Venezuela is anchoring its economic recovery to a cryptocurrency that is widely considered a scam

Venezuela is doing something completely unprecedented. Some even say illegal.

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Maduro said he aims to block salaries, prices and pensions at the petro, which according to him amounted to $ 60 or 3,600 sovereign bolivars. The ultimate goal, he said, is a unique floating exchange rate in the future linked to the digital currency.

In March, President Donald Trump issued an executive order prohibiting any transaction within the United States that implies any digital currency issued by, for, or on behalf of the Government of Venezuela.

Venezuelan banks closed Monday in preparation for issuing sovereign bolivar bills, which will have five zeroes less than the current bolivar currency. The launch of a new fiat currency is at the heart of Maduro's strategy to curb hyperinflation, which the International Monetary Fund predicted was up to 1 million percent by the end of the year. The IMF also predicts a 18% shrinkage in the economy, as oil production declines significantly.

Hanke, also an elder of the Cato Institute, said that all of Venezuela is making the exchange of 100,000 old bolivars for a new bolivar that does not make "any difference" towards the arrest of an inflation rate that has exceeded 40,000 percent.

"They are not changing politics in any way," Hanke said. "All things will return to the course they were in before the so-called currency changed."

On Friday, Maduro announced a 3,000 percent increase in the minimum wage, along with the new currency, which kicked off on Monday. Opposition leaders have called for a national strike and are protesting this week in hopes of calling the masses into the streets against the socialist party of Maduro.

The country has been in turmoil since Maduro took office in 2013. Caracas' financial transactions have been paralyzed by the West. Sanctions and citizens are facing widespread food shortages as their traditional currency collapses.

Cryptocurrency uses cryptography to verify the transfer of funds and operates independently of a third party such as a central bank. The first and best known example is the bitcoin, which skyrocketed nearly $ 20,000 last year. Since then, it has lost over 60 percent of its value, according to CoinDesk's data.

[AssociatedPress

contributed to this report.

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