Business

Report touts Bitcoins over bucks for OPEC … uh-oh

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What would happen if OPEC began demanding Bitcoin as payment for oil? It could be ugly.

The respected Kuwait-based investment banking and asset management firm Kuwait Financial Centre (also known as Markaz) just put out a new report (Disruptive Technology: Bitcoins, Currency Reinvented?) where it says the cartel should trade oil using Bitcoins, not dollars.

Of course, if that happened the U.S. government would be livid. Oil is essential to the American economy, as is maintaining access to oil coming out of the Middle East. We’ve already fought two wars over these things.

Adopting a different currency than the dollar is an idea that OPEC members have proposed before, especially when relations with the West are not going well. But these nations have never been able to agree on an alternative. OPEC has been arguing about the Bitcoin option for the past year.

And other nations don’t do fossil-fuel business in the dollar. Iran, for one, always tries to get its oil-trading partners to pay in a currency other than the dollar. Russia, whose flagship company Gazprom is 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 rubles.

Using Bitcoin to trade oil would bring serious problems. It’s proven to be vulnerable to hack attacks, it’s highly volitile, and it’s unregulated. There’s already talk of the Securities and Exchange Commission regulating Bitcoins in some way. And the volatility and vulnerability of the currency might improve as more merchants and organizations begin to support it.

The total market value of all Bitcoins grew by a factor of 56 during 2013.

Bitcoin-related startup companies have now attracted $228 million in venture capital, according to Venture Scanner.

Should the Bitcoin replace the dollar as the main petro-currency, the United States and its allies would lose a lot of control over the oil market. Wars have already been fought over establishing access to oil, and it’s unlikely the U.S. would take this lying down.

Via: Gulf Times


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18 comments
Raymond Gao
Raymond Gao

Who will be the Fed-Reserve? No Bernanke? No SEC?

Larry Yang
Larry Yang

LOL... using COD4 screenshot as photo.

Stefan Carter
Stefan Carter

VB seems a pile of shit recently - how can I take this seriously when your using a screenshot from a game to support your article? unliking

Maximiliaan Van Kuyk
Maximiliaan Van Kuyk

Ummm... leaving the petro dollar has been connected at least 4 conflicts in the past 30 years. Soo... yea goodluck with that.

Carl Tierney
Carl Tierney

Well as long as you are getting paid I can live with that. :) Bitcoins and their stability are far more in line with precious metals than an actual currency and unfortunately for bitcoins if another rival currency comes along that replaces it like ripple its value will decrease rapidly as its value is entirely demand based and has no backing by any government. As an investor seeking insulation from volatility you are far better off investing in gold than you are in bitcoins

Carl Tierney
Carl Tierney

this is so stupid, how much does venture beat get paid for this stupidity.

Karl Chappé
Karl Chappé

if you want stability, stick with fiat money

Andrew Stover
Andrew Stover

What happened to all the Bitcoin trolls on here?

Joel Reyna
Joel Reyna

Yeah and maybe they'll use Tor to keep the spooks away.

Animus Invidious
Animus Invidious

it seems obvious to me that it will, considering how it's set up. Less ability for people to fudge and steal

Irshu EK
Irshu EK

modern warfare..haaa, the memories

Josh Reighley
Josh Reighley

Volatility will go down as Bitcoin becomes more mainstream.  The volume necessary to trade on the scale of world oil trade would certainly deepen the market to the point where volatility was a non-issue..  Of it would also drive the price of Bitcoin up exponentially if it where to happen in one fell swoop..  

Ryan Casey
Ryan Casey

Joseph Crain says everything I wanted to say, except this: you misspelled "volitile."

Joseph Crain
Joseph Crain

 "...proven to vulnerable to hack attacks" is incorrect, at least with link provided.  Transaction malleability as discussed in the linked article created a vulnerability to social engineering, not hacking.  Basically it was possible to make changes to transactions and claim that they never went through, when in fact they did.  (Behavior in the bitcoin protocol well known and documented for couple years)  In the case of Mt. Gox, their wallet software was developed in house and did not properly account for this malleability and as such they were victim to social engineering attacks where clients would claim their Bitcoin withdrawals never processed and asked for their funds to be resent, to which Mt. Gox complied because their wallet software could not find any evidence of the original transaction.  It should be pointed out as well that while it is not certain, it is widely believed that Mt. Gox was involved in more serious fraud and used the malleability behavior as an excuse and/or red herring to detract from a larger scandal.

Espen Overaae
Espen Overaae

@Joseph Crain Let's call a spade a spade here. The malleability excuse used by MtGox was pure bullshit. They may have lost coins to a social engineering vulnerability brought on by their own incompetence, but not until long after most of their bitcoin holdings had gone missing.