With each global crisis taking place, the weaknesses of our globalized financial systems’ underpinning mechanisms become more apparent. Economic sanctions are often viewed as an alternative to violence. Global leaders have repeatedly utilized them to meet foreign policy objectives. However, history and practice prove that sanctions are a double-edged sword. One side of the blade swiftly cuts off entire nations, the other side slowly cuts through the confidence of investors and average citizens in the institutions they once called upon to guarantee their financial stability.
One of the first recorded uses of sanctions was in 432 BC, when the Athenian Empire issued them against Megaran traders to ban them from the marketplace and ruin the rival city. Since its conception in 1945, the United Nations has decreed over two dozen sanctions alone. Last year, the IMF “strongly urged” El Salvador to reconsider making Bitcoin legal tender in what very much read like a disguised threat. Nowadays, sanctions can send shockwaves across the globe regardless of which group or nation is currently being targeted.
This brings us to our current financial system: an inefficient structure that is vulnerable to politicization at its best. Its worst is an unreliable universal gateway for monetary transaction processing. Even channels which were established through decades of international cooperation, such as SWIFT, and electronic payment systems like PayPal are not safe as they can be rendered inoperable in a matter of days.
The witnesses of the sanctions are wondering if they can be next to be affected at some point in the future. Such doubts and the prevailing uncertainty of the global geopolitical landscape have reignited a global diatribe across the web. Decisions that twenty years ago might have felt like they existed in a vacuum now have a very clear human cost.
The global dialogue continues then, with many looking beyond the current financial paradigm. More and more people believe that an unbiased and fully decentralized system is necessary to avoid suffering should their nation become entangled in tomorrow’s calamities. As it happens every time there is a global crisis, someone mentions the blockchain. With its decentralized infrastructure, governed by smart contracts with full transparency and no centralized management or interference, the blockchain allows countless cryptocurrencies to be deployed and used as both a means of payment and a store of value. The stateless nature of cryptocurrencies enables them to be used as currency is essentially borderless.
The reality of the situation paints a different picture. Many centralized exchanges operating on the market as cryptocurrency hubs begin to prove that even cryptocurrencies are not free of geopolitical pressure. Recently, Binance has received a lot of pressure for buckling under orders from the United States. This and countless other calls to action by global leaders to pull crypto exchanges in have cast considerable doubts on the capabilities of cryptocurrencies to act as a truly global and trustless currency. Such restrictions significantly undermined the faith of members of the decentralized community in the virtues of the blockchain. Its inherent qualities of decentralization, full transparency, and global accessibility have been overruled.
Cryptocurrency and blockchain adoption, the convenience of using crypto as payment alongside fiat is making global leaders insist that crypto must play by the same rules as fiat- their rules which they make. Unfortunately, until we can achieve full decentralization as a society via a Bitcoin standard (or another form of cryptocurrency), we’re moving in the direction of having to play by these rules. Crypto companies currently have to rely on legacy financial infrastructure to move forward, centralizing themselves and inadvertently aligning with the leading political paradigms. The result might be the undermining of the reputation of cryptocurrencies as reliable means of cross-border payments free of political interests.
With cryptocurrency and blockchain adoption on the rise, the convenience of using cryptocurrencies as a payment method has become evident. Crypto financial infrastructures like Embily offer their clients the ability to use crypto as easily as fiat in everyday life holding VISA-powered cards. Such a tool will help erase the border between crypto and the usual currency for individuals. And legal entities can buy and sell crypto directly from business accounts legally.
Regardless of the endgame of the sanctions war, the repercussions for the cryptocurrency and blockchain industry may be severe if it does not find a way to remain neutral and act in favor of its global users, who cherish liberty.