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The war on the petrodollar through Bitcoin

Flight2gold

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The war on the petrodollar through Bitcoin

Posted by Michael Kern | Oct 24, 2017


Established in the early 1970s, the petrodollar has secured the United States’ influence over the oil trade for over 40 years, but recently, it is clear that this monopoly is slowly beginning to fall apart – in some part due to the influence of Bitcoin and other emerging cryptocurrencies.


Background
Due to the plummeting value of the dollar, the debt from the Vietnam War, and excessive domestic spending, President Nixon abruptly pulled out of the Bretton Woods Accord, which pegged the dollar to the price of gold and based the value of other currencies on that of the dollar. Labeled the “Nixon Shock,” these actions left the country bursting with debt and low on cash, with many of its key allies such as Britain, France, and Germany questioning whether the U.S. was justified in its position as the leader of the global economy.

While the U.S. economy entered a nose dive, another geopolitical event was unfolding which exacerbated the economic free fall.

In 1973, Syria and Egypt, backed by several other Arab Nations, launched an attack on Israel which marked the beginning of the Yom Kippur War (or Ramadan War). The war placed increased pressure on oil prices, and when the United States provided Israel with financial aid and arms, the Arab Nations responded.

In 1960, the Organization of Petroleum Exporting Countries (OPEC) was formed. At the core of this organization were Kuwait, Iran, Libya, Qatar, Saudi Arabia, Iraq and the United Arab Emirates – countries which were strongly opposed to U.S. interference in the 20-day war.

Following U.S. provisions to Israel, resource rich OPEC placed an oil embargo on all those thought to have aided Israel, including the United States, Britain, Canada, Japan, the Netherlands and later South Africa and Portugal. By 1974, the price of oil quadrupled.

With the success of the embargo, and cartel’s new role as an oil price influencer, Saudi Arabia became the de facto leader of OPEC.

In 1974, desperate to return value to the U.S. dollar, President Nixon and Secretary of State Kissinger entered negotiations with the Saudi Royal Family. In the agreement, the United States would provide Saudi Arabia with arms and assist with the protection of oil fields. In exchange, Saudi Arabia was to price all oil sales in U.S. dollars and invest surplus oil proceeds in U.S. debt securities. And by 1975, all oil-producing members of OPEC followed suit. This began the reign of the petrodollar.

The petrodollar has since elevated the United States economically and politically throughout the world, but after years of unprovoked wars and geopolitical belligerence, U.S. influence is beginning to fade.

Through the years, there have been a number of attempts to move away from the petrodollar system, especially within OPEC, in which many of its members are not particularly friendly with the United States. Another strong advocate of change is Russia, which suggested to China and Japan to purchase oil in yen or yuan.

Bitcoin, the Russian Miner Coin and the Cryptoruble
A Kuwaiti finance firm, however, took this debate a step further, suggesting in 2014 that the Gulf Cooperation Council could benefit from trading oil for bitcoin. The suggestion was based on the idea that the GCC could save time and money with faster, cheaper, and more efficient transactions.

This idea has been debated back and forth for some time, with some even suggesting that the “anonymity” factor could usher in a new era of world peace. The idea is that, using a neutral “petro-bitcoin,” countries would be immune to currency manipulation from governments, which has clear global impacts. In an unbiased-blockchain could act as a great medium for doing business on a global scale.

While this is all well and good, neither the U.S. or China are looking to ease up on their power push.

China, indeed, has taken the lead in the fight against the petrodollar. In 2012, Iran began trading oil in yuan, and earlier this year, in response to U.S. sanctions, OPEC member Venezuela began pricing its oil sales in Chinese yuan, as well. China’s biggest move, however, was its push for Saudi Arabia to do the same. One of the most notable efforts from China to tackle the petrodollar was the country’s yuan-priced crude oil benchmark, which it recently unveiled.

While China pushes for the petro-yuan, Russia is also making moves which could have serious implications for the U.S. dollar.

In addition to the Russian Miner Coin, the Kremlin announced that it will be creating a new state-endorsed cryptocurrency backed by gold. The goal of this coin is to allow free exchange between the cryptoruble and the ruble, and to reduce dependence on foreign currency while stimulating the domestic online economy.

While few details of the cryporuble are known, the technology does seem to be blockchain-based, as Putin has met with Ethereum and WAVES advisors to build the platform.

With these major moves from China and Russia, there is no doubt that the dollar will see downward pressure in the near future. As the world’s major economies vie for geopolitical power, it is worth following the growing role of bitcoin and cryptocurrencies in this story.

https://cryptoinsider.com/content/war-on-petrodollar-through-bitcoin/index.html
 

Flight2gold

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One day you might even be considered a traitor or an enemy of the state for trading in bitcoin. :))
 
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the_shootist

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With BTC at ~$6K it's may not be the best time to get in even if you like pissing off the state!
 

Bottom Feeder

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Naw, ain't buyin it. Why would any financial entity give up the lucrative "adjustable" currency scheme that is in use now for one "fastened" to the value of gold?
I'm sure they would want to substitute their own manipulable fiat in place of the buck. So where's the benefit to the world financial system? SOSDD.

BF
 

Flight2gold

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Actually, one country and one region are moving in this direction.
Estonia and Catalonia are both considering digital freedom in the form of bitcoin.
Reason?
Well first, there are zero borders.
I guess they would use gold and silver if it didn't weight about a ton in the bottom of your pocket and there was a digital way to transfer quickly.
Just as the US populous is waking up to the globalist agenda some countries are waking up to the same.
 

the_shootist

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Actually, one country and one region are moving in this direction.
Estonia and Catalonia are both considering digital freedom in the form of bitcoin.
Reason?
Well first, there are zero borders.
I guess they would use gold and silver if it didn't weight about a ton in the bottom of your pocket and there was a digital way to transfer quickly.
Just as the US populous is waking up to the globalist agenda some countries are waking up to the same.
The US will be invading those areas very soon now!
 

Joe King

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With BTC at ~$6K it's may not be the best time to get in even if you like pissing off the state!
Same was said about btc when it hit $10 and again at $100 and again at $1000 and again at $2000 and again at $4000 and it'll continue to be said all the way up.
 

Joe King

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A Kuwaiti finance firm, however, took this debate a step further, suggesting in 2014 that the Gulf Cooperation Council could benefit from trading oil for bitcoin.
That'd be the best idea ever!
...and I've been hearing for a long time now that 2018 is the year OPEC dumps the dollar. I suppose we'll all find out together, it's almost 2018.


IMHO, it's stupid to have one nations currency used as a World reserve currency.
...but if OPEC ever does drop the dollar, ya better be ready ahead of time. Because it'll be a brave new World afterwards where the old rulz just won't apply anymore.