- - Monday, January 8, 2018


There was a time when “a penny saved is a penny earned” was all anyone needed to know about money. That is so 20th century.

Money, as we’ve known it (and yearned for it), relies on centralization for its print, its banks and for its insurance (think FDIC). But toward the end of the last century some began to see the centralization of money as monetary “monopoly,” and that unease begat cryptocurrency, the go-to coin for those seeking an alternative to money tied to government controls. Cryptocurrencies live on a cloud, waiting to be summoned to Earth.

Cryptocurrencies such as Bitcoin and, more recently, Ripple, were eagerly embraced. Millennials, perhaps the segment of society most susceptible to the siren call of money shielded from prying authority, were lured in great numbers to the novelty of cryptocurrencies, freedom and perceived easy path to wealth.

Now the autocrats want in, or so it seems. Last week, the Financial Times reported that “officials in Moscow say that President Vladimir Putin has commissioned his economic team to make a blockchain-based version of the ruble. Venezuela’s information minister, Jorge Rodriguez, announced that his country’s new cryptocurrency, the petro, will be issued in ‘a matter of days.’”

There’s no certainty that either Nicolas Maduro or Vladimir Putin will succeed. Gizmodo, the design, technology, science and science fiction website “that also features articles on politics,” observes that “above all, Venezuela’s idea for the petro sounds like some Grade-A [baloney]. That doesn’t mean that Russia’s planned cryptocurrency is any better, it’s just earlier in the planning stages, though it’s not at all clear how much planning Venezuela has done.” President Nicolas Maduro, consumed with other planning headaches, such as where Venezuealans can find enough to eat and enough toilet paper, first announced his cryptocurrency strategy at the beginning of December as an alternative to the rapidly depreciating Venezuelan bolivar.

Gizmodo further observes that the Petro, as it seems to be conceived, would be different from Bitcoin because Venezuela would back it up with oil reserves. But that kind of “back-up” would make it no different than a functioning and healthy monetary policy.

Enter, then, the potential for abuse. According to the Financial Times, Sergei Glazev, an economic adviser to Mr. Putin, told a recent government meeting that a cryptoruble would be a useful tool to get around international sanctions. “This instrument suits us very well for sensitive activity on behalf of the state, Mr. Glazev said. We can settle accounts with our counterparties all over the world with no regard for sanctions.”

The New York Times observes that what has seemed like a fringe concept is starting to gain some level of acceptance in global finance. Several of the largest central banks in the world, including the Bank of England and the People’s Bank of China, have said they are “looking at using the technology introduced by Bitcoin to track and issue their own digital currencies.”

The authorities in the United States have long been aware that virtual currencies could be used to evade sanctions. David S. Cohen, a Treasury official focused on terrorism and financial intelligence, said four years ago that “the American authorities were not seeing any widespread efforts to get around sanctions with virtual currencies.”

Digital currencies fell broadly on Monday, with Ripple and Bitcoin leading the charge lower. Perhaps it’s time to embrace the healthy U.S. economy and its commensurate stock market, stable for now and proceeding in languages not buried in the darkest recesses of the internet. Besides, there’s something suspicious about money that lives in a cloud.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide