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Is anyone pricing oil with Bitcoin? It seems that crypto would be the ideal type of currency for international trading. Is that not a thing because government w

Is anyone pricing oil with Bitcoin? It seems that crypto would be the ideal type of currency for international trading. Is that not a thing because government wouldn't want to give up control to a decentralized system that they don't run?

chrisco255 7y ago
Not yet, but maybe they will when the dollar squeeze causes their economies to crash.
- kebman 7y ago
  I'd say that is a good enough reason to buy. As they say, buy the rumour, sell the news.
selectodude 7y ago
Because, to use a technical term, the fuck is Saudi Arabia going to do with $400bn worth of bitcoin? After 1 year, assuming Saudi Arabia was able to procure every bitcoin that can ever be mined, past present and future, they would be worth $20,000 each. And then they have all the bitcoin that nobody wants.
- neilwilson 7y ago
  Dollars are similarly useless in Saudi Arabia. They use the riyal there. Outside of the US, dollars are really just government bonds that people hold as a store of savings. They have to be sold before you can do local transactions or pay local taxes.
  - selectodude 7y ago
    Saudi needs dollars to buy everything else since they make nothing and import everything. Everybody else will take their dollars, so it’s a worthwhile thing to have around for them. Sure, you can’t buy a kebab on the streets of Jeddah with them, but the chicken that kebab was made with was almost certainly bought in some way using those aforementioned petrodollars.
    - neilwilson 7y ago
      How does the seller selling the kebabs in riyal get the chicken given they only earn riyal? You need somebody who wants riyal for dollars. Why would the chicken seller not take the riyal since that helps his customers and do the FX magic themselves? "Local currency sales" is what marketing men recommend. It's just the latest form of vendor financing. Who wants riyal for dollars. People who buy kebabs in Saudi. Those who live and work there. As I said the dollars are useless in Saudi, because that's not the local currency stuff you need day to day is priced in. The point again is that in aggregate you can buy things in the currency you have and you can sell things for the currency you want. The financial system smooths the path to that deal - for a price. As anybody with a Paypal account and who trades internationally understands.
      - simonh 7y ago
        >How does the seller selling the kebabs in riyal get the chicken given they only earn riyal? They buy the dollars they need to buy the chicken off the Saudi national bank for Riyal. That’s their job. Controlling that rate is a primary way the SA government manages their domestic economy.
  - 0DHm2CxO7Lb3 7y ago
    Can always buy US weapons and politicians with dollars
  - zeofig 7y ago
    He's talking about Saudi Arabia, not random people in Saudi Arabia...
    - neilwilson 7y ago
      Saudi is random people in Saudi. Countries aren't sentient on their own.
      - selectodude 7y ago
        Well no, in this particular case it’s the house of saud.
      - zeofig 7y ago
        What is countries? I mean it's just atoms, man... This is all so trivial!
  - rckoepke 7y ago
    Currency is slightly more fungible than this. Not enough to invalidate your point, but worth noting that I've purchased food, transportation, lodging, and knickknacks in Saudi/Bahrain/UAE and Oman using USD. All of the above items, in each country. It's certainly not a universal currency though, I'd say the vast majority of vendors were not interested in taking USD. Even then though, generally you could find a private citizen/local expats from many other continents that would be willing to perform currency exchange to/from popular currencies at a rate profitable for them. Vendors/citizens of some other countries - Jamaica, many parts of Mexico, many parts of Canada, also are happy to deal in USD as a customary business practice, at least in my experience.
    - neilwilson 7y ago
      Sure. It's the same here. I can buy stuff with Euros in York rather than the usual GBP. But generally people want the local currency because they have fixed liabilities in the local currency - taxes and debts. Chances are they'll take your money and then swap it out for the local version rather than hold it.
  - rumanator 7y ago
    > Dollars are similarly useless in Saudi Arabia. This is simply outright wrong. According to Wikipedia, the last arms deal that Saudi Arabia struck with the US was, that alone, around $350 billion. That's more than most of the nation's GDPs. Trying to put a Ponzi scheme such as Bitcoin on par with the US dollar is either an entirely clueless assertion or a disingenuous claim made in line with all the other pump-and-dump schemes that plague the so called crypto currencies.
