Recently a lot of developing countries turned to cryptocurrency in an effort to avoid consequences of US sanctions and bootstrap their economies. Indeed, the US is known to employ economic pressure as a political tool. We are not going to judge the fairness of these actions even though they may often lead to regular people suffering and drops in the living standard, purity or even hunger. Instead, we are going to examine if cryptocurrencies can, in fact, become a saving grace for the countries that fell under the influence of US sanctions.
The presence of a single account unit, such as the US dollar, showed the world that it is very convenient to conduct calculations based on the exchange rate of the national currency to the US dollar. That is a definite plus. But unfortunately, there is a catch. Several of them, in fact. Let us take a closer look.
The first cornerstone is that if a country’s economy uses the US dollar country, it thereby strengthens the US economy, but not its own.
The second cornerstone is a selfish right. The United States, using its currency as an instrument of pressure, is trying to solve not only economic issues, but also political ones, which also negatively affects other states.
The third cornerstone – despite the convenience of a single account unit, national businesses still incur conversion losses in addition to the fact that they have to “feed” the SWIFT system and the entire banking sector that is involved in transactions.
Over the course of time, the US dollar has become the world’s most dominant reserve currency. But was the dollar’s economical omnipresence the result of its convenience, or was it an artificial trend promoted by the US with the aim to establish economic superiority that for political control? Some indicators speak in favor of the latter.
Indeed, looking at the economic and political landscapes it is becoming apparent that more than a few nations have begun the process of untying their economies from the dollar, swapping it for other means of value exchange. Assets, that can be utilized by the US to apply pressure. The prime example of such a move is the de-dollarization agreement between Russian and China and establishing the yuan gold standard. In essence, by selling hydrocarbons to China in exchange for yuan and immediately converting yuan into gold at the Shanghai Gold Exchange, the nations are able to establish an effective trading channel that bypasses the US sanctions.
But if sanctions can be bypassed without blockchain, then where do cryptocurrencies come into the picture? To put it simply, there is a weak link in the scheme that we took as an example. Yuan and gold are physical assets that can be affected by centralized regulators, in theory giving the US a chance to establish economic pressure via new means.
This is where crypto comes into place
Decentralization on the other hand guarantees that the value of assets cannot be influenced by any correlations with the US dollar, effectively taking away the only pressure mechanism of the US. Technologies like Bitcoin or even EON can, in theory, give governments the ability to conduct trades directly, completely avoiding intermediaries that can influence the values in the process, thus allowing to create a completely new and independent value exchange network, that is completely bulletproof from any tempering from the outside.
Indeed a creation of decentralized and anonymous alternative global payment system is, in fact, a viable alternative that can end the rule of the dollar on the economic landscape.
Ridding the world of $
Russia and China are indeed not the only nations that are trying to untie their economies from the influence of the dollar. Others may have come even further and started utilizing crypto to create an alternative value exchange system. For instance, the Marshall Islands, a small country in Oceania, is moving towards issuing a sovereign cryptocurrency that will be in free trading alongside the country’s second national currency… US dollar! Is it a coincidence that the Marshall Islands waited for blockchain to finally introduce a dollar alternative to its people or were they simply too scared to overthrow the dollar before? We will let you decide.
Another notable example is Iran, which announced the development of a state cryptocurrency, bluntly stating that the move was done to revive the post-US sanctions economy and naming it the “blockchain revolution”. As the local newspaper, Tehran Times, reported on January 28th, the nation is already negotiating cryptocurrency trading with 8 other countries, taking the first step to relaunch its economy on the new, safer platform, free from the US influence.
Taking a look at the global picture it becomes apparent that several countries around the world are starting to employ the blockchain technology in order to boost their economy. Indeed, right now cryptocurrency provides the most promising alternative that a new generation value exchange system can be built on.
What conclusion can be drawn from this?
Cryptocurrencies are actually a good thing because they can provide an uncompromising level of security and transparency. But how the states began to interpret this technology for themselves is bad. In fact, creating a Venezuelan, Iranian or any other cryptocurrency is not much better than what we have now. The unit of account must obey the same rules, must not belong to any state or have anyone point of control. This is called a free, transparent economy, where the boundaries and rules of the game are outlined, which are formed not from a position of strength or power of the state, but from the point of view of logic and common sense, which is quite possible to describe with a mathematical function and Bitcoin has proved it to everyone. Thus, states will concentrate on the economy itself, rather than on manipulation in financial markets
Give me the ability to control a country’s money, and I won’t care who sets the laws there.
By Andrew Zimine, Exscudo CEO