Iran and Russia just took a page out of Venezuela’s playbook.
Like Caracas announced on Dec. 4, Moscow and Tehran are looking into cryptocurrencies as a means of upending the U.S. petrodollar’s reign over the global oil market, Cointelegraph reported on Dec. 11.
For its part, crypto’s rise in popularity of late does make for an enticing investment choice, especially with Bitcoin’s 150% surge over the past month.
ICOs (initial coin offerings) abound as well. In fact, investors have poured in excess of $3 billion into over 200 ICOs this year, according to data from Coinschedule.com on Oct. 22.
And don’t forget the crypto futures that started trading on the CBOE options index Sunday – to be soon followed by rival derivative marketplace CME on Dec. 17.
Crypto is all the rage.
But for Iran, Russia, and Venezuela, replacing the petrodollar with cryptocurrency offers a chance at actual liberation.
How Iran and Russia Will Use Crypto to Loosen America’s Grip
Iran, Russia, and Venezuela are all major oil producers, but they’re not liberatedoil producers.
Each nation is, at present, dependent on the U.S. dollar, since the global crude market is traditionally dominated by contracts in American currency.
Moscow, Tehran, and Caracas are likewise either under U.S. sanctions right now or facing them. For Venezuela, in particular, these penalties are proving to be quite painful, since the state oil company is banned from the U.S. market as well as a large portion of Europe’s. Now 80% of the nation’s population lives in poverty, reported The New York Times on Dec. 2.
But then Venezuelan President Nicolas Maduro announced he would use cryptocurrency to combat Washington’s sanctions. Here’s why.
First, digital currency would provide a means to bypass and upend the petrodollar’s reign.
You see, cryptocurrency is decentralized – which is to say, it’s not controlled by a single entity (like the petrodollar is).
Since crypto is a common currency worldwide, there’s no need for fiat conversion when it changes hands. This would render the petrodollar obsolete, as it would negate the need to peg oil contracts to a centralized currency.
Second, purchasing and selling oil contracts via crypto would also be a pragmatic move. Cryptocurrency is bought and sold anonymously through the use of blockchain technology (the public ledger for all crypto transactions).
This perk is especially enticing for Iran, Russia, and Venezuela, as it would allow them to buy and sell oil contracts incognito. The world would be none the wiser to any “cut-or-glut” oil schemes they might try to pull off.
Full article: Iran and Russia Just Revealed How They’ll Upend the Petrodollar (Money Morning)