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At September 2022, Russia declared a 'crypto international trade' that uses cryptocurrency for international trade settlement.
Russia, the world's largest natural gas exporter, announced the use of cryptocurrency in trade settlement. It signal the advent of the new era that 'new energy currency' will appear after 'petro dollar'.
In 2022, the world is suffering from severe inflation. One of the main causes of the current 'hyperinflation' is soaring energy prices. The outbreak of war between Russia and Ukraine and the resulting Western economic sanctions against Russia have halted Russia's energy supply to Europe. As a result, energy prices in Europe soared 28% at September 2022. Russia's energy supply has become a big 'Butterfly Effect' due to the characteristic of 'global village', soaring oil prices around the world and causing the world to tremble with severe inflation.
At this point, Russia suddenly declared Crypto International Trade. Why did Russia choose cryptocurrency, not ruble, for international trade settelment? What future is Russia envisioning?
A rational conjecture is possible by analyzing at Russia's move following the expulsion of SWIFT after the outbreak of the war and Bitcoin(BTC)'s characteristics.
# Russia and Oil-producing Countries Wake Up to 'Energy = Bitcoin' Formula
After analyzing Russia's moves and the characteristics of Bitcoin, the answer is simple. The fact is that energy and Bitcoin eventually have an interlocking relationship.
The unique characteristic of Bitcoin can create an integrated phenomenon with energy. This is the PoW(Proof of Work) operation method and the limited quantities up to 21 million.
The PoW refers to the operation method of operating a mining machine that produces cryptocurrency. Energy is essential to PoW. This is why energy-producing countries will head to Bitcoin mining according to Russia.
Russia has begun Bitcoin mining at the government level this year. As Western economic sanctions began in earnest, the government began preparing a bill to operate cryptocurrency mining sites in May. Two months later, in July, Russia announced the legalization of Bitcoin mining for overseas sales. The Ministry of Finance and the Central Bank of Russia has established a system to manage mining sites and manage Bitcoin mined.
But the move was only not for Russia. A number of 'oil-producing countries', including the United States, Kazakhstan, Iran, Kenya, and Paraguay, have begun mining Bitcoin mining at the government level. Bitcoin mining by oil-producing countries has begun in earnest.
At this point, Russia, the largest exporter of natural gas, declared 'crypto international trade' and Bitcoin mining at the government level. A day after Russia declared the crypto international trade, Russia announced its official position that it will use stablecoin linked to investment products. Already in an interview at the end of 2021, Putin of Russia cleary represented he understood the exact characteristics and values of Bitcoin by mentionioning Bitcoin as a 'value store'. These conditions enable speculation that Russia will use Bitcoin in crypto international trade as an investment product linked to new currencies.
Meanwhile, Russia's crypto international trade is likely not to simply end in the case of Russia. Due to complex international interests, there are many countries with poor value of their currencies despite their abundant energy reserves. Venezuela, which has the world's No. 1 oil reserves, launched 'Petro', a cryptocurrency linked to oil in 2018, but has been relegated into the dust bin of history. Venezuela had couldnt find the way to circulate the petro without finding an ally because the relationship with the United States was strained and collapsed. However, Russia's crypto international trade through Bitcoin can greatly stimulate Venezuela, which can produce abundant energy. It will not just be Venezuela. Is it a coincidence that Saudi Crown Prince Muhammad bin Salman ignored President Biden's request for increasing oil production to defend against soaring oil prices? And what can the event really mean?
# Limited Quantity 'Premium' Bitcoin Heralds a New Modern History
The limited quantity of Bitcoin is the reason for increasing the intrinsic value of Bitcoin. Analysts say that the value of gold, a traditional asset, will drop significantly as a gold mine capable of producing $12 trillion worth of gold was discovered in Uganda in February 2022. On the other hand, Bitcoin was carefully designed with a limited quantity of 21 million, as stated in the white paper published in 2008. Along with the fact that additional issuance is not possible, the majority of Bitcoin has been lost, and its scarcity has increased further. In particular, Russia suffered an official freeze of $300 billion of its hard-earned foreign exchange reserves due to economic sanctions. And the whole world watched the Russia's case. Russia and the world watching this have become suspicious of the intrinsic intrinsic value of the dollar.
Russia's declaration of the crypto international trade seem trigger a era of the 'new currency'. Russia can use its natural gas for production in Bitcoin and use Bitcoin for crypto international trade. If Russia makes a success story, Russia's paradigm will be applied to energy-holding countries, opening the era of 'Energy Bitcoin." The era of producing Bitcoin through energy and the Bitcoin produced in that way being used for energy transactions again will be begun.
"The era in which energy becomes Bitcoin and Bitcoin becomes energy will come."
권승원 기자 ksw@