In the wake of cryptocurrency development, and the emergence of Bitcoin as the dominant player in this space, many industries are pursuing blockchain technology beyond the cryptocurrency use case to solve industry issues. However, cryptocurrency continues to be the dominant goal to pursue for fintech, corporate banks, and indeed, central banks.
Many have remained cautious in light of the volatility of the cryptocurrency in general, and Bitcoin in particular. Indeed, since June 20th, Bitcoin shot past $9,440 to over $13,000 on June 26, and as of July 1, was corrected to just over $10,214. (Cointelegraph)
Facebook Enters Cryptocurrency
Now—on June 18th, Facebook announced their coin, Libra. Edan Yago, observed on that announcement—”cryptocurrency has entered the big leagues”. (Yago, Edan)
Edan asserts that with Facebook’s entry, companies everywhere will now have to take cryptocurrency seriously. But adopting blockchain for Libra, Facebook “has hammered the final nail in the coffin of ‘blockchain not Bitcoin’”, Egan has opined.
Indeed, blockchain use case has been considered for nearly every industry—healthcare supply-chain, fintech, banks, automotive, giant retailers, telecommunications, and more. With Libra, blockchain has moved from a technology that a company researches with skepticism, to a must have. Companies must adopt a blockchain strategic plan and allocate resources for blockchain adoption.
Russia’s Oil Industry Considers Using Facebook’s Global Coin
In recent years, the U.S. has emerged as a net exporting energy country. With America’s large oil reserves, it is one of the top three oil- and gas-producing countries, along with Russia, and Saudi Arabia. (Muzzy, Everett)
Since 2014, the U.S. has imposed a number of sanctions, travel bans, trade restrictions on Russian citizens and companies. According to a Washington Post report, top Russian companies—including oil and gas giants—are barred from getting financing through U.S. banks and markets. Sanctions have targeted a myriad of companies, industries, and individuals—some with close ties to Putin.
This has put Russia and Facebook in a perfect nexus on how to manage their desire to expand their energy industry. According to P. H. Madore , CCN Facebook’s Global Coin (Libra) “might soon be used to value barrels of oil.”
According to a local Russian report on the impact of technology on the Russian economy— RBC warns that further American dominance in technology will likely lead to increased sanctions and other problems for Russia, including trade and tariff imbalances.
The head of Russian company Rosneft—Igor Sechin warns his colleagues about the “incredible power” that technology companies have. “The ability to use their global status and access to information seems too tempting for the law enforcement agencies of one big country of the New World.” He adds that in his opinion, “there is a possibility that as the American technology companies enter the energy market, ‘regulatory, sanctions and customs tariff imbalances are likely to increase’”. (RBC)
Sechin said that the preference for Libra over Bitcoin is the user reach of Facebook. Facebook’s user are global—and so, Libra is a natural choice. Whether the Russian oil industry will prevail in forcing the value of a barrel of oil to be based on Facebook’s Libra—remains to be seen. Overall, the oil industry is looking at blockchain beyond its application to cryptocurrency.
1/ Thoughts on Libra (and my first tweetstorm!): first, zoom out for a second and realize how far this industry has come. The biggest companies in the world are now launching cryptocurrencies. BOOM.
— Erik Voorhees (@ErikVoorhees) June 18, 2019
Blockchain Technology in the Oil and Gas Industry
In a research paper published by IEEE Research, Hongfang Lu, et. al. academically evaluated the state of blockchain for the oil industry. Large oil and gas companies have been working on blockchain technology over the past two years as a way to improve the management level, efficiency and data security in the oil and gas industry. (Hongfang Lu, et. al.) Hongfang notes that blockchain can bring a number of opportunities to the oil and gas industry. these may include reducing transaction costs, improving transparency, and increasing efficiencies.
The development of blockchains will likely move toward a hybrid blockchain architecture—with a multiple technology combination, cross-chain, hybrid consensus mechanisms, and other interdisciplinary professionals. However, since it is still in the early stage of the application, there are still many challenges, primarily technological, regulatory and system transformation. Currently, he says, Europe and Asia have the fastest pace of developing blockchain in the oil and gas industry. The number of blockchain projects is low when compared to the number of companies in the industry. The current understanding of blockchain in the oil and gas industry is not sufficient. The application is still in the experimental stage, and the investment is lagging.
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Will Facebook’s Libra truly cement cryptocurrency and blockchain for all industries to adopt? That remains to be seen. As in all emerging technologies, there are many companies vying to make their mark in the industry, and new applications to be developed.
However, Facebook’s dominance with user members on a global scale clearly puts cryptocurrency and blockchain on the map in a way that no other use case application has done before. Companies, world over, should pause and consider their blockchain strategy if they are going to succeed in the 21st Century.
Hongfang Lu, et. al., “Blockchain technology in the oil and gas industry: A review of applications, opportunities, challenges, and risks”, IEEE Research, March 2019.
Madore , P. H. , “Russia’s Massive Oil Industry Considers Using Facebook’s Global Coin”, CCN, June 2019.
Meyer, Henry ; Arnold, Laurence; and Tanas, Olga, “All About the U.S. Sanctions Aimed at Putin’s Russia”, The Washington Post, April 2019.
Muzzy, Everett, “A History of Disruption in the Energy Industry”, ConsenSys Media, July 2018.
RBC, “Sechin announced the penetration of Google and Facebook in the oil industry”, RBC, June 2019.
Yago, Edan, “Facebook’s Cryptocurrency Is a Nail in the Coffin for ‘Blockchain Not Bitcoin’”, Coindesk, June 2019.