Geopolitics & Cryptoeconomics: 2018 and Beyond

 The  price will fluctuate and short-term bubbles will eventually burst, but  there is no stopping worldwide analysts from reassessing and  re-imagining what the true definition of money is, or can be.If  you thought 2017 has been crazy for Bitcoin and Cryptocurrency, 2018 is  going to be absolutely wild. From states unveiling their own  centralized cryptocurrency to more nations officially recognizing  bitcoin as a medium of exchange. When tax season hits for many  Americans, the Internal Revenue Service (IRS) will finally come out with  more concrete guidelines on how to report the new asset class. The  Securities and Exchange Commission (SEC) will continue striking against  fraudulent ICOs and will classify a wide-range of crypto assets as  securities. In the global political and economic arena, we have China  inching closer to power-parity with the United States of America in a  non-militaristic fashion. France & Germany have called for a Bitcoin  Debate to be held at the next annual G20 Summit, a meeting between the  European Union and 19 of the wealthiest nations. 2018 will be the year  of Bitcoin diffusion, seeping into the markets and bureaucracies of  countries whether they like it or not. We may even see the first event  where the people of a sovereign nation decide to adopt Bitcoin as its  reserve currency, likely hyper-inflationary candidates being Venezuela,  Zimbabwe, and Argentina.

//SWIFT VS BITCOIN, BAN?

SWIFT  is the Society for Worldwide Interbank Financial Telecommunications,  also known as and was previously the only way to send and receive money  internationally if you are a nation-state. In our digital age, SWIFT  hilariously takes three days, on average, to send money globally and  does not work on weekends. SWIFT is centrally controlled mostly by  Western nations, particularly the United States of America which  leverages SWIFT as a political tool. If you do not play nice with the  U.S. or if you do something the U.S. does not like, you get cutoff from  SWIFT, receive sanctions from the United Nations, and your economy  cripples. Such nations include Iran, Russia, and North Korea,  whom are fascinated by the Bitcoin protocol and are expeditiously  testing it. Bitcoin is naturally attractive for countries that have no  other means of moving money internationally when the U.S. embargoes said  states. The Bitcoin protocol is a multitude times faster, more secure,  and decentralized way of sending money versus SWIFT, and Bitcoin works  weekends. The natural attraction then becomes a no-brainer answer  because effectively-speaking, SWIFT is inferior to Bitcoin as a means of  monetary exchange. I argue this: as more “enemies”  of the Western Allies get prohibited from using SWIFT, the greater the  proliferation of nation-states adopting Bitcoin as a method of  transferring money and thus, the lesser the influence of the United  States in geopolitics. The acceptance of Bitcoin by good or bad actors  further legitimizes what was once an unknown socioeconomic experiment.Albeit  individuals, small businesses, or multinational corporations, we have  now reached a point where nation-states are starting to pay attention.The  U.S. Dollar (USD) is the incumbent global reserve currency in our  current economic system. The U.S. Dollar’s dominance is akin to the U.S.  military’s strength, both of which play a crucial role in the uni-polar  American hegemony since the end of World War II. Unless the  representative leaders of the U.S. Republic concede to losing some  economic influence & power, Bitcoin will eventually be perceived as a  financial and/or national-security threat if it is not already. We can  agree that governments do not like things they cannot control, and they  cannot control Bitcoin. You cannot regulate a self-governing protocol.  You cannot fully ban a peer-to-peer system of money. You cannot apply  traditional rules and regulations to an entirely different type of  technology altogether. When controlling the original blockchain protocol  becomes out of question, we arrive at outlawing it. If the U.S. were to  ban bitcoins, labeling it as a financial and/or national-security  threat, the price will initially plunge in the short-term, but in the  long-run, it will only become more sacred. Previous results of past bans  we’ve witnessed include alcohol becoming more expensive during the  Prohibition of 1920 and marijuana becoming cheaper as it is being  legalized in the present. Admittedly, this is somewhat of a reach for  argumentative purposes as I do not believe there is a better analogy.  Perhaps the U.S. will attempt to criminalize bitcoins by painting a  false portrait that it only funds terrorists organizations and/or is  used by bad actors. I do not know, I am merely hypothesizing one of the  last ways which Bitcoin can possibly be stopped and if it can be, it  starts with the greatest Empire to have ever existed.

//PETRODOLLAR VS YUAN

At  the moment, Bitcoin is not as worthy of an opponent as the Chinese Yuan  to the USD supremacy. USD is strategically the most preferred method of  exchange worldwide, be it oil, shipping ports in the Netherlands, taxis  in Puerto Rico, or any international airport where it is always  accepted. The Petrodollar as it is coined, has purposely been the sole  medium of exchange for nations and companies to obtain oil, propping up the value of USD  since most of us have been alive. For example, if you were a British  oil company, you need to exchange for USD in order to buy oil and in  fact, it is probably wisest to not sell out of USD if your business  requires oil and you are going to need USD in the future.Iraq  & Libya were the only two countries that have tried to use  something other than the Petrodollar. Prior to the capture and  assassination of Saddam Hussein & Muammar Gaddafi, both leaders of  respective countries independently devised a monetary strategy to use  another form of currency to exchange for oil: Hussein shifting to the Euro and Gaddafi’s gold-money plan. 

