Can Bitcoin End International Economic Sanctions and Create a Fairer World?

Vlad Costea
  • The post-WW2 paradigm of economic-driven international relations is bound to get shifted thanks to Bitcoin's uncensorable nature.
  • This change can either translate into an evolution into a more peaceful and understanding civilization, or a return to our previous bloody wars.

Most of the Bitcoin discussions nowadays involve investors, financial institutions, and the opinions of billionaires on whether or not Satoshi's invention has value or potential for international markets. However, it's quite negligent and short-sighted to treat this advanced invention of cryptography as a mere financial asset which retains some speculative potential.

First and foremost, Bitcoin is a political statement of autonomy and self-determination, and a financial tool libertarians use to exchange value without the intervention of an oppressive government or authoritative institution.

When we speak about the greatest creation of the cypherpunks' anarcho-capitalist dream, we should have some considerations for their intentions. The financial incentives and market dynamics are not a goal in itself, but just a mean to attract people into the system and grow a revolutionary project.

 Those who have been around long enough know that the name of their game isn't "let's speculate and get rich", but rather "let's change the world by separating the state from money". Nevertheless, the economic conflict isn't always between individuals and their governments - in many situations, we're dealing with international tensions which often result in financial resolutions.

If you watch world news for longer than a week, it's impossible not to hear the terms embargo, trade war, and economic sanction. They are all concepts of international affairs which refer to punishments that one or more states use against others for financial purposes. As soon as the United Nations were established in 1945, the new world paradigm has been that of economic cooperation (well, where it was politically possible).

Instead of waging war for resources and land, states would open borders to trade by virtue of treaties and international organizations. We're talking about a large-scale application of Adam Smith's economic thought, and one which comes with many ways to create prosperity but also retain leverage.

In order to remain prosperous and benefit from the advantages of trade, a state must respect certain economic, political, and military rules. Maintaining peace, respecting the rule of law, and being compliant with international regulations are essential to remaining integrated in the system of free international trade. But when you break your agreements, you're bound to withstand harsh sanctions that make you either comply and find alternatives.

Until the invention of Bitcoin, there really was no workaround in regards to embargos and trade sanctions.

The statement isn't supposed to mean that a cryptocurrency magically opens up borders in order to transport goods and satisfy the supply-demand chain. From this perspective, it's all the same and nothing will change up to the moment we invent teleportation. However, states that get economically isolated via international treaties can now mine Bitcoin or even create their own ways to trade with uncensorable cryptocurrencies.

Russia, Venezuela, North Korea, and Iran all have something in common: they have been sanctioned by the international community and must suffer from economic restrictions. By not respecting laws and treaties, they are restricted from their international trade activities, and this mechanism would work perfectly in the absence of Bitcoin, which obliterates and disrupts even relations between nation states.

What the countries enumerated above have in common is a tie to Bitcoin activities. Ever heard the news about the Russian super computer which was caught mining BTC? They were all over in February 2018. What about the entire Venezuela cryptocurrency situation with the Petro and ZCash? Then there's all this talk about North Korea and the way they mined or stole BTC in order to gain foreign capital. Iran is just the most recent example of a state which has to support harsh economic sanctions, but chooses to avoid them with cryptocurrencies.

With Bitcoin, which - unlike financial assets that are controlled by governments and central banks - cannot be stopped from being traded all across the globe, financial sanctions are becoming obsolete. The international community must work on more efficient solutions, and we might be facing a paradigm shift in terms of diplomacy.

If states can no longer impose efficient economic sanctions on each other, then we might either see a return to the bloody days of war, or an evolution to something greater.

In the case of Bitcoin, you just can't stop transactions - and then there are quite a few creative ways of exchanging the digital currency into fiat in another country just to bring it all home. Just remember: by virtue of the Vienna Treaties, diplomatic luggage cannot be controlled, so ambassadors and consuls can do the dirty work as long as there are relations between the states.

The more common and accessible cryptocurrencies become in the financial world, the less sense it makes for nation states to resort to economic sanctions as a way of damaging economies. Maybe jobs can be lost and products can become scarce in certain regions via embargos, but the flow of capital can continue. So, what can the heads of state do in order to solve this crisis of diplomacy?

If economic sanctions stop working because of Bitcoin, then we have two extreme cases which have to be taken into consideration: we either embrace the global nature of BTC and build an entire civilization around it, or we return to our ruthless days of wars. Since the creation of the United Nations, the number of wars and their magnitude has reduced significantly (at least in the Western world whose cultural heritage founded the organizations). It makes much more sense to incentivize nation states to become open to international business and trade than to threaten them with bombs. It's constructive and it generates more wealth for everyone involved.

But what are you going to do when states stop cooperating and they can retain a considerable amount of trade privileges via Bitcoin? You can't block their wallets, you can't reverse transactions, and the best you can do is try to negotiate the situation. Ideally, these negotiations would lead to a more peaceful world where no issue gets ignored and a compromise gets reached in order to please the greatest number of participants. However, when the heads of our executives and commanders-in-chief are so reckless and impulsive, we might see many more bloody wars being fought for reasons that are as little rational as ever.

It's hard to predict what's going to happen, and whether or not Bitcoin can cause a fair new world to rise. What we know for certain is that the invention of Satoshi is a powerful political and economic instrument that smart nation states make use of in order to reach their goals. And just like the participants on a blockchain must reach consensus in order for the transactions to function well, nation states must also find a common protocol which integrates crypto-related provisions.

They can't block BTC, but they can discourage it through their routinely FUD. They can't control which countries operate on the blockchain, but they can restrict centralized exchanges from offering servives to nationals from certain countries. And they can't take down Bitcoin without shutting down the internet - but even for that situation, there are quite a few smart workarounds.

In a world of rational governments which most and foremost value the lives of their citizens and the values of free trade, we could easily reach a peaceful state where people from all across the globe exchange value freely. But since the world's greatest economic powers also impose their agenda through strong military forces and there are always greedy interferences with the free market of smaller nations, we're not going to see this kind of utopian system blossom any time soon.

Ultimately, Bitcoin can be an instrument for world peace or the apple of Discord. It can end economic sanctions and lead to a greater degree of international cooperation’s, but due to the will of greater powers, it probably won't anytime soon. However, one can only hope that the decentralized revolution also hits international relations and creates a relaxation of all these tense and greed-fueled situations.