Bitcoin & Geopolitics – Week 19

Bitcoin & Geopolitics - Week 19

8:00 in ▪
min read ▪ with
Nicholas T.

It will not be so easy to get rid of the dollar. Russia is already starting to shun the Indian rupee to pay for its oil.

Long-term dedollarization

The dollar’s status as an international reserve currency is eroding. The efforts of Vladimir Putin, who already declared in 2010, are bearing fruit:

“We should move away from the dollar which has an excessive monopoly as the only international reserve currency. This privilege has made the global economy unbalanced and vulnerable.”he had fallen during a visit to Germany.

Good comrade, the Tsar had even appealed to the EU:

“We know that there are problems in Portugal, Greece, Ireland and that the euro is a bit exciting. But, overall, it is a solid, high-quality currency, which should take its place as a reserve currency. »

Ten years later (June 2021), V. Putin accused the United States of using the dollar as an economic and political weapon. “Russia may consider settling oil and gas transactions in other currencies, including the euro”he had a threat.

Warning that it would be a blow to the American dollar, the Russian president, however, had declared that he had no intention of doing so. And then came the war between kyiv and moscow.

In September last year, Russia finally stopped accepting the euro, the dollar and the pound sterling. For three reasons:

-Disconnecting Russia from the SWIFT payment network (for international transactions)
– Freeze 300 billion dollars and euros related to Russia
-The Western embargo on the Russian economy

Since then, Russia has sold much of its oil to India, which pays in rupees. But that’s a problem…

The rupee is not the dollar

While the West has come together to try to isolate Russia, India is going it alone, very happy to be able to buy black gold cheaply. Its Russian oil imports increased by more than 1100%. Those of agricultural fertilizers of 300% and 200% for coal.

Unfortunately, India doesn’t have that much to offer Russia in return. The Indian industry does not know how to produce what the Russians want. They are the best components for Russia.

This results in an imbalance in the trade balance. Russia has billions of rupees left that it cannot use.

India’s total exports to Russia fell 12% to $2.8 billion over the past 11 months. Conversely, its imports from Russia have almost quintupled to reach the equivalent of 42 billion dollars.

“It’s a problem”Foreign Minister Sergei Lavrov said on Friday on the sidelines of the meeting of the Shanghai Cooperation Organization. “We have to use this money. But for that, these rupees need to be transferred to another currency, and that is what is being discussed”.

In fact, the rupee is far from being on the scale of the dollar. Unlike the greenback, it is not accepted worldwide.

Internationalize the rupee

India has recently succeeded in convincing several countries to accept the rupee as payment.

In other words, Russia will now be able to spend its rupees in several countries such as Nepal, Bhutan, Myanmar, Sri Lanka, United Arab Emirates, Iran, Iraq, Yemen, Bahrain, Oman, Qatar, Saudi Arabia , Syria, Jordan, Lebanon, Germany, Singapore, Kenya, England, Germany and Egypt.

So many countries that have mainly oil and gas to offer, which Russia does not need. But it still opens up a realm of possibilities.

Russia would prefer to be paid in Chinese currency (yuan). The reason is that the Middle Kingdom produces many products that Russia needs. Especially smartphones, personal computers or motors.

But this idea is struggling to pass the New Delhi side. Two Indian banking officials said earlier this year that the Reserve Bank of India (RBI) was not in favor of settling foreign trade in yuan.

In fact, that was tantamount to making concessions to its major Asian competitor. And despite Vladimir Putin’s intervention, the grievances persist.

The solution would be to use a stateless currency. A currency that does not privilege any particular country. Bitcoin, which is a currency as well as a (two-in-one) payment system, is the obvious candidate:

“Bitcoin is the answer to the question that doubts Warren Buffett. »

Bonus, its excess electrical energy can be converted to bitcoin. This is what Argentina should do instead of contracting debt with China.

Its huge surpluses of hydraulic energy would allow it to mine bitcoins. Selling bitcoins abroad would reduce the pressure on the exchange rate. (Imported) inflation would be further reduced.

Argentina bans BTC purchases

In a press release published last week, the central bank of Argentina recognized the ban on exchanges from buying bitcoins abroad.

Argentina does not have many bitcoin miners. So exchanges have to buy BTC abroad to meet the demand. Problem, the central bank of Argentina is one dollar more.

Another problem, the inflation rate has reached 100%… Argentinians keeping their savings in pesos saw their purchasing power halve in just one year!

Hence the recent poll push from Bitcoin-friendly candidate Javier Milei. The latter aims to allow all currencies (dollar, euro, personal, etc.) to compete within Argentina’s borders.

However, only the very rich can afford to buy prestigious real estate, master paintings or shares in American or European multinationals. Lack of desirable assets which appreciate as fast as inflation is the cause of great distress to the poor.

All this has changed since the advent of Bitcoin. Unlike Picasso, it is possible to invest in Bitcoin from 10 dollars.

Chainalysis believes that Argentina is one of the countries where people are adopting bitcoin at the fastest rate. But when it’s too late, it’s too late…

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Nicolas T. avatar

Nicholas T.

Journalist reporting on the Bitcoin revolution. My papers deal with bitcoin through geopolitical, economic and libertarian prisms.

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