The killing of Qasem Soleimani, an Iranian military general by the United States forces has sent out a signal of uncertainty around the world. It is an issue that is reverberating across both political and economic circles on a global scale. This development is not strange, as historically, people in affected regions during times of political unrest suffer extensive economic setback. It is the fear of such setbacks that is beginning to engineer some kind of signals across different sectors of the world.
Whenever there is a war or some sort of socio-political unrest, the economy of the affected region suffers. The reason for this is quite straightforward, as it would not be business as usual for that region. Trades will halt and the local economy will be grounded, or something close to that. Therefore, at the sight of such a scenario, inhabitants of such regions begin to seek safe havens for their wealth and resources.
The Search for Economic Safety
Under such circumstances as described above, people begin to exchange their local currency for more sustainable alternatives. They usually flow towards other international currencies that are more stable, without any immediate tendency of collapse. However, with the advent of nationless currencies like Bitcoin, a new trend has emerged. A lot of people are beginning to take refuge in cryptocurrencies for wealth preservation.
Before now, there have been examples of regions where Bitcoin and cryptocurrencies served as a safe haven. Venezuela easily comes to mind when issues like this are discussed. After the national currency of the South American nation collapsed, many of the citizens moved towards Bitcoin. Many people also believe that the high level of awareness that Bitcoin and cryptocurrency has received in parts of Africa can be attributed to this same philosophy. When citizens begin to lose trust in the future of their local currency, they look for alternatives.
Notice that Bitcoin which traded below the $7,000 mark posted some significant bullish figures shortly after Soleimani’s killing. Could it be that some people are already taking asylum for their wealth ahead of the uncertainties in the middle-east? Perhaps, the factor of uncertainty is kicking in already.
Nations Also Prepare for Uncertainties
Responses like this is not isolated to individual and corporate wealth alone. International trades are also significantly affected under these circumstances. Take for instance, Iran is one of the world’s major oil producing nations. If the country decides to go to war with the United States, international trade will suffer, including its oil trades. This will generate relative scarcity, such that there will be increased demand for oil from the other parts of the world. The resulting effect will be an increase in the price of crude from other parts of the world.
The rumour of war alone has already seen Brent Oil surge up to $70 per barrel as tension continues to mount in the Middle East. Unfortunately, the uncertainty that is looming over Iran may not be contained strictly within its bothers. The effect of any eventualities could affect neighbouring countries within the region, especially from an economic angle.
Just recently, Qatar announced a blanket ban on all activities around virtual currencies, which includes Bitcoin and other cryptocurrencies. Although, the Arabian nation has shown some kind of resistance towards crypto in the past, the timing of the recent ban suggests something more technical. Some analysts believe that it is an attempt to protect its national currency by preventing capital flight. Since the public has learned to use Bitcoin and cryptocurrency as safe haven, perhaps stopping them could maintain the level of demand for the local currency.
How Relevant is Bitcoin Today?
Apparently, what we are witnessing is a high level reaction around Bitcoin and cryptocurrency. As a matter of fact, these digital currencies are enjoined in such relevant global discussion that involves other major elements like the international crude oil market. This reveals how much the blockchain ecosystem has become interwoven into the entire fabric of human existence. This also serves as an alert to governments around the world that may need to sit up, especially with their economic policies. As we can see, the citizens who have previously been totally reliant on national economic arrangements are beginning to have alternatives with decentralized systems.
The current situation in the Middle East is fueled by the tension between Iran and the United States. In Africa, the economic backwardness is perennial and endemic. A lot of people blame Africa’s situation on bad leadership, and they may not be far from the truth. Otherwise, the African region is blessed with numerous resources and favourable weather conditions. Bad management has always been fingered as the main reason why Africa has remained backwards.
What Can Blockchain Do For Africa?
From a popular perspective, the bad management that Africa has suffered has been deliberate and fueled by greed and corruption. This is why there is currently a popular belief that with blockchain technology empowering, Africa now has the opportunity to rise from the dust. The citizens can now, to a large extent take responsibility for themselves by themselves without choking under bad government policies. The rate at which the youths across Africa are embracing blockchain technology is testimony to this development.
For Iran and the Middle East today, it is a rumour of war with the United States that is causing a response around the blockchain ecosystem. With Africa, what it looks like is a revolution. The youths are taking control of their future and seeking a safe haven that will keep them away from further torment of the political elite. This could be the ideal way out, since other methods in the past have failed.
There is currently a huge gap between Africa and other developed parts of the world. It is widely believed that blockchain technology will provide a leapfrogging opportunity for Africa. The technology is expected to enable the continent to catch up with other regions of the world. The signs are there already as startups in the industry are beginning to compete with their counterparts from other parts of the world. All that is needed is collaboration and effective partnerships, and Africa will rise from the dust.
Iyke Aru is a seasoned author and educator in the blockchain and cryptocurrency industry. He has been in the business of crypto content writing for many years with thousands of his articles across several platforms on the internet. Iyke is based in Nigeria where he stands out as one of the most informed and credible figures in the cryptocurrency industry. Outside blockchain and crypto, you will most likely catch Iyke playing or discussing football with friends and family.