide anti-mining campaign, confiscating over 11,000 ASIC miners and disconnecting all crypto farms from the national grid.

By 2024, the government had halted Petro trading, ordered a nationwide stop to crypto mining, and shut down all authorized exchanges. A once-promoted industry was completely collapsed under the weight of corruption.

The Petro experiment failed utterly—not because of Washington’s bans, but because of its own rot.

A tool designed to counter external sanctions ultimately became a tool for corrupt officials to launder money.

A Microcosm of a National Failure

The trajectory of the Petro’s failure almost perfectly mirrors Venezuela’s broader governance collapse.

It is a “quick fix” policy. Faced with deep-rooted economic structural problems, the government chose to create a glamorous gimmick, attempting to mask the real economic rot with a digital illusion. Like a building tilting due to foundation failure, officials simply painted a bright coat on the exterior.

Maduro’s government tried to solve systemic issues through technological means, which is fundamentally a misguided approach. The value of a digital currency still depends on the credibility of its issuer. In a country with inflation rates reaching millions and basic necessities unguaranteed, how credible can the government be? Citizens don’t trust the traditional currency issued by the government, so how could they accept a new digital currency?

Instead, the Petro exhausted the last remnants of government credibility.

Imagine this scene: a retired teacher, whose lifelong savings have been swallowed by inflation, now receives her pension forcibly converted into Petro. She walks into shops with her phone, only to be told, “We don’t accept this,” or “The system is down.”

The root of Venezuela’s economic problems lies in fundamental structural flaws. The country suffers from the classic “Dutch disease,” over-reliance on oil exports leading to manufacturing decline and an extremely single-sector economy. When oil prices fall, the entire economy collapses. The Petro, attempting to anchor to oil, only deepens dependence on oil without solving structural issues.

Operationally, the Venezuelan government lacks the basic technical and operational capacity to implement blockchain projects. From abnormal blockchain data to payment system failures and arbitrary pricing mechanisms, every detail exposes the amateurish level—worse than outsourced studios in Shenzhen.

Today, the Petro has vanished into history. Maduro’s “national salvation experiment” ended in a tragic failure, and Venezuela remains mired in chaos, with its people continuing to suffer in the flames of inflation.

The country’s real way out is not to seek the next “Petro-like” digital shortcut, but to muster the courage to face reality, return to common sense, and undertake the long-overdue, arduous process of genuine reform.