  - dageshi 7y ago
    The point of the article is that around the world very large amounts of loans have been denominated in US dollars, even in countries that don't use USD. That means there is always a constant and large demand for USD to repay those loans. So outside of the US, no USD is not just a store of savings, it's a means of repaying debt. Hence why people want it and will accept it as a first preference over most other currencies when international transactions need to be made.
    - neilwilson 7y ago
      Repaying debt is the same as an increase in the store of savings. Your personal balance sheet moves in the same direction from a lower value to a higher one.
      - dageshi 7y ago
        Not in USD it doesn't. You got your loan in USD, spent it to buy whatever you needed, you have assets, not USD. You need USD to repay the loan, where do you get them from?
- ahnick 7y ago
  Whatever anyone would do with $400bn worth of an asset? If Saudi Arabia started buying Bitcoin in bulk, then the price of Bitcoin would go up. This would create demand for the asset that is increasing in value and other people would start buying and holding. Saudi Arabia would not be able to acquire all the Bitcoin, but it doesn't really matter anymore, because now everybody wants it, because it has increased in value.
  - selectodude 7y ago
    And voila! You’ve created an enormous speculative bubble. That hasn’t ever gone wrong.
    - ahnick 7y ago
      Bitcoin has had several big moons/busts now, but the software and network has persisted and grown dramatically in size. The long term trend is up. I think it is really hard at this point to make the case that this is a bubble.
      - selectodude 7y ago
        Bitcoin is an “asset”, not an intermediary. Saudi doesn’t just sit on their dollars, they buy stuff with it, either actual goods and services or fixed incomes. Since nobody wants bitcoin for their labor and it’s a highly speculative asset that isn’t a particularly good store of value, it doesn’t accomplish either of the key things that are needed.
        ahnick 7y ago
        Bitcoin is both an asset and an intermediary. I don't think it is a good intermediary due to its volatility and tax treatment, but it certainly has and can be used as such. If you had bought a hundred dollars worth of Bitcoin back in April of 2011 and sold it at it's most recent all time low on December 16th 2018 you would have $320,000. If you sold it today you would have $681,800. Volatile? yes. Good long term store of value? All available data indicates yes. It's speculative in so far as the software and the network are speculative. The speculative risk of both of these attributes has reduced over time. (i.e. The more time that goes by the more likely that bugs in the protocol will be discovered and the network size and volume has dramatically increased) The real danger to Bitcoin is probably another cryptocurrency that comes along and does it's job better. This will be very hard though as Bitcoin is essentially the Facebook of the cryptocurrency world. I think that it is possible that this will happen, but it will likely be a process more than an event. Offering holders of Bitcoin to diversify overtime should other cryptocurrencies come into being. Whether Saudi Arabia should buy it or not is an entirely different matter. IMHO if they have some reserves that they don't think they will likely need to touch for a 5 to 10 year period then I would invest some in it. It would be akin to trading in some of their dollars for Gold. (https://tradingeconomics.com/saudi-arabia/gold-reserves https://tradingeconomics.com/saudi-arabia/gold-reserves)
- empath75 7y ago
  The price of bitcoin would probably grow way way way way higher than 20k if Saudi Arabia decided they were only going to sell only for bitcoin, as in “add a large number of zeros” higher.
cjhopman 7y ago
No. Because Bitcoin has no use in legal industries.
- kebman 7y ago
  Wrong. It's a great intermediary to buy and sell international assets cheaper and faster than with SWIFT. Also it effectively bypasses local bureaucracy.
  - quickthrowman 7y ago
    It’s too volatile for this, sorry. If it’s so great, why isn’t everyone doing it?
seanmcdirmid 7y ago
Can you use Bitcoin to buy a few billion dollars in really safe and liquid treasuries when you need to park a trade surplus somewhere? If not, it isn't really useful in the oil trade.
deleted 7y ago
[deleted]

chrisco255 7y ago

Not yet, but maybe they will when the dollar squeeze causes their economies to crash.

