Russia May Turn To Oil-Backed Cryptocurrency To Challenge Sanctions & The Petrodollar

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.

As RT reports, 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, China and Iran are currently pursuing currency swap agreements to eliminate the US dollar from trade.

One of the world's biggest crude importers, China, has also announced the launch of the petro-yuan to replace the greenback in oil transactions.

While currency swaps are being considered, cryptocurrencies, once they become less volatile, offer several advantages.

Instead of using various national currencies, they provide a common currency for countries seeking to avoid using the dollar.

 

They are also universal and flexible, easily convertible back to national currencies.

Cryptocurrencies provide yet another advantage to countries facing international sanctions.

They are anonymous and decentralized, which limits the effect of US economic sanctions on trade deals for countries like Russia, Iran and Venezuela.

 

Comments

peterk Oldwood Mon, 12/11/2017 - 06:55 Permalink

If all wealth is going to be tied into  CRYPTO, this means i just need to be able to crackENCRYPTION ALGORITHMS and i will be the rishect man on planet earth.Uptill now there hasnt been an incentive like this to  DECRYPT  encryption algorithms, so i think  once people realise this it wont only be the  CIA who can  crack encryption codes

In reply to by Oldwood

hola dos cola Oldwood Mon, 12/11/2017 - 07:48 Permalink

WASHINGTON, Dec. 11, 2017 /PRNewswire/ -- OilCoin, a project led by a team including Commissioner Bart Chilton of the U.S. Commodity Futures Trading Commission (2007-2014), is pleased to announce today the creation of the first legally-compliant digital currency based upon a physical asset. OilCoin will tokenize barrels of oil held in reserve with each token representing the value of one barrel. OilCoin's asset support will provide global users of digital currency with a meaningful safe haven from cryptocurrency volatility. OilCoin's public token sale (otherwise known as an ICO) is scheduled to begin in early 2018.https://www.prnewswire.com/news-releases/oilcoin-the-worlds-first-legal… 

In reply to by Oldwood

MEFOBILLS hola dos cola Mon, 12/11/2017 - 12:02 Permalink

Cryptocurrencies like Bitcoin are mostly commodity.  The have a price, which is volatile, as bitcoins are bought ....like commodity.  Bitcoin mining limits the amount of bitcoins (making them scarce) relative to goods/services.The Petro is a different animal.  It is not commodity.  It is money.  It is money that is uniquely transmitted by blockchain.  The amount of Petro's in money supply will be controlled, channeled, and have backing by law.  If the Petro is unstable in exchange value, then oil producers and consumers will not be able to price futures contracts.I expect the Petro will circulate outside of the nation of Venezuala only, and will also stabilize the internal Bolivar unit.It is a good move on the part of Venezuala and Russia.  Russian crypto Ruble is also money, not commodity:http://www.zerohedge.com/news/2017-10-17/russia%E2%80%99s-crypto-ruble-…Vladimir Putin is very much a law and order kinda guy. If you watch Putin operate in the public arena he always does so with an eye towards the law.  He believes strongly in the law.  And cryptocurrencies, despite their obvious benefits to a Russian economy that needs the type of disintermediation cryptos offer, operate in a legal gray area that makes Putin uncomfortable.So, the goal with Russian official crypto-policy is to stamp out the illegal activities – the money laundering, terrorism-financing, human-trafficking, etc. – while simultaneously using the technology to modernize Russia’s internal capital handling capabilities.This is what the crypto-ruble is all about.  It is a way for Russia and Russians to provide a gateway between the crypto-world and the so-called real one.  It ensures that this new form of ruble properly tracks capital flow through the Russian economy.By taxing crypto-rubles at the capital gains rate for those that cannot provide a paper-trail of ownership, Russia and Putin are incentivizing the development of low-cost crypto-payment systems to exchange rubles for goods only in cryptocurrencies that also track ownership, like Ethereum and others that have transparent blockchain histories.

In reply to by hola dos cola

Ghordius Thoresen Mon, 12/11/2017 - 06:54 Permalink

exactly. the article is non-sensical

Russia won't use BitCoin as currency. unless it can calculate in such, particularly for the imports of crude to be refined and re-exported

no stability of price = no currency for real trade

contracts and price calculation down to price lists, that simple

In reply to by Thoresen

Pearson365 Mon, 12/11/2017 - 04:27 Permalink

No confirmation whatsoever from the Russians that they will do this.  Just a crypto pimper's opinion.  The Russians will probably use gold for this.

BobEore Pearson365 Mon, 12/11/2017 - 04:56 Permalink

Or...they just might carry on doin what they be doin! Never forget...The RUSSIAN central bank is.... ah humm... a CENTRAL BANK.NOT an experiment laboratory for financial instruments... new ways of doing trade n commerce, or freedom from usury/debt/interest cartels. China ditto. Apparently, the agit-prop designed to convince us that the folks living east of the Dnieper are likely to do anything different from what human be-ans have been doing since time immemorial...has not been going so well ... so far. Or else, they WOULD NEVER HAVE RESORTED to lining up Russia with basket case Venezuela in a hail mary effort to make a case for "BRICS N THE NEW SILK ROAD"... or whatever pathetic excuse for geopolitical musings is on tap here today!

In reply to by Pearson365

opport.knocks BobEore Mon, 12/11/2017 - 05:58 Permalink

True for part 1 > "Elvira Nabiullina, the head of Russia's central bank, has been named the best Central Bank Governor in Europe in 2016 by the international financial magazine, The Banker."Which shows what these people think of US sanctions, they applaud people who effectively stand up to them. When the US talked about kicking Russia out of SWIFT, SWIFT responded by appointing them to the Board.The whole US "Imperial" exercise is failing, by targeting Russia the US has made them the global experts in:1. Fighting counter insurgencies (Chechnya, Syria)2. Developing strong local economies, they are currently assisting Venezuela and others. 

In reply to by BobEore

MEFOBILLS opport.knocks Mon, 12/11/2017 - 12:15 Permalink

Elvira Nabiullina is part of Atlantacist crowd, who are fifth columns within Russia.  Putin has been hands off with Russian Central Bank, allowing them to use neo-liberal policies.  At the same time, Putin has bought all of his countries gold output and used it as reserves, which then allows Ruble emission.  This is the loop hole that was used to get around BIS rules.Getting around the central bank was also done by Debt Instrument Swaps.  Both China and Russia give each other new debt instruments, and then China magically has Rubles, and Russia magically has Yuans.  All of this is within BIS operations, since private banks use debt instruments to create money.The new Crypto Ruble will bring in foreign capital and it will have an exchange rate to Rubles, bypassing the dollar.Stolypin group is also advising Putin, and they are not friendly toward Atlantacists, so Russian sitation has its own complexities.Russia is playing chess, while the West is playing checkers.

In reply to by opport.knocks

opport.knocks Davidduke2000 Mon, 12/11/2017 - 05:11 Permalink

Putin is interested in Russia's own national crypto and hired the Etherium co-founder Vitalik Buterin as a consultant."At the moment, bitcoin mining and selling are not regulated by Russian law. President Vladimir Putin has ordered the government to create legislation governing the status of bitcoin, other cryptocurrencies, mining, initial coin offerings, as well as defining everything that relates to digital money by July 2018.""The Ministry of Finance earlier suggested introducing mandatory registration of cryptocurrency miners and only to allow legal entities and individual entrepreneurs to participate."The only thing that can be safely said is that things are under review.https://www.rt.com/business/412132-bitcoin-cryptocurrencies-mining-russ…

In reply to by Davidduke2000

Davidduke2000 opport.knocks Mon, 12/11/2017 - 10:15 Permalink

no he said he will make sure that the transactions are legal and people need to know with who they are dealing. cryptos are nothing more than an index that has zero value. However people can gamble $25, $50, $100 per unit knowing they can lose it all, but it is such small amounts that people can accept the loss, cryptos are simply made up by anybody who starts a website and start selling cryptos like the old pyramidal cards that you have to sell 5 cards to be on the money making machine, the more cards you sell the more pennies you get.

In reply to by opport.knocks

White Devil Mon, 12/11/2017 - 04:49 Permalink

The idiot masses are growing intrigued with cryptocurrency.
I am confident somebody could have an ICO for something named “Shitcoin” and enough fuckers would buy it to make it take off.

oncemore Mon, 12/11/2017 - 04:57 Permalink

They have to.They would ditch USDThey would ditch SWIFTThey would ditch Chicago CME and London price setting exchange.US crack oil industry would gladly join to bypass domestic regulator, whom they have to bribe now.Financial industry would suffer, but those are Jewish hasbara anyhow.

opport.knocks Mon, 12/11/2017 - 05:02 Permalink

"“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." (from the original article)The article is total BS. If party A is selling oil to party B how can either party remain anonymous? It has to be shipped somewhere.How can you back currency with a consumable product like oil, it is the definition of "... and it's gone"As for cryptos being anything other than a pseudo-currency, wake me when I can buy products and services in Bitcoin without conversion to a national fiat. 

webmatex Mon, 12/11/2017 - 05:17 Permalink

Beat em till they scream.Crypto backed by oil - even better than Btc and the dollar - gotta get some BrixCoin - protect me from FEDs - another kick in the testicles for the BIS.Hooooooray! 

Aengrod Mon, 12/11/2017 - 05:21 Permalink

Hah another one of those typical articles: what will russia do nd why alll of us should be scared or concerned blah blah blah. Russia is land filled with pathology, alcoholism, HIV, where mooslems breed like rabbits and will outnumber native russians in two generations (for fighting age cohorts) russia is a failed state, face it, to even entertain a thought that they pose any sort of threat .... ridiculous. Just contain russian shit within its borders and be done with it.

tuetenueggel Mon, 12/11/2017 - 05:50 Permalink

Russia won´t accept any crypto currencies as they are made by USA to go on fooling world after their greenshit has been crippled by gold and reality.Simply, but if one only knows 10 % of world ( USA ) that´s the result of stupidity.

just the tip Mon, 12/11/2017 - 06:15 Permalink

for all the CIA demonizing, and US hate that any discussion of venezuela brings, i can't help but think that most of venezuela's problems are venezuela's problems.  which is another way of saying that the US maybe fucked and a failed state, but venezuela is gonna beat us there.  gross incompetence, negligence, ignorance, or arrogance, or some other "ence" or "ance".two things.about six months ago, russia, impounded a venezuelan tanker is some carribean country over non-payment of debt.https://www.reuters.com/article/venezuela-oil-tankers-seizure/refile-de… straw that broke my camel's back on my opinion of venezuela came this past week, when i read that a chinese company was suing PDVSA for non-payment of aquiring steel products, probably pipe.  and to top it off, the chinese company was suing PDVSA in a US court.  and to make matters worse, it came out that PDVSA undertook this action to conceal who the steel products were really being bought for/by.http://en.mercopress.com/2017/12/08/chinese-government-oil-company-suin….  you will say these are petty sums.  $20mil US here, $50mil US there.  but if they are so petty, why doesn't venezuela just pay them already, and why are russia/china taking the legal actions they are?  and in US courts?  on top of this throw in the constant building of bridges propaganda at ZH heralding loans from Gazprom and Roseneft mortgaging PDVSA even deeper. if russia/china file further suites towards PDVSA in US courts, i'm sure the US will be the bad guy in all of it.  and gawd forbid anyone blame venezuela in any of this.

MEFOBILLS SmallerGovNow2 Mon, 12/11/2017 - 12:26 Permalink

Venezuala is not broke, they have some of the world's largest reserves of oil.  They are broke in foreign exchange, which then makes their own Bolivar not be good external to the country.By having Bolivars not be "exchangeable" then debt contracts, say in dollars, become unpayable.  It is part of the swaps con game embedded in private debt money systems.  Usury is the taking of something for nothing, and the usurers of the West would love to buy up Venezuala for cheap--- to then erase the debts.  In other words swapping something real - like Venezualan land - for something unreal.  What is unreal and outside of nature?  Paper claims that go exponential.  How are you going to collect the debts?  Send in the Marines?Russia gave Venezuala a loan, payable in future oil output.  The loan may be denominated in Rubles or Dollars, I don't know.  But, either unit is exchangeable and will pay some of Venezualas external debts, mostly denominated in dollars.Also, Russia is lining up to sell Venezuala Russian military gear.  China has also given Venezuala loans.  Outside of bankster dollar debt game, Venezuala is a good credit risk.

In reply to by SmallerGovNow2