We estimated recently that entire countries may choose to jump into a decentralized financial system flooded by CryptoCurrencies, in order to escape from the monopoly of the Western hard currencies.
Less than two months later, it was the turn of Venezuela to announce that is considering to issue its own CryptoCurrency. As MintPressNews reports:
Months after Russia became the first country to announce the creation of a state-backed Cryptorouble, Venezuela has followed suit, announcing the creation of El Petro, a state-sanctioned cryptocurrency to be backed by Venezuela’s extensive reserves of crude oil.
Venezuela has already broken free of Dollar dependence months ago when Caracas announced it would be trading its oil using China’s Petroyuan. Venezuelan President Nicolas Maduro also stated that he would like to begin trade with Russia in the Rouble. With Venezuela heavily sanctioned by the United States, El Petro looks to be another tool which Venezuela can use to continue and conduct international commerce without relying on Dollar based financial institution.
Crucially, while existing Cryptocurrencies tend to create their initial value through an arithmetic process called “mining”, leaving them heavily subject to market fluctuation, El Petro will be backed by a known commodity, oil, thus giving it a clear advantage for risk-averse investors. While the world’s most popular cryptocurrency Bitcoin, has seen its value skyrocket against the Dollar, some remain unconvinced of its long-term prospects for stability. A currency, backed by oil would, by contrast, ostensibly fluctuate in accordance with the well established global price of Brent Crude.
An official oil-backed cryptocurrency could work in tandem with Russia’s soon to be launched Cryptorouble, a digital currency which will ostensibly be backed by the vast resources of the Russian state. With western governments ambivalent about how to treat existing cryptocurrencies, Russia and Venezuela have taken the lead to both normalize cryptos while backing them by well-known assets.
More countries are expected to follow the example of Russia and Venezuela, or BRICS as a whole. An interesting case is Greece. Many in Greece are considering Bitcoin and other alternative currencies as a solution against the monetary dictatorship of the ECB.
Recall that, while Greece was the major victim of an economic war, Germany used its economic power and control of the European Central Bank to impose unprecedented austerity, sado-monetarism and neoliberal destruction through silent financial coups in Ireland, Italy and Cyprus. The Greek political establishment collapsed with the rise of SYRIZA in power, and the ECB was forced to proceed in an open financial coup against Greece when the current PM, Alexis Tsipras, decided to conduct a referendum on the catastrophic measures imposed by the ECB, IMF and the European Commission, through which the Greek people clearly rejected these measures, despite the propaganda of terror inside and outside Greece. Due to the direct threat from Mario Draghi and the ECB, who actually threatened to cut liquidity sinking Greece into a financial chaos, Tsipras finally forced to retreat, signing another catastrophic memorandum.
Under a really open-minded government that will seek to liberate Greece from the ECB dictatorship, Greece may become the next country that will choose to abandon euro currency sado-monetarism through its own CryptoCurrency. This will also permit Greece to find an alternative on the rapidly growing market led by BRICS. Under similar circumstances, the entire European periphery may follow. Countries who also suffer from the euro sado-monetary prison, like Portugal, Spain, Italy and Ireland could issue their own CryptoCurrencies in order to escape from the euro-tyranny.
But the CryptoCurrency alternative could be used by the eurozone countries also as a backup plan against a potential collapse of the rotten eurozone structure in the close future.
Again, the CryptoMarket anarchists have nothing to fear. A CryptoCurrency issued by BRICS, or some member-states, or even other countries separately, will not be a threat for the decentralized nature of the rest of CryptoCurrencies. On the contrary, it will give them a significantly wider field and greater opportunities for all kinds of transactions inside a dynamically growing economic bloc which, if nothing else, does not rely on wars and destruction to maintain its dominance.
However, authorities should not exhibit excessive control on certain issues. There should be a viable balance between free activity and regulation. Russia already works to regulate virtual currencies:
As the Russian government is working on laws to regulate virtual currencies, the country's finance ministry has proposed making their mining illegal. However, buying them will not be punishable.
"The penalties will be different, mostly administrative, but if someone created the cryptocurrency for the purpose of settlements, then there will be a criminal punishment," said Deputy Finance Minister Aleksey Moiseev.
Criminal penalties can also be applied to the creation of a financial pyramid or the issuance of a cryptocurrency to avoid tax, he said. The minister stressed buying bitcoin, and other cryptocurrencies would be legal.
Moiseev added that work on the bill could drag on, as it includes many new words and concepts now absent in Russian legislation.
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 reliability offered by entire countries who will back the global CryptoCurrency market through their rich resources and economies will normalize and stabilize the market, while will restrict the fraud, speculation and other illegal activity through Bitcoin and other CryptoCurrencies.