Middle Eastern nations are exploring the possibility of settling oil contracts in Bitcoin even though they are skeptical of the currency. They view bitcoin’s post-sovereign nature as anathema. They are also considering the potentials of bitcoin for cross-border settlements in the energy sector. But reportedly, some are confused about it thinking bitcoin doesn’t have the legal framework. They argue that if bitcoin is brought to energy enterprises, it won’t be for at least another decade.
Oil producing countries expressed dismissive views about bitcoin as an asset, frequently referring it as a gambling conduit. The topic was in discussion at Davos in Switzerland where most of the leaders gathered for the annual conference. A businessman from Saudi Arabia rejected the idea that Bitcoin denominated oil contracts could ever be more than an outlier saying they have been trying to move beyond the U.S. dollar by settling oil contracts in euros. Bitcoin isn’t yet regulated was his allegation.
Crescent Enterprises CEO Badr Jafar said Settling of oil contracts in currencies beyond the dollar might be driven by political factors related to Russia and China. China is hyper-focused on both compliance and global market opportunities.
China’s new initiative
Reportedly China’s blockchain-based currency could offer a backbone for energy markets. The traders of oil and gas are using leverage and that leverage must be backed by financial systems. Bitcoin with a larger ecosystem is yet unable to afford the trading volume of a commodity. Provably, bitcoin lost its chance to be the dominant currency for settlements and will instead primarily be a store of value as per Wang Wei, one of the China’s revered bitcoiners. Several businessmen of China paid their view that the bank could offer an alternative to dollar settlement systems by 2021. Tilektes Adambekov, Chinese speaking Kazakhstani entrepreneur, joined the Chinese delegation for lunch in Davos to negotiate over the future of global markets over foie gras and fig chutney.
After returning home from China, Adambekov, who established an exchange called ‘’EBX crypto exchange’’, became focused on serving Russian-speaking crypto markets across borders. Kazakhstani has an open regulatory framework and strategically situated along the path of China’s ‘’Belt and Road’’ initiative. Adambekov’s exchange aims to support tokenized oil and gas options. Prime personalities are yet in favor of dollar as a king in commodities markets. To displace dollar from its place, it will take a long time because maybe Bitcoin showed some of its qualities but it still has some challenges.