The rise of cryptocurrencies is offering a number of countries a chance to liberate themselves from mainstream financial institutions that have dictated trading practices for decades.
Oil is the prime example of this, as OPEC nations still index the value of oil in dollars – tying the economy-driving commodity to the American currency. The western superpower has imposed sanctions on countries rich in oil, hampering their ability to trade the resource.
Following in the footsteps of Venezuela, Russia and Iran may consider using cryptocurrencies as they look for an alternative to the dollar.
According to RT, an oil analyst foresees both countries considering virtual currencies as a method to sell crude oil. PVM Oil Associates Analyst Stephen Brennock says virtual currencies are a way to sever ties to the dollar.
“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.”
Oil producing heavyweights have been working on plans to cut out the dollar for some time now. China, Russia and Iran are set to agree on currency swap agreements to rule out the dollar from oil trade, while China are working on a petro-yuan deal with Venezuela to sidestep the greenback.
The likelihood of these countries trading in their fiat currencies is high, but it could be wise to consider the likes of Bitcoin as the choice currency to trade in.
Countries can easily convert their currencies to and from Bitcoin and the decentralized nature will offer sanctuary and respite from international sanctions in trade.