The legalization of Bitcoin by Russia is a huge deal, here some reasons that it could cause the bitcoin price to skyrocket

Recently, many countries announced a legal status for bitcoin. This is great news, and I think especially the legalization by Russia will bring huge opportunity. A while ago, Russia announced that bitcoin will be legal from 2018 and later Putin had a meeting with Vitalic, the creator of Ethereum, followed by the release of a plan to create a Russian national cryptocurrency. Till today cryptocurrencies are illegal in Russia, people involved are even in risk of imprisonment. This is a policy turn of 180 degrees!

Russian policy made a big shift

Legalization of Bitcoin in Japan caused high trading volume and mass adoption under merchants. The same is expected for Russia, but here are way bigger potentials!

1 - Russian miners will re-decentralize bitcoin mining

One of the biggest problems in Bitcoin at the moment is the centralization of mining. Most of the mining takes place in China, this creates the risk of a 51% attack, that could be done by the Chinese government or PBoC.

Mining is big in China because the chips are produced in there, so they can use the full lifespan while in other parts of the world miners can mine a shorter periode with the same chips because of the shipping delay. The lifespan is getting longere over time, so this problem will solve itself.

Another advantage for Chinese miners is the combination of cheap electricity and the cool climate in the mountains. Russia has the same advantages and is also a big country. I expect that after legalization bitcoin mining will be booming in Russia and will re-decentralize.

By the way, India is in progress of legalization too, the same will happen there

2 - Russian businesses can use bitcoin to avoid restrictions and sanctions of the USA

Bitcoin doesn't care about borders and nobody can stop a bitcoin transaction, even the USA government. Russia’s trade is limited a lot by USA policy. Sanctions disallow many trade routes and bank accounts of wealthy Russian business people are frozen. By holding their wealth in bitcoin, their accounts can’t get frozen and by trading in bitcoin it can’t get influenced by the Americans. When the Russians adopt bitcoin for this purpose, a lot of value will flow into bitcoin and the price will skyrocket!

Imagine that all Russian companies, their trading partners and many of the Russian wealthy people exchange their fiat into bitcoin……….

3 - THE JACKPOT

The possible scenario I describe now is the jackpot and will make many of the bitcoin HODLers millionaire. Today the US dollar is the world reserve currency and this has always been a big disadvantage for Russia (the USA can manage the world economy, freeze accounts and block trades). This makes Russia the perfect candidate to start holding reserves in BTC and dump a part of the fiat treasuries (mostly USD or USD based assets). They might want to do this, because this will undermine the reserve status of the USD and this could help to end the deepening depression of the Russian economy.

It is realistic to expect other countries to follow ones one county broke the ice. Even an armsrun between countries could start, because the first county to buy bitcoin will pay by far the lowest price and become incredible rich. In this case not billions, but trillions will flow into the tiny market cap of bitcoin, and the price will have to skyrocket to meet this huge demand.

This could cause the biggest price explosion bitcoin has ever seen!

Disclaimer:
I am not a professional investor and this is not investment advice, but just my thoughts. Every investor is responsible for his own investments!

Do you agree with this post? Do you have something to add or dismiss? Please discuss it in the comments!