Assessing Bitcoin's Impact and Challenges in Oil Trading

So, if Iran decides to use Bitcoin for oil transactions, there might be some issues pop up. What are the fixes? Or if we're out of options, let's think about the implications. I think the challenges we might face are: # Relying on petrodollars could shake up the market! # A reliable currency might be essential for different contracts! # Long-term strategies might hit snags! # Controlling prices could become a headache! # Mining could eat up a ton of energy!

The bitcoin is volatile normally the price has never been stable so you don’t need to be worried about about the price instability thats its nature. Stable currencies like you said could be needed but they are looking at privacy which most stable currency can’t provide like bitcoin will give

Firstly , I think you're missing something about the new regulatory shift. The new directive is that Bitcoin will be used for settlement not logistics. So using "transport" is wrong because Bitcoin will only be used to handle the payment side not the not the physical trade. The market at the moment doesn't even seem to be stable. So I think it’s more about changing the current power structure. Any shift away from the petrodollar will definitely feel unstable at first. I agree with you on this. The volatile nature of Bitcoin makes it hard to use directly for long-term agreements. I strongly doubt that there's anyone who would want to deal with price swings when signing long-term deals. It'll only be problematic or will I say risky if Bitcoin is used as the pricing unit but if it’s just used to settle payments then I don't see it as a problem. I disagree with you on this. Bitcoin actually removes control rather than creating problems. I think that's the major one the reasons the Iranian authorities decided to use it in the first place. Your concern here is more like a general Bitcoin argument. It’s not really tied to whether it is used for oil trade or not. You need to understand that a lot of mining activities runs on cheap or excess energy that would've still been unused.

Did you means petrolbitcoin? Because I think what you want to against on this thread is bitcoin to be used by Iran? It will be profitable in long term. Not every fee will be paid in bitcoin. Are you saying you are wasting electricity at home? Mining companies are wasting electricity? Or banks are wasting electricity? No one using electricity means no job for electricity workers. If bitcoin uses electricity, it means bitcoin creates jobs.

Sorry!! Actually This is not a contradiction! What I really want to understand is that if Bitcoin transactions start, there is a possibility of many transactions, in which case there may be a lot of pressure on mining (since mining is related to transactions) and a lot of energy may be required! Which we should think about!

Wait, "uses Bitcoin to transport oil"? The wording is a bit off, but I guess you're saying it is meant to replace the petrodollar. Frankly the US and Iran are playing an equally dangerous game, as oil is one of the few sources of revenue that Iran even has left and they ship a lot of it via the Strait. It goes both ways, if they don't let any other ships out then they will end up getting blockaded too. The whole thing is just one gigantic mess instigated by Israel and actioned by Trump - without a plan of course. All of this talk of trading in Yuan and Bitcoin can happen on a small scale, but it's not going to happen and if it ever did then you can bet the US and/or EU governments would crack down on Bitcoin making it worthless - it's dangerous talk. Sensible presidents in America generally don't like things like the petrodollar getting displaced and have tools to fight back.

The petrodollar has already been a means to evaluate and trade in the oil market before now, so what other market are you referring? Moreover the propose of the Iran government in this field doesn't say they'd demand bitcoin payment to trade the oil but to accept it for taxation of oil tanks using the Strait of Hormuz for transportation which is ascribed to terminate Western sanctions. So apparently the value of the oil prices won't be manipulatable for the cause of the accepting bitcoin for transit fees in demand. Moreover petrodollar may still be accepted in the main oil market. The officials has also diligently scrutinized the system before taking this step which they find it very safe. So don't worry for them about what the obstacle could be because there's non in the figurative for now.

I would say that Iran is happy with the Yuan deal and they are not looking at Bitcoin at all. There is no need for them to look at it, there is really no version of this story where they had to take bitcoin and not anything else. They are aware that nobody in the world would pay with their fiat, and we also know that we are not going to see Russian neither because that's also sanctioned, so the only fiat that is not sanctioned but still sort of ally to Iran is Yuan from China, and they are happy to use that.

