Dollar for Cryptocurrency: The Unintended Consequences of Dollar Dominance
In a Shift From Traditional Economics, countries are boldly leveraging cryptocurrencies to reshape global trade dynamics, particularly in oil trade deals. This daring move allows them to sidestep the dominance of Western financial systems that have long been controlled by the US dollar and SWIFT.
Oil Exchanged for Crypto: The New Game
For instance, Russia is using Bitcoin, Ether, and stablecoins like Tether (USDT) to settle oil trades with nations such as China and India. The process involves converting the local currency equivalent of the oil payment into crypto and moving it through a series of accounts before it reaches its final destination in Russia, where it's swapped for rubles.
Advantages of Crypto Transactions
The benefits of using cryptocurrencies are plentiful. They offer faster transaction speeds, lower intermediary costs, and operate freely outside traditional banking systems, making them a potent tool for sidestepping sanctions. Moreover, cryptocurrency transactions are harder to track than conventional bank transfers, making them more resistant to being blocked or frozen by Western nations.
BRICS Bloc and the Crypto Shift
The BRICS bloc, including Russia, China, India, Brazil, and South Africa, is exploring alternative payment systems in a bid to reduce reliance on Western financial systems. Although BRICS Pay, the digital currency project, is still in development, the strategic use of existing cryptocurrencies like Bitcoin and Ether is a shrewd move in this direction.
Regulatory Changes in Russia
In an indication of increased acceptance of digital assets, Russia has recently legalized crypto mining and introduced an experimental legal framework for cryptocurrency trading.
The Future of Crypto in Oil Trades
Even if sanctions are lifted, the efficiency and speed of cryptocurrency transactions suggest that their use in oil trade may persist. However, Russia's Central Bank Digital Currency (CBDC) project faces delays due to technical and infrastructure challenges, which might slow down the adoption of a national digital currency.
In essence, the use of cryptocurrencies by Russia and other BRICS nations marks a dramatic strategic shift in international trade, aimed at reducing dependence on Western financial systems and maintaining economic stability under sanctions. This fascinating development is redefining the global economic landscape, reinforcing the idea that the new world order is becoming increasingly decentralized.
The use of cryptocurrencies like Bitcoin and Ether, such as those used by Russia in oil trade deals with China and India, highlights the interdependence of these digital assets and oil trade in the changing global economy. This shift towards decentralization in payment systems, as seen in the BRICS bloc's exploration of alternative payment systems, is aimed at enhancing stability during periods of trade sanctions. Yesterday, Russia took a step towards embracing cryptocurrencies further with the legalization of crypto mining and the introduction of an experimental legal framework for trading.
