Mission & Name
US Foreign Policy (Dr. El-Najjar's Articles)
Meet The World's Most Powerful Bitcoin
Oil Price, Al-Jazeerah, CCUN,
December 4, 2017
Russian President, Vladimir Putin
Share the link of this article with your facebook friends
Cryptocurrency may be one of the biggest threats to
governments, security and the entire financial system that we've ever
seen. It can help fund terrorism and its anonymity makes it almost
impossible to track. Most importantly, it is poised to revolutionize
global finance and banking.
But our new Enemy No. 1 can't be
fought; it can perhaps be controlled. Banks have figured that out and
are bringing crypto currency into the fold.
superpowers—U.S., China and Russia--will have to face the new reality.
They love to hate it and hate to love it. Regardless, if they don't
embrace it, they won't be able to control it. An enemy you don't control
is a much bigger threat.
So, welcome to the new balance of
power, funded by cryptocurrency.
"This will 'uberize' banking to
the extent that the major banks are spending billions to get into this
Blockchain, says Frank Holmes, legendary gold investor, CEO of US Global
Investors and Chairman of
Blockchain Technologies (TSX:HIVE.V), the first public company where
investors can participate in the build-up and infrastructure of
"Bitcoin is the catalyst for crypto-mining the
way emails were for the Internet. When we first heard about the Internet
it was for the 'dark world', but with email, it exploded and became
mainstream. Ethereum takes crypto-mining further with smart contracts,"
Holmes told Oilprice.com
The Period of Uncertainty is
Russia is embracing it, with an eye to dominating
it. China has banned it. The U.S. is struggling to figure out how to
regulate it. But nothing can hold it back.
And now, many believe
the uncertainty is over.
China tried to
ban it in September, making it illegal for residents to trade in
cryptocurrencies or start-ups to raise funds through ICOs, completely
shutting down local cryptocurrency exchanges.
plunged 40 percent. Then it recovered almost immediately.
was a reminder that cryptocurrency is an autonomous system that can't be
"The ethos behind blockchain has been tested," Ken
Sangha, COO of Open Money and the Open Project in San Francisco,
told Forbes. "A central, organized and powerful authority -- China
-- said 'no' and we all have been tested worldwide because of it. But
the system flexed its muscles. It's doing what it was supposed to do."
And its muscles are the envy of tangible currencies everywhere.
Bitcoin hit a record $6,000 per coin on 21 October. Naysayers came out
of the woodwork to say it couldn't possibly last, and definitely
couldn't go any higher. Wrong again. By the last week of November it was
approaching $10,000 a coin.
Threats and Opportunities
security threats are clear and present, but let's put things like new
avenues of terrorism funding into perspective.
At this point,
terrorist groups are certainly eyeing their options with cryptocurrency,
and testing the waters.
In January, we saw what appears to be the first case, with the
Indonesian government claiming that members of the Islamic State were
transferring Bitcoin to each other.
Terrorists could create a
virtual currency that is
even more powerful and untraceable-one that can completely bypass
the global banking system. It hasn't happened yet, but the potential is
While terrorist groups may be mildly courting
cryptocurrency, it's not widespread. Speaking to
Newsweek, the Rand Corp's Joshua Baron, a cryptographer and
mathematician, says he doesn't really see Bitcoin as the "go-to currency
for terrorists"—yet. "It does not offer enough anonymity."
terrorism is a threat to the security of all states, another threat to
the U.S. is an opportunity for Russia: sanctions busting.
rise of digital currency means that Russian officials sanctioned by the
U.S. and the European Union have a
way to send and receive money.
While the U.S. Treasury's
Terrorism and Financial Intelligence unit puts sanctioned
individuals on a blacklist that keeps them from doing any business in
U.S. dollars, cryptocurrency, which isn't backed or controlled by any
state, makes it possible to bypass the blacklist.
But even this
pales in comparison to the bigger story here: Bitcoin and its fellow
cryptocurrencies are challenging the foundations of the global banking
Disruption of the global banking system at this point is
"inevitable", Bala Venkataraman, global chief technology officer of
banking and capital markets for Computer Sciences Corp, whose sister
company runs the IT backbone of the National Security Agency (NSA), told
"Cryptocurrencies could become the new driver of
international business and financial transactions, and that would be
transformative, if not revolutionary," says Dr. Makarenko, whose
consulting firm advises Fortune 500 companies.
here's the problem:
"If we don't truly understand how
they are operating, who is controlling them and how to avoid it being
used for illicit purposes, it may inadvertently turn out to be one of
the most innovative turning points in the underworld, whether it's
organized crime, terrorism financing or corruption."