kebman 7y ago
I'd say that is a good enough reason to buy. As they say, buy the rumour, sell the news.

selectodude 7y ago

Because, to use a technical term, the fuck is Saudi Arabia going to do with $400bn worth of bitcoin? After 1 year, assuming Saudi Arabia was able to procure every bitcoin that can ever be mined, past present and future, they would be worth $20,000 each. And then they have all the bitcoin that nobody wants.

neilwilson 7y ago
Dollars are similarly useless in Saudi Arabia. They use the riyal there. Outside of the US, dollars are really just government bonds that people hold as a store of savings. They have to be sold before you can do local transactions or pay local taxes.
- selectodude 7y ago
  Saudi needs dollars to buy everything else since they make nothing and import everything. Everybody else will take their dollars, so it’s a worthwhile thing to have around for them. Sure, you can’t buy a kebab on the streets of Jeddah with them, but the chicken that kebab was made with was almost certainly bought in some way using those aforementioned petrodollars.
  - neilwilson 7y ago
    How does the seller selling the kebabs in riyal get the chicken given they only earn riyal? You need somebody who wants riyal for dollars. Why would the chicken seller not take the riyal since that helps his customers and do the FX magic themselves? "Local currency sales" is what marketing men recommend. It's just the latest form of vendor financing. Who wants riyal for dollars. People who buy kebabs in Saudi. Those who live and work there. As I said the dollars are useless in Saudi, because that's not the local currency stuff you need day to day is priced in. The point again is that in aggregate you can buy things in the currency you have and you can sell things for the currency you want. The financial system smooths the path to that deal - for a price. As anybody with a Paypal account and who trades internationally understands.
    - simonh 7y ago
      >How does the seller selling the kebabs in riyal get the chicken given they only earn riyal? They buy the dollars they need to buy the chicken off the Saudi national bank for Riyal. That’s their job. Controlling that rate is a primary way the SA government manages their domestic economy.
- 0DHm2CxO7Lb3 7y ago
  Can always buy US weapons and politicians with dollars
- zeofig 7y ago
  He's talking about Saudi Arabia, not random people in Saudi Arabia...
  - neilwilson 7y ago
    Saudi is random people in Saudi. Countries aren't sentient on their own.
    - selectodude 7y ago
      Well no, in this particular case it’s the house of saud.
    - zeofig 7y ago
      What is countries? I mean it's just atoms, man... This is all so trivial!
- rckoepke 7y ago
  Currency is slightly more fungible than this. Not enough to invalidate your point, but worth noting that I've purchased food, transportation, lodging, and knickknacks in Saudi/Bahrain/UAE and Oman using USD. All of the above items, in each country. It's certainly not a universal currency though, I'd say the vast majority of vendors were not interested in taking USD. Even then though, generally you could find a private citizen/local expats from many other continents that would be willing to perform currency exchange to/from popular currencies at a rate profitable for them. Vendors/citizens of some other countries - Jamaica, many parts of Mexico, many parts of Canada, also are happy to deal in USD as a customary business practice, at least in my experience.
  - neilwilson 7y ago
    Sure. It's the same here. I can buy stuff with Euros in York rather than the usual GBP. But generally people want the local currency because they have fixed liabilities in the local currency - taxes and debts. Chances are they'll take your money and then swap it out for the local version rather than hold it.
- rumanator 7y ago
  > Dollars are similarly useless in Saudi Arabia. This is simply outright wrong. According to Wikipedia, the last arms deal that Saudi Arabia struck with the US was, that alone, around $350 billion. That's more than most of the nation's GDPs. Trying to put a Ponzi scheme such as Bitcoin on par with the US dollar is either an entirely clueless assertion or a disingenuous claim made in line with all the other pump-and-dump schemes that plague the so called crypto currencies.
- dageshi 7y ago
