Sanctions are often used as an inconspicuous means of control by international organizations against a country. This concept has also been used by states against other countries as a means of control. An example is the United States, which has issued sanctions against Iran and North Korea . These sanctions often take the form of trade and financial embargoes, which cause the affected nations considerable economic hardship.
Countries that are cut off from dollar trades, such as Iran, North Korea and Cuba, are most affected. This is causing serious economic problems for the affected countries, because the US dollar is at the moment the world's reserve currency. And many other countries are on the verge of imposing these sanctions, where one wrong move could set off their avalanche. El Salvador's success in adopting bitcoin as legal tender in the face of growing international pressure could serve as an incentive for other countries to prepare for the big leap.
The absence of an intermediary for bitcoin and other cryptocurrencies represents an interesting option for these countries, and the loss of value due to inflation is another factor that upsets the balance in favor of digital assets. Financial experts believe that the decentralized nature of cryptocurrencies is a viable alternative and offers a chance for real independence. A hot example of recent days is Russia, which is currently facing sanctions due to growing tensions with Ukraine. Although the country has reserves in dollars, the government has already begun the process of reducing them. And recent reports suggest that the Russian government is not going to ban cryptocurrencies and has taken steps to give the digital asset class legal status. Vladimir Putin himself has suggested in the past that cryptocurrencies could be used to settle oil contracts.
This path will not be easy, as the dominant countries will not want to lose their power in favor of a decentralized system such as bitcoin. Countries outside hegemony are slowly beginning to adopt as a possible path to greater economic freedom.
As a possible reserve currency of the world, Bitcoin (thanks to a fixed limit of 21 million coins) would gain an advantage over the seemingly "unlimited" nature of fiat currencies such as the dollar. Decentralization and real democratization of the miners would ensure that the asset is not controlled by a centralized intermediary, as is the case with Fiat Currencies or the central bank digital currencies (CBDC).
In the context of Russia and possible sanctions, cuts from the SWIFT system were considered, which could, however, be problematic for many states and companies. Another option being considered is a cut-off from dollar-settled international trade, which would be very simple, as US dollar trades go through the US Federal Reserve or other US financial institutions. Bitcoin and other cryptocurrencies are in principle free and no one can influence their transactions. Could this scenario be what will lead to greater adoption of virtual currencies by states?
Comments