 China  becomes the third country attempting to compete with the dollar on the  global oil exchange. North Korean shenanigans aside, China’s Shanghai  Futures Exchange offering oil for Yuan backed by gold is  the hottest topic in geopolitics and world economics today. Per Chinese  Authorities, pricing oil in Yuan that is easily convertible to gold is  one component to China’s ultimate plan to internationalize the Yuan and essentially challenge the United States Dollar  on the global theater. Countries that have expressed deep interest are  none other than U.S. sanctioned nation-states such as Iran, Russia, and  Venezuela. Further, in the last several years and with Art of War style, China has positioned itself to triumph the United States hegemony. China is in control of their national debt-to-GDP ratio and is the United States’ biggest creditor to the enormous Federal Reserve debt. To launch the eventual Yuan-Oil Futures Exchange, China has been accumulating at least five-thousand tons of gold the past decade, equivalent to over $321 Billion. China also imports oil from at least ten other nations and will easily be able to fill the marketplace of the Shanghai Exchange. China’s infrastructure investment in Africa is unrivaled by any other country, including the United States. Finally, China’s One Belt One Road Initiative  aims to claim economic influence throughout Eastern Europe, the Middle  East, and South East Asia. Military strength is not nearly as important  as it once was as economic power plays an ever-increasing role in the  21st century international arena, especially when comparing two nuclear  states that both have mutually-assured destruction. We are seeing the  very beginning of a worldwide shift from USD to the Yuan. The  Petrodollar’s days seem to be unfortunately numbered.

//IMPLICATIONS OF BITCOIN

The incumbent in power is rightfully too complacent as the head honcho of the current global regime. Japan, Russia, Venezuela, Saudi Arabia, the United Arab Emirates, Sweden, Germany, Argentina, Thailand and China are all advancing towards the new paradigm shift that is Blockchain Technology and Cryptocurrency.Bitcoin  serves as the inconvenient truth to China’s plan for international  monetary and economic dominance. China’s struggle to thwart capital  flight from leaving the country resulted in the complete ban of Chinese Cryptocurrency exchanges  in September 2017. This is not to be mistaken for a ban of bitcoins or  blockchain innovation, rather, a ban of the fiat to crypto on-ramps and  off-ramps to restrict the Yuan from exiting China. Since the ban of  centralized exchanges, Chinese citizens’ insatiable appetite for bitcoins is demonstrated by the explosion of over-the-counter & peer-to-peer trades via LocalBitcoins.  Because no government can control the Bitcoin protocol, I am convinced  that China has a master plan in the making. I believe that once China  reopens their exchanges, they will reveal their cryptocurrency version  of the Yuan, forcing Chinese citizens to first buy their centralized  cryptocurrency before entering the market of the new asset class. Doing  so, props up the value of the crypto-Yuan, drawing parallels to how  USD’s value is propped up in traditional markets. Of course, this is  sheer speculation on my part.In  geopolitics and global economics, the Bitcoin protocol acts as a  remarkable wildcard, fundamentally playing a role as a nation-less  deflationary store of value against inflationary, flagged currencies.  Few individuals have the luxury to speculate on bitcoins as an  investment vehicle. Bitcoin has proven useful to Venezuelans that have experienced hyperinflation and have specifically fled to using bitcoins. Unseizable assets are necessary during moments of steep, 47.5% raids on Greek saving accounts at the hands of the government.  Bitcoin changes the dynamics of geopolitics by serving as a form of  value that does not rely on any central authority, but instead a public  platform. Once Lightning Network gets activated for the protocol,  Bitcoin will then test the waters as a world currency and will do it  transparently 24/7, 365. Nation-states can no longer ignore the  immutable blockchain, and countries that jump on the bandwagon first  will get a head start on where our digital age is bringing us. Bitcoin  knows no borders, is completely neutral and does not care whether you  are Muslim, black, female, male, homosexual, Republican, fat, or have a  weird fetish, as long as you can send or receive transactions, you are a  part of the financial revolution of the century. The 100% decentralized and most computationally-secure network on Earth  at the very least offers an option away from traditional forms of  money, and is a self-governing new system of money that is becoming  stronger every, single, day, it does not die. It is without a doubt that  Bitcoin is in a short-term bubble, but one can make the argument that fiat money is the real bubble  waiting to burst. 2018 and beyond will continue to prove that  separating the control of money from state is as obvious as the  separation of religion from government.