Cryptocurrencies have been extremely popular in countries who at one point had faced economic or political sanctions imposed on them by world superpowers. Most of these countries fall under the third world criteria, but some are developed fully-fledged nations that didn’t really lose too much with the sanctions.
In this article, I’d like to discuss the various reasons why numerous nations used cryptocurrencies or were planning to do so in an effort to avoid international sanctions. Most of the efforts were not necessarily concluded, but the idea itself is enough to give us some clues as to how we can convince governments to adopt crypto faster.
The most relevant example these days is the tension between the United States of America and Iran. These two nations have been at a standoff for quite a while now, with shots starting to fire the first thing 2020 started.
Iran had faced multiple sanctions from the United States, especially economic ones. No US-registered company was allowed to do business with Iranian entities, thus denying Iran lucrative trade deals with large corporations.
This was especially hard-hitting due to how profitable oil trade with the United States can be.
Furthermore, the United States used the old “deny them the USD” sanction. This meant that any Iranian international venture would have to rely on alternative currencies as a means of exchange.
As we all know, most international business is done with the United States Dollar as the intermediary. Only on some occasions is the Euro used. Considering that not too many trade partners were stocked up on the Iranian rial, it made international trade very hard for the government.
Enter the Iranian mining industry where the government was hoping to get most of its dollars from as well as access to decentralized currencies which were starting to become more and more useful.
All in all, should the plan had proceeded without hindrance, Iran may have managed to avoid US sanctions completely unharmed.
Corporate sanctions are usually interpreted as government regulations. It could be a state ban on a service or product, which is not necessarily accessible through local hardware, software, and currencies.
However, most countries, when making these firewalls on goods and services, tend to leave legal backdoors for the consumers themselves.
Take for example Norway.
The country has imposed an utter and complete ban on the gaming industry. Anything that is remotely similar to wagering is under the control of the government, in order to regulate just how much the local population spends on it. However, the increasing number of new casinos in Norway is telling us that the prohibition is not working whatsoever. So what’s the issue? Cryptos.
Cryptocurrency-backed platforms on the Norwegian digital space are allowing local players to take part in dozens of games, avoiding the regulation. The companies themselves have modernized cybersecurity and safety mechanisms that prevent them from simply being blocked in the country.
The location and identity of the people behind these platforms are usually protected by the blockchain as well, thus preventing Norwegian authorities from finding and shutting them down. The Norwegian consumer though, receives access to these platforms without facing any legal repercussions, simply because the law says that the consumer is not at fault.
Superpower vs Superpower
How would cryptocurrencies work in a superpower vs superpower situation though? Well, let’s imagine the example we have currently.
The United States and China have been at each others’ throats in terms of trade deals for a while now, with the US imposing some serious economic sanctions. Naturally, China didn’t really budge because of those sanctions simply due to their soft power increasing all over the world.
Instead of catering to US demands, China decided to go the official route around the sanctions, and that was the introduction of the Chinese CBDC. Yes, the coin is still in development, but the idea of an economy as large as China’s introducing such a game-changing currency is already enough to see their desire to avoid not only the current sanctions but any other sanction that could come in the future.