Friday, October 27, 2017

Could astronomical rise in cryptocurrencies potentially lead to the Petro-Bitcoin replacing the Petrodollar?

The idea of cryptocurrencies, and in particular Bitcoin, becoming a replacement for the Petrodollar by OPEC actually goes back as far as 2014 when a finance firm in Kuwait broached the idea to the Gulf Cooperation Council.  And while the past three years have seen major shifts away from the dollar and more towards Chinese influences from OPEC, the idea of using a de-centralized form of trade settlement remains a serious topic for oil producing nations bent on escaping U.S. interference and military interventions.


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. – Crypto Insider
Ironically, the comparison between oil and Bitcoin has come up recently in regards to the energy cost it takes for processing companies to be able to mine a Bitcoin as the algorithm slows down production.  And according to a new study, it takes about 20 barrels of oil today to mine just one Bitcoin.

(And at today's oil price of approximately $60 per barrel, that equates to $1200 worth of oil per Bitcoin)
The bitcoin boom is well and truly underway, and investors are constantly looking for new ways to gain an advantage in this space. The best way to do this, it seems, is by cutting the energy costs of mining this precious commodity. 
The bitcoin mining industry consumes 22.5 TWh of energy annually, which amounts to 13,239,916 barrels of oil equivalent. With 12.5 bitcoins being mined every 10 minutes, that means the average energy cost of one bitcoin would equate to 20 barrels of oil equivalent. - Russia Today
Of course both the U.S. and China will inevitably have much to say about the future of the Petrodollar, however the ultimate decision may come from the oil producers in OPEC themselves, and they have already put cryptocurrencies on the table as a potential replacement for the dying global standard.

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