CCTV-2 Financial Channel reports: Russia considers accepting Bitcoin as payment for oil and gas exports

Last night, CCTV-2 Finance Channel reported an international news story with the headline “Russia-Ukraine conflict affects international energy landscape; Russia considers accepting Bitcoin as payment for oil and gas exports”[1].

Western media such as the BBC also reported the news at about the same time[2].

On the 24th of yesterday, BitcoinMagzine first released on Twitter that the Chairman of the Russian Energy Committee stated that Russia would be open to paying for natural gas with Bitcoin[3].

After multiple cross-verifications, it seems that this news is most likely true.

Although it will take time to prepare from statement to implementation, as the "big three" of the five most powerful permanent members of the UN Security Council on the planet, a nuclear power, a military power, and a major energy exporter, Russia's binding of Bitcoin to its energy value is not just good news, but is also expected to profoundly affect and permanently change the nature of Bitcoin, laying a solid foundation for Bitcoin to undergo a "phase change" after the 2024 halving, when its S2F hardness will significantly surpass that of gold.

We have never doubted that the path that Bitcoin will take, as Liu Jiaolian said in his WeChat official account article "We are in the great historical process of Bitcoin's century-long bull run" (December 25, 2020) two years ago, is "from nothing to something, to commercialization, to assetization, and finally to monetization."

In this round of production cuts from 2020 to 2024, the entry of European and American institutional funds has driven the bull market and also contributed to another "phase change" of Bitcoin, that is, the emergence of the significant property of "Americanization" - that is, a high correlation with U.S. stocks.

However, this "U.S. stock" nature is only temporary after all. As Bitcoin undergoes another "phase change", it will get rid of this correlation.

We can see that Bitcoin is like water. Water has no fixed shape, and it takes whatever shape it is in. So water is also the most flexible, and yet it cannot be broken. Only water can defeat steel, and steel cannot defeat water. So Lao Tzu said, the strong are below, and the weak are above.

Water brings benefits to all things without arguing with them. It stays in places that no one likes, so it is closest to the Tao.

Bitcoin is like a measuring cup of value. If you fill it with brown sugar water, it will be red. If you fill it with white milk, it will be white. If you fill it with black oil, it will be black.

If you put US stock funds in it, it will be like US stocks. If you put natural gas in it, it will be like energy.

People of all kinds want to put all kinds of values ​​into Bitcoin, but Bitcoin has its own firm development ideas, which is to steadily and continuously become harder until it becomes the hardest thing in the world.

“Hard”, for a monetary commodity, refers to a high S2F value, rather than a small absolute quantity.

A common fallacy is to say something like this: My crappy sneakers are the only one in the world, so aren’t they more scarce than Bitcoin? People who say this don’t understand what scarcity means. Scarcity is not the same as scarcity.

"Hard" also requires that it be difficult to imitate, non-renewable, and naturally have absolute monopoly.

Another common fallacy is to say: If a certain copycat coin (such as SHIB, or a certain NFT series) never issues more, isn’t it even “harder” than the current Bitcoin? People who say this forget that the difficulty and cost of counterfeiting a SHIB or NFT is as different from the difficulty and cost of counterfeiting Bitcoin as the sea and the sky. Due to the characteristics of Bitcoin mining, the PoW data condensed in the ledger, which has been forged by hardware, manpower, and electricity with huge investments over the past decade, is impossible to do again without repeating the same investment. This is almost impossible.

Bitcoin is more precious than oil and gas, which are non-renewable energy sources. But the good news is that Bitcoin will not be consumed like oil and gas. It can exist forever and has greater durability than gold.

Once upon a time, people had been arguing for many years about whether Bitcoin should take the so-called "payment currency" route or the so-called "stored value currency" route.

Those who advocate the so-called "payment currency" route believe that in order to make it suitable for "payment", people should not always want to hoard it, but should be encouraged to spend it. Therefore, these people naturally come to a philosophical idea close to Keynesianism, that is, the design of the total scarcity of Bitcoin is not good, and a certain inflation rate should be maintained to continue to increase the issuance, so as to encourage people to spend the currency in their hands with the threat of devaluation.

They believe that such a currency can only become popular if people want to spend it. If everyone wants to "hoard" a "stored value currency" like Bitcoin, and everyone is reluctant to spend it, it will be withdrawn from the circulation market.

This "softer" currency is spent first, while the "harder" currency is collected by people for appreciation. The phenomenon of "bad money driving out good money" in which the former excludes the latter from the circulation market is called "Gresham's Law".

As a result, these people strongly criticized the design of Bitcoin and turned to promote other altcoins that were issued in large quantities and continued to be issued.

Little do people know that this claim is a huge fallacy. Those who hold this claim are fools who cling to theories, or even bad people who attack Bitcoin in the name of theories and take the opportunity to promote their own altcoins.

Hayek has already made it very clear in his book "Denationalization of Money" that when the circulation of money can be regulated, Gresham's Law will take effect and good money will be driven out of the market by bad money; however, when money is allowed to circulate freely, good money will drive out bad money.

Obviously, Bitcoin is good money (harder currency), and altcoins and fiat currencies are bad money (softer currency). If Bitcoin can be regulated, then Gresham's Law will come into play. If Bitcoin cannot be banned, then good money will eventually drive out bad money.

For a monetary commodity to become a commodity-money, it is necessary that there must first be sellers willing to accept it, rather than buyers willing to spend it.

Only by first proving its value as a "store of value currency" will sellers be willing to accept it, and Bitcoin will have the possibility of evolving from a monetary commodity to a commodity currency.

Russia’s consideration of accepting Bitcoin as payment for oil and gas exports is strong evidence of the correctness of this theory.

References:

- [1] http://tv.cctv.cn/2022/03/25/VIDEHvMr1sUmTOyL445JzneJ220325.shtml

- [2] https://www.bbc.com/news/business-60870100

- [3] https://twitter.com/BitcoinMagazine/status/1507006732546936840

(Official account: Liu Jiaolian Pro. Knowledge Planet: reply “Planet” to the official account)