Russian-Turkish relations and the dark underbelly of cryptocurrency

Russian-Turkish relations and the dark underbelly of cryptocurrency

Russian-Turkish relations were in the news again last week. But this time it was different. It was not about S-400s, sanctions or secondary sanctions, or even about the Syrian Civil War. It was about Bitcoin and blockchain technologies. Could this also be considered sinister, since Russia and Turkey as partners in crime? Could cryptocurrencies be considered a new tool for busting American sanctions? Could this be the premature end to Bitcoin? Let me elaborate.

First, a note about Russia and Turkey. Lately, wherever I am, I have to put up with a barrage of questions about the two countries. I find it a bit amusing. When we downed the Russian jet, the outside world advised us to start talking to the Russians again immediately. And we did. Now that we are talking again, the same people resent the Turko-Russian relationship. There is always something about the relationship that seems vaguely illegitimate.

Let me go back to the recent news item. Last week, a headline read: “First cryptocurrency freight deal takes Russian wheat to Turkey.” The actual thing happened in December, but the announcement has come recently. A vessel took Russian wheat from Rostov-Don and brought it to Samsun, a Black Sea port on the Turkish coast. It worked. The Danish shipping giant Maersk has been working on a similar scheme together with IBM and Walmart. The Sumitomi Mitsui Group has also been thinking on it. Yet, it was Prime Shipping Foundation in Gibraltar that eventually made it happen. Good for them.

Smart contracts based on blockchain technology have been useful for some time in cross-border trade. That’s why we have this race for solutions. Normally, a lot of documents and guarantees are needed for cross-border trade. With ethereum-based smart contracts, you need less paperwork. The smart contract can carry all the information regarding the goods in question in its chain of blocks, i.e. pages of the contract. If a GPS signal is received showing that the vessel with the goods has arrived, or has reached a certain destination, the smart contract can complete the transaction by changing cryptocurrencies from one wallet to another. Then, as futures contracts become available in cryptocurrencies at the Chicago Mercantile Exchange, the exchange rate risk can also be managed technically.

What does all this mean? Last night, I was watching “Quest means Business” on CNN. Richard Quest was talking to a broker from the New York Stock Exchange. While the latter was summarizing the daily investment scene, she went over the state of various stocks, bonds and guess what else, the daily price movements of cryptocurrencies. This is quickly becoming mainstream.

I also have no inclination to incant “bubble, bubble, fraud and trouble” as some economists of the 20th century have recently been doing in the New York Times. I do not think of Bitcoin and ether as overhyped instruments. Blockchain technology is here to stay. Yet cryptocurrencies have had so much to do with the dark side of the web that it does make me think, especially on issues like this Russia-Turkey deal.

Venezuela’s Nicolas Maduro announced a plan last December to mine “Petro,” its national cryptocurrency, to solve Venezuela’s sanctions-induced balance of payments crisis. A cryptocurrency freight deal has been done between Russia, another country under strict American sanctions, and Turkey, who is still awaiting the verdict of a court case on busting Iranian sanctions, due this April.

Too much talk on sanctions, secondary sanctions and cryptocurrency is bad for cryptocurrency, if you ask me. It reinforces the image of shady dealing. This connotation is bad, especially for the Hill. Commerce might be global, but politics is still a very local affair.

Güven Sak, hdn, Opinion