Venezuela’s government has announced that the Petro ‘cryptocurrency’ is now finally ready to be backed with oil in the nation’s oil inventories. However, only 30 million barrels of oil will be dedicated to the Petro’s reserves, a far cry from the 5 billion barrels of oil that were originally promised.

It is unclear what this announcement exactly means for multiple reasons. First off, the marketing materials for Petro in the past made it seem like it was already backed by oil, as well as gold, diamonds, and other precious metals. This week’s announcement seems like an admission that the Petro has never actually been backed by anything, confirming that it was no better than fiat currency.

Also, this current announcement does not disclose how Petro would actually be redeemed for physical oil, and if no system is disclosed to the public then the Petro will continue to not be backed by anything.

In any case, Venezuela blames the United States for the Petro’s oil reserve shortfall, saying that the sanctions on the national oil company PDVSA are the reason that only 30 million barrels of oil will be dedicated to the Petro’s reserves. This actually makes little sense, since the sanctions should cause Venezuela to have far more oil reserves, not less.

The worst thing about the Petro is that there are still little to no signs that it has any value. The Central Bank of Venezuela refuses to redeem Petros, and reports on the ground indicate that the Petro is basically unused. Unfortunately, the government has decided to convert citizens monthly pension payments to Petros automatically, despite the apparent inability to exchange the coins for real cash.

Finally, the Petro’s value is tied to the Sovereign Bolivar fiat currency, which has continued to hyper-inflate at a rate of 11,900% per year according to the Cafe Con Leche Index. In other words, this means that the price of a cup of coffee in the nation’s capital has risen from 150 to 18,000 Sovereign Bolivars in only a year. This is not a premium Starbucks drink either, it is cheaper than most gas station coffee at a price less than $1 USD.

Therefore, even if the Petro could easily be redeemed, it would have practically no value. Ultimately, it seems the Petro has solved nothing, and may be the equivalent of a national level ICO scam.