You did not get my point. I am not saying mining is not consuming huge amount of electricity, what I am saying is that if people are not using electricity, no job will be given to people working in electricity companies because people are not using it. That makes bitcoin relevant because it is using electricity for mining. Another one are miners that are using solar, wind turban or any other means of generating the electricity themselves. Solar as an example, solar panel companies make money as miners buy solar panel from them. Also solar battery companies make money. Those that will install it will also make money. Another one are the companies that are producing bitcoin mining matches. All created jobs.

Iran does not plan to use Bitcoin to transport oil, they trade oil in Chinese and Russian currencies to bulk of their buyers. They proposed to use Bitcoin as toll payment option for vessel passing through the Strait of Hormus. A lot of countries are already pondering on shifting from the Petrodollar and I don't see how that is going to be a problem to Bitcoin or even mining because it has no direct impact on energy cost.

I'm afraid your worries are misplaced. They're founded upon a wrong assumption. The amount of energy required by miners doesn't rise and fall according to the volume of transactions. Meaning, even an exponential growth in the number of transactions won't affect their energy consumption. There may be a surge in transaction fees, but the amount of energy consumed to mine a block doesn't necessarily change. They're not related.

Bitcoin can help in some situations, but it is not perfect for something like oil trade. The main issue is that Bitcoin price changes a lot. so if a country sells oil today and the price of Bitcoin drops tomorrow, they could lose money. That is why many deals prefer stable currencies. Also, big oil deals usually need long-term agreements and price stability, which Bitcoin doesn’t really provide right now. Take for instance , imagine selling oil worth $1 million in Bitcoin today and after a few days the value drops to $800k, that is surely a big loss.

One thing you need to understand, even though Bitcoin is used as payment for purchasing oil, Bitcoin cannot yet be used as a massive physical oil purchase. This means that even though Bitcoin is considered a hedge, currently Bitcoin cannot replace fiat currencies in general (especially the US dollar), even though this is happening in global energy trading. In tensions such as the current conflict in the Middle East, some think that Bitcoin shows better performance and is superior in terms of oil trading, but it is necessary to understand that Bitcoin's current role when used in global oil trading still has characteristics. speculative or very limited compared to mainstream exchange tools such as dollars and other fiat, so you don't need to worry too much if Bitcoin is used as payment for global oil, as I have explained above.

in this context, bitcoin may not be the most suitable option but in our current situation that being usa and iran being at war with each other, using bitcoin the neutral option is the best one for both sides. it’s no doubt iran proposes to receive fees in bitcoin

I understand your question but i think it’s coming from the point that you don’t understand some concepts of bitcoin. First bitcoin mining doesn’t actually depend on transaction, I will say that even without any transactions bitcoin can still be mined that’s why it is actually possible to see empty blocks without any transaction in it except the coinbase transaction which is for the block reward, so with or without transaction bitcoin mining wouldn’t be affected just that miners incentives will be. As for if there is more transactions due to this then it simply means more transactions leads to network congestion due to the limited size of block and as such transactions confirmation will take time except if you set higher priority fee since miners use fees as priority for picking each transaction. But this doesn’t still affects anything on mining as the network average time to mine one block will still remain at 10 minutes. But will this be any issue base on this case? NO, because realistically there was around 130 ships that was even remotely passing through the strait of Hormuz daily before the war, so that should have reduce now. But let’s say an extra 130 transactions on bitcoin blockchain daily wouldn’t be causing any congestion in my opinion.

Not entirely sure if its needed for oil trade, not saying it wouldn't be used, or shouldn't be used, if anyone wants to use it then use it, that's fine. Plus if all of Hormoz ships pay millions for passage in bitcoin, that will increase the buying rate a lot, and Iran wouldn't sell them all overnight, they would keep some of them, which would benefit a lot. But I am just saying, that's not needed, its not a "must", they could use other fiat that would be fine, they are not sanctioned by most of the world, so they could keep doing what they are doing so far. Obviously it would not be bad at all, it would work fine, so we should consider that both are a possibility at the moment and anything could happen and be ready for it just in case.

The fourth point, price contol wouldn't be a problem because every country would have to buy bitcoin from the open market and they will shoot the price of bitcoin. It would be a perfect scenario and a use case of bitcoin that could take bitcoin back into the bull market, and we may see another all-time high pretty quickly with this increase in demand. However, the problem is that the USA won't agree to this, and they wouldn't want Iran to get free money that they may use to develop more weapons and create more problems for the Western world.