What the future has in store for crypto currencies?
by Martin Berger on 22 Jun 2018 1 Comment

The second half of the twentieth century was marked by the world economy suffering irreversible and potentially catastrophic changes. Once the US obtained virtually uncontested economic and military influence in the world, the Fed found itself in a position when it was able to print piles of dollars on demand without worrying about the overall sustainability of the global financial system. This resulted in decades of untamable warmongering, media mayhem and the cult of consumption that turned to be highly profitable for the US, that would exchange goods from all across the globe for useless pieces of green paper. Essentially, the con of the century has come to bear. The situation resembles a TV show where banks, corporations, rating agencies and governments have become a part of a huge conspiracy aimed at persuading the rest of the world that Washington’s securities are the safest asset in the world, even safer than gold, which has some real value on its own.


It was only logical that some alternative system would eventually contest American dollar’s dominance, and crypto currencies turned out to be the tool states were waiting for them to launch a process of de-dollarization. At the same time this article is not going to try to downplay in any way the fact that bitcoin was developed by American and British intelligence agencies to be able to move liquidity quickly without tying it to finance their operations overseas. One can note that the creator of bitcoin, Satoshi Nakamoto, turned out to be “a group of American cryptographers.”


It’s been noted that a limited number of countries has emerged as cryptocurrency havens that played a pivotal role in the development of cryptocurrencies. The top three around the world by the rate of adoption of cryptocurrencies are South Korea, Russia and Venezuela. And across all three, cryptocurrency is widely seen as a different means to a different end.


In South Korea, cryptocurrencies have been widely perceived as an alternative investment path that can potentially deliver enormous returns in a highly competitive environment.


In Venezuela, the rapid development of cryptocurrencies was triggered by an economic collapse trigged by Western sanctions against this oil-producing country. Some would argue that in that state cryptocurrencies are seen as a more convenient and reliable store of value than the destitute bolívar, despite its volatility.


As for Russia, the consensus is that the rapid rate of adoption of cryptocurrencies in that state was spurred by a combination of a perfect crypto mining environment and situational investor sentiment, backed up by the encouragement of authorities and a lot of local talent.


Furthermore, Moscow knows it’s an attractive option and is willing to sweeten the deal further, by offering a level of government support to miners and investors that cannot be found in the US or China. Some sources say that the level of official support can vary widely in various American states, while it’s noticeably absent in China.


Last month, Russia’s State Duma issued a preliminary approval of a draft bill that brings cryptocurrencies in this country’s legal field. The potential law defines cryptocurrencies as property and establishes parameters of transactions. The largest bank in Russia, Sberbank has announced the first official ICO (initial coin offerings) of Russia’s proprietary cryptocurrency. The Senior Vice President of this entity, Igor Bulantsev announced that it believes that this currency is going to be a pretty successful venture as both clients of the bank and investors are interested in exploring new options.


At the same time, financial authorities of various states have been pointing out to the risks associated with investing in crypto assets: the lack of protection of investors’ rights, the risks associated with the prevention of money laundering and terrorist financing, the lack of market liquidity, and operational.


As for Russia’s evaluation of crypto assets themselves, the Central Bank of the Russian Federation released a financial stability review, which states that today crypto assets do not pose a threat to global financial stability, since the volume of transactions made in this form of currencies remains relatively low. However, experts believe that crypto assets could put pressure on the traditional financial markets if they continue to grow at a breathtaking rate, while getting the retail and government investors on board. However, due to high volatility, cryptocurrencies are still not being regarded as a reliable investment vehicle.


Unlike the generally accepted official currencies, transactions in the crypto currency cannot be hampered by local authorities in any state. Therefore, there’s a general belief that in a situation when the US and EU impose sanctions against other states, a number of countries will be able to circumvent international sanctions through the use of crypto assets. For many countries that have been subjected to harsh sanction regimes, cryptocurrencies may become a viable substitute for international banking systems like SWIFT.


However, foreign capital instruments are not the only tool that states find themselves deprived of, as consumer payment systems like Paypal or Venmo are also limiting their operations in certain countries, which won’t be a problem anymore in the world with the booming cryptocurrency markets.


According to the recent statement of the head of the Iranian parliamentary commission on economic issues, Mohammad Reza, that was released by PressTV, as both Iran and Russia found themselves affected by Washington’s sanctions and a number of EU countries joining them, those states can replace dollar settlements for crypto settlements. In addition, the Iranian parliament called on the Central Bank of Iran to explore other possible options for the use of digital assets.


Against this background, many experts are convinced that cryptocurrencies can save the financial system in a situation when the previously unchallenged dominance of dollar on financial markets is coming to an end.


Martin Berger is a freelance journalist and geopolitical analyst, exclusively for the online magazine “New Eastern Outlook.” Courtesy


User Comments Post a Comment

Back to Top