Crypto 'Embrace' is All About Control
Just last year,
Russia was toying around with throwing Bitcoin
owners in prison,
characterizing cryptocurrency as an infectious pyramid scheme.
Now, Vladimir Putin's Russia is ready to embrace cryptocurrency—if only
to control it.
The real push started
in July, when a Putin aide unveiled his cryptocurrency mine: an
industrial-scale server farm called Russian Miner Coin.
In September, the company held an initial coin offering (ICO),
raising over $43 million in Bitcoin and Ethereum.
Then came the
regulatory push. After all, Russia has lost an
estimated $310 million this year alone due to lack of ICO
In late October, Putin issued
presidential orders for controlling cryptocurrency. This means
everything from taxing coin miners and regulating initial coin offerings
(ICOs) to creating legislation for new blockchain tech and setting up a
single payment space, presumably with the Central Bank.
the Russian government is
not entirely unified on the issue. The Central Bank thinks
blockchain is cool, but isn't keen on cryptocurrency itself. They'd like
to have something like a crypto-ruble that could track transactions from
cryptocurrencies into rubles.
It's far more than a fad.
Cryptocurrencies are becoming increasingly visible across Russia. Mining
is becoming so pervasive, in fact, that computer stores are having a
hard time keeping
graphic and video cards in supply.
The Russian Finance
Minister, Anton Siluanov, has even gone as far as to say that
cryptocurrency will soon be treated like
regular financial securities.
There's no point in
prohibiting this reality, says Siluanov.
The U.S. might be of
the same mind—broadly speaking, but it's moving at a slower pace in the
race to control the world's new currency.
And it's its own worst
enemy in this scenario, says Dr. Tamara Makarenko, managing director of
West Sands Advisory, a UK-based global consulting firm.
Russia, for one, is much more motivated. Cryptocurrency is a great way
to skirt sanctions.
"The U.S. is rightfully concerned about
cryptocurrencies, but like anything that may have a negative impact on
national security, there are way too many stakeholders that need to be
brought to the table to discuss, so the U.S. is not capable of acting
quickly," Dr. Makarenko told Oilprice.com.
conversations are taking place, but at the end of the day, it is in the
U.S. interest to secure the value of the global position of the dollar."
So, while China is banning cryptocurrency and the U.S. is still
trying to figure things out, Russia seeks to dominate.
like China's ban will be largely ineffective, so too will Russia's move
to dominate. Cryptocurrency is stateless, and that is its real power. It
can be regulated, but not enslaved.
Investors Flock to the Future
Right now, about
85 percent of the world's bitcoin trading volume comes from China.
Countries with heavily subsidized energy are obvious ether mining
haunts, but now the colder countries have something to offer that has
nothing to do with the government, and doesn't involve any legal gray
areas that will come under scrutiny.
With even Putin's IT
advisor getting into the great game, hoping to
challenge China's hegemony in Bitcoin mining, the race is on in full
force. They're hoping
to capture 30 percent of the global cryptocurrency mining share in
Kumagai, co-founder of giant GMO Internet, announced plans recently
over $90 million in a new Bitcoin mining business that will operate
as a fund, partially by soliciting capital from investors and repaying
them in cryptocurrency.
In North America, billionaire backing is
going into HIVE (TSVX:HIVE.V), via Lionsgate Entertainment and Goldcorp
Frank Giustra, a legendary mining figure known for being in the
right place at the right time—and always in front of a trend.
The new Great Game is virtual reality, and while governments are busy
trying to figure out how they can control it, investors are busy sinking
billions into what is fast becoming a story of industrial-scale
Now that everyone's seen how resilient
Bitcoin is, not only are things moving to the industrial phase, but
everyone's weighing the best venues for mining. Because even though this
is virtual reality, location still matters.
That's why HIVE has
set up in Iceland, where Mother Nature's natural cooling is friendly to
these massive computing facilities, and where the massive energy
required to mine cryptocurrency—in this case Ether--on an industrial
scale is cheaper thanks to plentiful
hydroelectric and geothermal sources. First, HIVE put $9 million
into Hong Kong-based
Genesis Mining Ltd., which just built the biggest ether-mining
facility in the world—Enigma.
Genesis acquired 30% of HIVE in the deal. A second deal in
mid-October saw HIVE close a
$30-million bought deal financing, completing a $7-million
investment by Genesis Mining, acquiring a second data center in Iceland.
And now HIVE is setting up in another 'cold country'—Sweden—with
From China and Russia to North America, virtual is the
reality. It's no longer a question of whether cryptocurrency will
survive. It's a question of what it will disrupt on its way to the top
of the global finance chain.
Link to original article: