Kuwait Financial Centre, also called Markaz, believes using Bitcoins would save payment transaction costs for oil exporting countries as according to it sending and receiving the digital currency of any denomination is just a matter of seconds and costs next to nothing. Apparently, for this reason, it suggests that oil trading should be done in Bitcoin.
The organization also realizes that whereas 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, the Bitcoin comes with several advantages like instant payment and almost no transaction fees.
There are apparent benefits from accepting Bitcoin as part of payment for international transactions; for instance, it will reduce transaction time and costs for the GCC which are heavily dependent on oil exports which comprises of 90% of total exports and forms 75% of government revenue.
The research paper by Markaz says that the measure could be of great benefit for the oil exporting countries as it would mean net saving of the massive money flows through Bitcoin clearing houses. However, skeptics don’t believe that this is going to happen in the near future, particularly, the US won’t take it easy as it is direct threat to Dollar Hegemony.
Will Bitcoin Challenge Petrocurrency?
It’s no more a conspiracy theory that US always keeps its interests at the top of anything else and several wars it has waged over the decades have been to protect its interest, particularly protecting the dominance of the USD. Therefore, any debate on the possible consequences of the GCC’s decision to accept Bitcoin for trading oil is a natural outcome.
The first reaction that came from unexpected quarters is that as is expected, the US would certainly not sit and watch the dollar losing its petrocurrency status and would do whatever needs to be done to defend its national currency. From Saddam Husain to Colonel Kaddafi, whoever challenged the USD monopoly has been decimated.
However, it’s also true that some OPEC member states not particularly friendly to the US, have been asking for denominating their price for hydrocarbons in other than the USD. Given the fact that Bitcoin is extremely volatile, the decision to accept Bitcoin for trading oil could also lead to instability and differences in returns as the prices of the digital currency change dramatically.
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