A few weeks ago, we put out a couple of articles on what we think of as the “petrodollar playbook” and how it can be used to predict cryptocurrency pricing.

More recently, there have been a couple of stories circulating around the cryptosphere that tie in closely with that concept.

One of them really closely, as a matter of fact. The Russian government is supposedly working on launching a crypto equivalent of the petrodollar. It would allow oil-producing countries on the United States’ “black list” to bypass the US-dollar denominated oil markets, sanctions, and other tricks the American have up their economic sleeve.

And the other story is that Facebook appears to be doing something with crypto as well.

It’s difficult to say what is actually going to come of both stories — but you can at least have a framework for your pessimism or optimism!

Whether intentional or not, there isn’t a huge amount of clarity about either of these stories.

Facebook doesn’t have a reputation for being the world’s most transparent company.

And the Russians have been fans of misdirection for years. If you’re interested, compare Cold War defector Yuri Bezmenov’s description of KGB tactics with Renée DiResta’s description of the Russian troll farm during American election season. All the “moves” are quite similar — send out multiple messages on both sides of issues that can be emotionally divisive but are inconsequential to the overall strategy. In other words, psychologically divide and conquer. We can be pretty sure crypto is in there somewhere.

So some healthy skepticism is in order, generally speaking.

Specifically, though, we can use the petrodollar playbook to analyze some key facts about what would make or break either of these crypto projects.

Summarizing what we said in the previous articles:

Judging a crypto project’s viability — and by extension its currency’s market price — depends on how well the currency functions as a hard coded mini petrodollar for X.

“Mini petrodollar” just means that, by default, any initiative like this is going to be on a smaller geopolitical scale than the existing petrodollar system created in the 1970’s by Kissinger & Co.

That means this framework has two main “big picture” criteria to evaluate for crypto projects.

One is how well the crypto currency is “hard coded” into a market.

In the case of the Russian-supported crypto version of the petrodollar, the basic mechanism for “hard coding” it into the oil market would be the same as the way the current petrodollar is. Politically. Sellers of oil from Venezuela (or wherever) would agree to sell it in this cryptocurrency… probably because they couldn’t sell it in any other currency as easily.

In the case of the “Facebuck” or whatever the alleged Facebook crypto will be called, there would actually be technological hard coding involved. The crypto would be integrated with the social media giant’s stable of technologies including Messenger, WhatsApp, etc.

The other is how well the “market for X” is functioning.

The market for oil is obviously alive and well. That’s why the Russians are making noises about having a crypto petrodollar replacement in the first place. You don’t see much talk of any other currency used like that in any other industry, do you?

It is not so obvious how a market or markets — using crypto as a medium of exchange — might develop on/with/via a social media platform or messenger service like Facebook’s. Consider all the hype and general lack of clarity about the Telegram ICO, for example.

There are healthy buy/sell listings type marketplaces on Facebook, for example, but it isn’t obvious that sellers would accept payments for these items in a crypto they can’t buy groceries with. In this respect, at first blush it might seems like a crypto from Amazon would make more sense than a cryptocurrency from Facebook.

Anyway, all of this uncertainty and speculation about Facebook’s move into crypto are what makes it a hot news item.

Summing up within this framework:

The “Russian crypto petrodollar for blacklisted oil-producing nations” would be in one of the world’s strongest markets but we can’t see how it would be hard-coded, especially as overt displays of national military power seem to be somewhat passé these days as opposed to the 1970's.

Facebook crypto, in comparison, would be hard-coded into an existing social media empire…. which basically exists to trade its users’ personal details, not help users trade value amongst themselves.

So question marks all around.

One last thing to note is that both the Russian petrodollar and the Facebook crypto projects are coming from the “top down.” There are plenty of solid crypto projects — like ours — that are coming from the “bottom-up” or somewhere in between.

The market for oil from blacklisted nations has existed long before crypto was a thing. Similarly, Facebook had already built or acquired much of their platform(s) before they appeared to get serious about crypto.

In this sense, both the Russian and Facebook crypto projects — if we can call them that — are working from the “top down” to impose the cryptocurrency on an existing market or technological platform.

The other way is obviously from the “bottom up,” i.e. develop the crypto market and/or technology after launching the currency a la the classic ICO. The model can work and often does but comes with its own set of risks and rewards.

At BlockStamp, we’re falling somewhere in the middle of the spectrum. Demand for the applications we’re working on exists.

It’s just that we’re trying to make disruptively better versions of the applications that everyone is used to using. All without an ICO!

The combined demand for our applications in timestamping, web publishing, and gambling is nowhere near that for oil. And we don’t have (and don’t want) anywhere near the scale of Facebook.

But we believe the project has solid fundamentals and a growing community to prove it. Looking forward to having you with us!

About BlockStamp:

BlockStamp is a multipurpose Bitcoin blockchain fork developed to promote liberty, transparency, and sovereignty in areas of the digital economy where these fundamental values are most at risk. BlockStamp hosts a radically fair gambling platform, a digital tool for transparently sealing data, a censorship-proof internet Domain Naming System, and the BST crypto coin.