Historically, money was everything people knew about a measure of value, a medium of commercial exchange, and a store of financial value, without any government interference, such as the trade in colored stones, silver, copper and shells, and some types of feathers, leather. , salt and coffee.
It should be clear that current money has a value for people’s confidence in it, so if people lose confidence in it, it becomes a piece of paper like any other. This may be the case in Lebanon now, and in Venezuela and some African countries.
Government or central bank control of exclusively issuing money is a recent phenomenon.
It should also be noted that the people most enthusiastic about bitcoin in general are generally hostile to central banks and their control of the economy.
And most bitcoin opponents are supporters of central banks, and those most enthusiastic about investing in gold are hostile to central banks as well.
The dollar’s peg to gold was deciphered in the early 1970s, the decline of the US dollar against gold and the spread of inflation. OPEC countries have attempted to seek an alternative to pricing, and all options have been considered in many studies.
Among the options were the price of oil in a basket of currencies and special drawing units overseen by the International Monetary Fund.
However, the issue resolved itself to continue to fix the price of oil in dollars despite all its problems, and the vision at the time was that oil prices could be increased to compensate for losses resulting from the falling dollar and high levels of inflation.
In other words, the objective was to maintain the real price of oil. However, the idea of ​​raising crude prices with a low dollar and high inflation failed, as the idea of ​​”declared price” ended with the end of foreign company control over oil reserves, the government ownership of these and the “nationalization of petroleum”.
Each option had its problems, and the SDR would not solve the dollar problem, and the currency basket was an unacceptable option, not only because the dollar had the lion’s share, but also because the trading partners of countries in the ‘OPEC were different. .
And therefore, the elements of the basket could not be agreed, as it would benefit some countries while it would cause losses to other countries.
Despite the many rumors related to the pursuit of the dollar price of oil, and the belief that the United States will not allow the price of oil to be denominated in currencies other than the dollar, and that the US economy would collapse if the Gulf states used another currency as their price, the data indicates the opposite – if oil prices rose to $ 100 per barrel, the value of all international crude oil trade for an entire year is about one tenth of US GDP only!
The truth is, the global oil trade is the largest in the world and requires huge amounts of cash.
This liquidity is only available in the US dollar, and it also requires the acceptance of various countries and parties, and there was no currency with broad global acceptance like the dollar.
In fact, the problems with pricing oil in a currency, in general, are the same regardless of that currency, so there is no need to change the dollar price.
And things seem to be even more complicated by the fact that the Gulf countries peg their currencies to the US dollar (with the exception of Kuwait, which ties its currency to a basket of currencies, but the dollar plays there – a big role in it. all cases).
One day, if the price of oil is other than in dollars, it is necessary to decouple the currencies of the Gulf countries from the dollar.
Some of them may argue that China has established an oil exchange in Shanghai, and the price of oil is in Chinese yuan, and therefore everything stated above does not make sense.
However, the truth is that all that glitters is not gold, as statistical analyzes indicate that the price on the Chinese stock exchange is a reflection of the oil exchange in Dubai. In short, the price of oil is in dollars all over the world. Having a price in yuan or whatever just converts the price in dollars to another currency.
The price of oil cannot be in bitcoin or in cryptocurrency, besides the problems mentioned above, oil exporting countries need a more stable currency than bitcoin.
Assuming it is a currency, all current indications are that investors treat it as an asset and not as a currency.
The original characteristic of the dollar is its liquidity.
A snapshot shows that the countries that use currencies other than the dollar are those on which the United States has imposed economic sanctions that have prevented it from using the global banking system to transfer money.
And there is no indication that oil-producing countries, without any sanctions, have asked importing countries to pay for their oil in other currencies, gold or cryptocurrencies.
And Venezuela’s creation of “Petro” – the cryptocurrency backed by Venezuela’s oil reserves – is seen as a desperate attempt to sidestep dollar transactions and inflation at the same time, but it failed miserably.
In short, the price of oil cannot be calculated in bitcoin. The properties of money require that money be a measure of value, a medium of exchange and a store of value.
The huge fluctuation in the value of bitcoin negates both attributes of a measure of value and a stock of value, but it remains a medium of exchange. This supports the idea that the price of oil cannot be calculated with it, but that producing countries may be able to receive their income or part of it in bitcoin.
In addition to this, the global oil trade requires enormous liquidity and this liquidity is available in dollars and not in bitcoin. And it cannot be said that Bitcoin’s liquidity will improve in the future, as its number is limited.
Finally, did you know that the amount of energy needed to mine a bitcoin is equivalent to around 20 barrels of oil?

* Saad Abdulla al-Kuwari is an oil and gas expert and explores the future of energy.