  The point of the article is that around the world very large amounts of loans have been denominated in US dollars, even in countries that don't use USD. That means there is always a constant and large demand for USD to repay those loans. So outside of the US, no USD is not just a store of savings, it's a means of repaying debt. Hence why people want it and will accept it as a first preference over most other currencies when international transactions need to be made.
  - neilwilson 7y ago
    Repaying debt is the same as an increase in the store of savings. Your personal balance sheet moves in the same direction from a lower value to a higher one.
    - dageshi 7y ago
      Not in USD it doesn't. You got your loan in USD, spent it to buy whatever you needed, you have assets, not USD. You need USD to repay the loan, where do you get them from?
ahnick 7y ago
Whatever anyone would do with $400bn worth of an asset? If Saudi Arabia started buying Bitcoin in bulk, then the price of Bitcoin would go up. This would create demand for the asset that is increasing in value and other people would start buying and holding. Saudi Arabia would not be able to acquire all the Bitcoin, but it doesn't really matter anymore, because now everybody wants it, because it has increased in value.
- selectodude 7y ago
  And voila! You’ve created an enormous speculative bubble. That hasn’t ever gone wrong.
  - ahnick 7y ago
    Bitcoin has had several big moons/busts now, but the software and network has persisted and grown dramatically in size. The long term trend is up. I think it is really hard at this point to make the case that this is a bubble.
    - selectodude 7y ago
      Bitcoin is an “asset”, not an intermediary. Saudi doesn’t just sit on their dollars, they buy stuff with it, either actual goods and services or fixed incomes. Since nobody wants bitcoin for their labor and it’s a highly speculative asset that isn’t a particularly good store of value, it doesn’t accomplish either of the key things that are needed.
      - ahnick 7y ago
        Bitcoin is both an asset and an intermediary. I don't think it is a good intermediary due to its volatility and tax treatment, but it certainly has and can be used as such. If you had bought a hundred dollars worth of Bitcoin back in April of 2011 and sold it at it's most recent all time low on December 16th 2018 you would have $320,000. If you sold it today you would have $681,800. Volatile? yes. Good long term store of value? All available data indicates yes. It's speculative in so far as the software and the network are speculative. The speculative risk of both of these attributes has reduced over time. (i.e. The more time that goes by the more likely that bugs in the protocol will be discovered and the network size and volume has dramatically increased) The real danger to Bitcoin is probably another cryptocurrency that comes along and does it's job better. This will be very hard though as Bitcoin is essentially the Facebook of the cryptocurrency world. I think that it is possible that this will happen, but it will likely be a process more than an event. Offering holders of Bitcoin to diversify overtime should other cryptocurrencies come into being. Whether Saudi Arabia should buy it or not is an entirely different matter. IMHO if they have some reserves that they don't think they will likely need to touch for a 5 to 10 year period then I would invest some in it. It would be akin to trading in some of their dollars for Gold. (https://tradingeconomics.com/saudi-arabia/gold-reserves https://tradingeconomics.com/saudi-arabia/gold-reserves)
empath75 7y ago
The price of bitcoin would probably grow way way way way higher than 20k if Saudi Arabia decided they were only going to sell only for bitcoin, as in “add a large number of zeros” higher.

cjhopman 7y ago

No. Because Bitcoin has no use in legal industries.

kebman 7y ago
Wrong. It's a great intermediary to buy and sell international assets cheaper and faster than with SWIFT. Also it effectively bypasses local bureaucracy.
- quickthrowman 7y ago
  It’s too volatile for this, sorry. If it’s so great, why isn’t everyone doing it?

seanmcdirmid 7y ago

Can you use Bitcoin to buy a few billion dollars in really safe and liquid treasuries when you need to park a trade surplus somewhere? If not, it isn't really useful in the oil trade.

deleted 7y ago

[deleted]