Good Morning Everyone,
There has been a flood of significant announcements this past 24hrs as bitcoin price relative to the melting USD shitcoin rallies toward $46,000 - an almost 40% increase now from the lows.
Perhaps the most significant of them is the Russian Government and Central bank agreeing to recognize bitcoin and crypto as a form of currency. Only last month the Bank of Russia proposed banning crypto mining over concerns it could endanger the countries financial system. Now we’re seeing a full 180.
According to Russian publication Kommerstant, that reported on the development:
“The government and the Bank of Russia have agreed on a future regime for the circulation of cryptocurrencies in Russia before February 18, they will prepare a draft law on the circulation of digital currencies in the Russian Federation, in which cryptocurrencies are recognized as an analogue of currencies, and not digital financial assets.
Their circulation in the legal sector will be possible only with full identification, through the banking system or licensed intermediaries. Operations equivalent to more than 600 thousand rubles. must be declared, transactions outside the legal sector for such amounts will become a criminal offense and an aggravating circumstance under the Criminal Code, fines will be introduced for the illegal acceptance of cryptocurrencies as a means of payment. Mining and related issues of DFA are not affected by the concept within which the project is being prepared.”
The big picture of what is going on here in my opinion, is a move away from the US dollar by Russia and others, specifically China, to insulate themselves from financial sanctions from the US, alongside the decline of the US as the world super power.
I believe we are seeing the beginning of the end, for the US Dollar as the world’s reserve currency.
Years gone by, there was no alternative to the SWIFT system. So financial sanctions were very effective, and if imposed, would completely exclude a country from trading with the world. However the game board has changed in profound ways over the last few years, ways that most still do not realise, and Russia are acting accordingly.
We have seen Russia agree to a 30 year contract with China to supply gas via a new pipeline, that is to be settled in euros. A strong US narrative has been baking over the past couple of weeks about a war breaking out between Russia and Ukraine, the validity of which has been hotly debated, and also the US’ intention in fanning this narrative. We recently saw Chinese supreme leader meeting with President Bukele, and most recently the two Russian leaders met face to face with a promise to collaborate more against the west and released a detailed joint statement following the meeting.
The statement is long, and demonstrates the position of China and Russia by referring to the two throughout the entire 5000+ word document as “the sides”. The document begins as follows:
“Today, the world is going through momentous changes, and humanity is entering a new era of rapid development and profound transformation. It sees the development of such processes and phenomena as multipolarity, economic globalization, the advent of information society, cultural diversity, transformation of the global governance architecture and world order; there is increasing interrelation and interdependence between the States; a trend has emerged towards redistribution of power in the world; and the international community is showing a growing demand for the leadership aiming at peaceful and gradual development.
At the same time, as the pandemic of the new coronavirus infection continues, the international and regional security situation is complicating and the number of global challenges and threats is growing from day to day. Some actors representing but the minority on the international scale continue to advocate unilateral approaches to addressing international issues and resort to force; they interfere in the internal affairs of other states, infringing their legitimate rights and interests, and incite contradictions, differences and confrontation, thus hampering the development and progress of mankind, against the opposition from the international community.”
The statement goes on to expressly condemn the actions of Australia, the UK and the US:
“The sides are seriously concerned about the trilateral security partnership between Australia, the United States, and the United Kingdom (AUKUS), which provides for deeper cooperation between its members in areas involving strategic stability, in particular their decision to initiate cooperation in the field of nuclear-powered submarines.
Russia and China believe that such actions are contrary to the objectives of security and sustainable development of the Asia-Pacific region, increase the danger of an arms race in the region, and pose serious risks of nuclear proliferation. The sides strongly condemn such moves and call on AUKUS participants to fulfill their nuclear and missile non-proliferation commitments in good faith and to work together to safeguard peace, stability, and development in the region.”
Without getting ‘stuck in the mud’ on the politics, it is undeniable that the global landscape is shifting in major ways, and as the US appears to be declining, China and others like Russia are leveraging the opportunity to re-assert themselves on the international stage in what is a wildly complex game of power projection.
It will be interesting to see how the situation specific to Russia develops, and to what extent they adopt bitcoin. The move to do so however, alongside the obvious de-dollarization, demonstrates their intent clearly, and while they will do their best to regulate it, as previously discussed, they will simply be leading the trojan horse into the city.
I think the situation with facebook serves as a good analog for what i believe will play out. Facebook wasted years working on their Libra project and Calibra wallet, which was to be a closed system controlled by a powerful few. They wasted billions of dollars in the process and in the end, the regulatory blow back was too much, and the project appears dead in the water.
If facebook simply adopted an open, public, global protocol like bitcoin, it would not only have saved the last number of years and billions of dollars, but the innovation potential as a result will only be obvious in retrospect.
I believe the same is true internationally between nations.
While western nations are focussing on trying to control everything, and limiting the freedoms of their citizens, the most strategically advantageous thing any of them can do, is to adopt this open global standard as quickly as possible. Of the major nations, the one that does this first, stands to benefit disproportionately over time.
Check mate.
Hope you all have a great day, and i’ll chat to you tomorrow.
AK
Canadian Trucker Update:
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