Sunday, December 10, 2017

Oil producing countries could follow in Venezuela's footsteps and use cryptocurrencies in trade to negate the Petrodollar

While the world mulls over whether President Nicholas Maduro's new scheme of creating an oil backed cryptocurrency is a viable attempt to attack the Petrodollar, or just a short-term play to remain in power as the nation flounders under hyperinflation, the potential of moving the global oil trade to a cryptocurrency platform is becoming more and more a serious discussion among oil producing nations.

The gradual acceptance of digital currencies, with major exchanges about to launch bitcoin futures trading, may prompt some oil producing nations to ditch the US dollar in crude trade in favor of cryptocurrencies, an oil analyst says. 
Russia, Iran and Venezuela have more than one thing in common. All three are major oil producing nations dependent on the dollar since the global crude market is traditionally dominated by contracts denominated in US currency.   
Moscow, Tehran and Caracas are also facing US sanctions; penalties which are proving effective since the sanctioned countries are dependent on the US dollar to sell their crude. 
A decentralized currency – allowing anonymous transactions along with blockchain technology support to facilitate oil contracts – may be the ideal tool to allow the oil producing trio to turn their back on the greenback. 
“The advent of cryptocurrencies, therefore, represents a fresh catalyst for commodity-producing countries wishing to abandon the dollar as a means of payment for oil,” said Stephen Brennock, oil analyst at PVM Oil Associates, in a research note seen by CNBC. 
Several oil producers have already voiced plans to ditch the dollar in oil trading. Last week, Venezuela announced it will launch its own cryptocurrency, the “Petro,” which will be backed by the country’s vast natural resource reserves. – Russia Today

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