How Is the Process of Trading Oil With Bitcoin?


How Is the Process of Trading Oil With Bitcoin?
How Is the Process of Trading Oil With Bitcoin?
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Oil is undoubtedly one of the most coveted resources globally, to the point of often being the cause of conflict.

It was the origin of the birth of industrial economies in the nineteenth century thanks to the property of containing a large amount of energy in a small, easily transportable volume.

Importance of oil in the world

For the past thirty years, oil has been competing with other energy sources, and it will remain an essential product in our daily lives for many years.

According to Daniel Yerguin, Oil is the largest business globally and the main one of the great industries that has emerged in the last decades of the 19th century.

In turn, oil price continues to be a variable for the functioning of the world economy because this product is the most traded internationally, both in terms of volume and value.

The United States, for its part, fights with all its might to ensure control by its companies of gigantic oil world reserves, so that oil continues to be traded in dollars and, with this, to sustain the dollar as a global currency, issuing securities of the Treasury, which expand its debt thus financing its deficit economy.

The importance of oil in international relations is publicly demonstrated as a commodity in world trade since it is a strategic product that performs decisive functions in the economic and social life of countries.

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Changes for oil marketing processes

Some of the largest producers, operators, and banks want to abandon the usual system of processing cargo documents and other registration forms required for each transaction.

These require a significant amount of time, making the processes slower, in which the captain and the employees in charge of the administrative operations bear absolute responsibility to cut costs and deal with tighter profit margins; the oil industry is analyzing the methods used to track and verify cryptocurrencies such as bitcoin through a more extensive and shared online registry, the well-known blockchain. But there are things that happen when Bitcoin crashes.

The documentation used in title transfers and post-transaction execution is full of paperwork and red tape, where such paperwork has not evolved in the last two hundred years.

The appeal of these great online books is that transactions are recorded using encryption to ensure security and so that the user network can see the history of each operation.

In addition, it is assumed that if one of the blockchain technology and cryptocurrencies is made, the procedures and operations would be free of commissions for executed transactions, an extremely beneficial fact for oil countries.

Although it is considered too early to talk about the sale of energy resources in crypto, not all countries have the same position on this statement.

The decrease in the fall in demand affects all oil producers globally, but the impact is felt more in those that have a greater dependence on crude oil, such as Venezuela, Ecuador, and Colombia.

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The first cryptocurrency for oil operations

That is why the full fury of cryptocurrencies, led by bitcoin, and during a severe economic crisis, the socialist government of President Nicolas Maduro made a novel and risky decision that officially began to function on February 20 with the phase of crude oil presale.

The first cryptocurrency issued by Venezuela, the PETRO, is created, the first launched by a State.

The Petro is used as a source of financing when the country’s income fell due to low production and the reduction in oil prices, this being the primary and almost only source of foreign currency entry to the country.

Petro has as a reference value the price of a barrel of oil, of which Venezuela is considered the country with the largest proven reserves in the world.

In turn, the sale price of the petro will still depend on an agreement between those interested in the presale and the government; this shows that everything indicates that in the not too distant future, the commercialization of crude worldwide could be carried out in cryptocurrencies.

Conclusion

The exchange of oil with bitcoin or cryptocurrencies has created great expectations in the oil-producing countries; consequently, many have been hit hard by inflation. Therefore, this type of digital currency would play a key role in valuing such a valuable resource.

In addition, it would be of great help to countries that, in one way or another, base their income on crude oil production, managing to protect their capital without being controlled by international organizations that benefit from large commissions for the millionaire transactions that this type of commercial operation generates.

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