Will Cryptocurrency (Bitcoin) Put The Final Nail In The Petrodollar Coffin Or Ignite A War

Article by WN.com Correspondent Dallas Darling
Not only does money talk, but it kills.

To be sure, and regarding Russia’s finance ministry working on a draft bill to legalize cryptocurrencies including bitcoins, whoever controls currency supply and rates can either enrich their own financial system and economies, or force other ones to commit financial suicide.

What’s more, and as more parts of the world increasingly move towards a cashless society, where goods and services can be purchased with electronic transfers through cryptocurrencies and bitcoins, will the monetary value of the U.S.-Saudi’s petrodollar or China’s  yuan renminbi (CNY) cause their spending and investing power to decline more, even leading to a severe collapse or war?

Money Will Be Met By Money – In This Case Bitcoins

Russia’s finance ministry and central bank are developing proposals to legalize bitcoins and cryptocurrencies in the form of federal loan bonds and savings accounts.

In addition to strengthening this virtual money throughout the Russian Federation, other states are considering doing the same.

Since it will be listed on stock exchanges, Russia also plans to regulate this financial instrument for individuals to acquire and circulate. “We believe it is possible for individuals to participate in the purchase of these instruments” said the deputy minister, and “these purchases should be clearly regulated and identified, and settlements in these cryptocurrencies controlled by the relevant authorities.”

Money, Not Morality, Is the Principle Commerce of All Nations

For now, China and a U.S.-Saudi alliance are anxious to prevent Russia from circulating and exchanging bitcoins and cryptocurrencies. Not only would such a move devalue the same Asian nation’s currency that introduced paper money, but the spending and investing power of the U.S.-Saudi petrodollar would decrease even more.

Consequently, Chinese authorities ordered Beijing-based cryptocurrency exchanges to cease trading and notified users of their closure. The U.S. has signaled a widening crackdown on the virtual money too. Along with warning investors not to dabble in Russia’s federal loan programs, the U.S. is leveraging Wall Street petrodollar financiers to attack the Moscow Exchange.

Bitcoins Can Buy a Lot More Than Happiness, Too

In 2009, bitcoins became the first decentralized cyrptocurrency to be circulated via Internet. Since they operated independently of a central bank, mainly as a digital currency in which encryption techniques were used to regulate the generation of units of currency and verify the transfer of funds, they posed a threat to many of the world’s state dominated financial institutions.

Indeed, cryptocurrencies such as bitcoins provided an outlet for personal wealth that was beyond government restriction, confiscation and taxation. What’s more, and unlike the CNY or petrodollar, federal governments and central banks found their circulation difficult to monitor, let alone track.

Money Equals Power and Control

The disturbing effects of money are well known, inciting everything from miserliness to crime and warfare.

As for the petrodollar and CNY, they’re backed by paper currencies against an oil standard. The petrodollar system actually replaced the gold standard in 1971, elevating the U.S. dollar to the world’s reserve system. Able to enjoy persistent trade deficits, the U.S. became a global economic hegemony.

Now that a large portion of China’s CNY is also invested through petrodollars, allowing both nations’ exports and imports and financial markets with a source of liquidity and foreign capital inflows, they’ve been able to manipulate the value of money and foreign markets.

A Bitcoin Saved Is a Bitcoin Earned – And Hard for the State to Control

Cryptocurrency, of course, changes this equation. In fact, central bank representatives have already stated the adoption of cryptocurrencies such as bitcoin pose a significant challenge to central banks’ ability to influence the price of credit for the whole economy.¹

They moreover stated as trade using cryptocurrencies becomes more popular, there is bound to be a loss of consumer confidence in fiat currencies, or paper bank notes.

Fearing virtual currencies pose a new challenge to central banks’ control over monetary and exchange rate policies, not to mention being unable to economically engineer society, both the U.S. and China would like to eliminate the virtual money.

The Real Health of the State

Is a future war plausible over Russia’s acceptance of cyrptocurrency and bit coins? If history is indication, the answer is yes.

To be sure, the primary reasons states go to war is over some kind of financial issue or for commodities, the most recent being Libya in 2011. Not only did it became apparent Muammar Gaddafi in Libya was attempting to develop a new African currency which could compete with the petrodollar, but the U.S.-backed International Monetary Fund wanted Libya’s 144 tons of gold currency (the gold Dinar) in its vaults.

Knowing an oil-rich nation would not accept a depreciating currency in exchange for oil and natural gas, the U.S. government decided to act.

In the end, war is not the ultimate health of the state but money – and, of course, now cryptocurrencies and bitcoins.

Dallas Darling (darling@wn.com)

(Dallas Darling is the author of Politics 501: An A-Z Reading on Conscientious Political Thought and Action, Some Nations Above God: 52 Weekly Reflections On Modern-Day Imperialism, Militarism, And Consumerism in the Context of John’s Apocalyptic Vision, and The Other Side Of Christianity: Reflections on Faith, Politics, Spirituality, History, and Peace. He is a correspondent for www.WN.com. You can read more of Dallas’ writings at www.beverlydarling.com and wn.com//dallasdarling.)

¹ www.wikipedia.com. See article “Cryptocurrency,” www.wikipedia.com.