Bitcoin Forum

Oil producing countries, particularly in the GCC, could benefit if they would use bitcoin in oil trading, instead of dollars, Markaz’ research department argues.


 

 There have been a number of proposals in the past to trade oil and gas in another currency than the US dollar, for political as well as for monetary reasons. Some OPEC member states not particularly friendly to the US, whenever there was a crisis of some sort, have been making repeated noise about denominating their price for hydrocarbons in another than the US currency, but have never quite managed to agree on an alternative.

The most active countries today that pursue a no-dollars-for-oil policy are Iran, which encourages all trading partners to pay for oil in a currency other than the US dollar, and Russia, whose flagship company Gazprom, the largest extractor of natural gas in the world, recently told oil importers from China and Japan that they should pay their bills not with greenbacks, but preferably with yen, yuan or even ruble.

But a new report (Disruptive Technology: Bitcoins, Currency Reinvented?) recently issued by Kuwait-based investment banking and asset management firm Kuwait Financial Centre, also known as Markaz, even goes a step further: Oil producing countries, particularly in the GCC, could benefit if they would use bitcoin in oil trading, Markaz’ research department argues.

This comes a bit as a surprise, since bitcoin as an unregulated and — as of now — highly volatile cryptocurrency, has no manifestation other than bits and bytes stored somewhere in the virtual space and seems not to be the most reliable means of trade for the world’s most sought-after commodity.  The idea is not new, though: There has been an Internet debate about one year ago on what would happen if the Opec would adopt bitcoin as transaction currency. The outcome: Firstly, the US would certainly not sit and watch the dollar losing its petrocurrency status and would do whatever needs to be done to defend the greenback; secondly, China wouldn’t allow it as it wants the yuan to be a petrocurrency as well; thirdly, in the moment oil and gas gets priced in bitcoins, it would be exposed to the cryptocurrency’s extreme volatility with massive consequences and fiscal uncertainties for petroleum-exporting countries. Speculators had a wide and anonymous field to play.

So what did Markaz actually mean? They basically said that using bitcoins would save payment transaction costs for oil exporting countries, because sending and receiving bitcoins of any denomination is just a matter of seconds and costs next to nothing. For the clearance of oil payments through conventional banks, exporting countries currently have to wait one to three days and pay the usual banking fees.

But just for saving some transaction time and costs, would the GCC, where the oil industry currently accounts for 90% of exports and 75% of government revenue, as per Markaz’ own research, really be wise to channel these massive money flows through bitcoin clearing houses, which are, as per their nature, unregulated, work with open source codes and can get — at recent history shows — easily hacked and digitally robbed? This is open for debate.

Before any barrel will ever be paid for in bitcoins, it will be the Chinese yuan that has taken on the role as the dollar’s challenger. China already pays Russia’s and Iran’s oil in yuan and is busy setting up yuan clearing houses in major financial centres all over the world to facilitate the global money flow of its currency. This is, for now, probably a much better solution until the world knows what will rally happen to bitcoin.

http://www.gulf-times.com/eco.-bus.%20news/256/details/398622/kuwait-finance-firm-suggests-trading-oil-in-bitcoins

It seems it is not that easy as we tought implementing, as they said "unregulated" cryptocurrency, but the first step, the idea of Bitcoin and

oil working together has already made, let's see what happens...

If oil would be priced in bitcoin, volatility would be no problem. As the oil/bitcoin ratio would be fairly stable within a short timespan, it's the dollar and other fiat currencies that will start to fluctuate in price against bitcoin and commodities, not the other way around.

You are looking at it from the wrong perspective.

This is acceptable but as it says this would scare the US a bit
The petrodollar is called the petro dollar because it is used as a means of exchange for oil commodities worldwide if the US loses its backing as the premier world oil currency something the Yuan is already doing to Bitcoin it weakens their rate :).
That said lower cost transactions have utility to all so I can see this being implemented sooner than later in Kuwait
Smart idea.

Link to previous post and discussion

https://bitcointalk.org/index.php?topic=672965.msg7619725#msg7619725

It would make a lot of economic sense to reduce dependence on $ as reserve currency
But not sure the Kuwaitis have the ability or desire to piss off Uncle Sam at the moment

Been watching the news lately?  No one considers the US much of an influence in global affairs at the moment.  Eventually that will trickle down to the financial level as well.

Still long way to go! China has been oppressing the distribution and development of BTC. They wouldn't allow circulate BTC and never choose BTC as payment for oil or anything for the time being.Probably one day they remove the restriction.

This is a really great podcast about this:

"Bitcoin for Oil? The Latest Threat to the Petrodollar System"
https://www.youtube.com/watch?v=9ymMYSyUSjQ

I would love to see it. Not only would bit coin skyrocket in value but oil prices would likely come down with a currency that isn't constantly devalued. All it takes in one oil wealthy country to open the spigot.

kuwaiti finance firm.. i really doubt they are good guys. they just want the US to keep their paws off of influencing everything in the mideast.

Someone should start a PetroCoin.

Better go slow and steady. Oil-for-food -> Oil-for-btc ;D

in the future we can see, it is impossible.

Petrodollar is going to be attacked by many countries, some ideas are emerging. And I like this one ;)

If only Gidaffi said bitcoin instead of gold, he might still be here today

My block eruptors would make a small fortune if OPEC adopted BTC. We'd look back at $1200 and laugh at the little bump and make jokes about everybody who panicked and sold out at $400. And the professor dude who predicted $10, I'd hate to be in his shoes.

Does anyone know if a bitcoin/oil chart exists?

Oh, this would be genius. There's been talks of moving away from the petrodollar for years now. What if Bitcoin was the new petrodollar? Moon Andromeda galaxy, here we come!

If this is finally done, it would be great.

However, BTC/oil ratio would fluctuate a lot.

I think a lot of people would turn the old miners back on at that point. Oil being backed by a stable deflationary currency would also reduce the number of conflicts among oil producing and oil importing countries.

yeah... after BTC jumped to $1200 each
the BE cube wont making any profits... extremely high diff. haha
but, anyway hope we can do something with Block eruptors...  :D

If it hits 1200 I am turning my 100 gh block erupted blade set back on for sure. It pained me to turn it off but the electricity bill was even more painful.

As rich as we would be, the countries we live in would be in a bad way. Let's do it!

Bitcoin doesn't have enough liquidity to be the currency that oil trades in, nor does it have a large enough market cap.


....Maybe in a few years though

Agree completely.  I suspect bitcoin will need at least a 15-20X increase in current market cap for any serious OPEC players to really consider using in lieu of USD.  Just more saber rattling by the oil-jockeys imho.

This is one of the most surprising stories in recent memory, and 'yes' it does seem a bit too early.

We can't be rich if everyone else is poor as shit. The Internet would be shut down.

The US government wouldn't be happy about that. One of the things that supports the US Dollars position in the world is it's near ubiquitous use in the oil trade. It would be beyond huge for Bitcoin though.

Bitcoin is also priced in USD. So pricing oil in bitcoin is not that much different than pricing oil in USD.

I think it is just the oil minister (IIRC?) showing his frustration with the US dollar and the US government.

The recent russia-china nat gas deal is around $20B - $30B a year I think. Most inter country oil deals would probably be pretty massive but they'd no doubt start with small transactions to test things out. Daily dollar transactions are in trillions of dollars so oil transactions don't disrupt the dollar index. Baby steps.

That really isn't correct because The Dollar has had a proven track record for a while before the debasement of the currency it was found to be the best option for transactions around the world.

Oil has been measured to expire earlier than expected in 50 years aprox. If I was big in the oil game I would move a legit chunk of my money in BTC.