Will the common token project of Iran and Russia be successful? A conversation with a blockchain expert
About a month ago, a Russian news agency quoted Alexander Brazhnikov, executive director of the Russian Blockchain Association, as saying that Iran and Russia want to launch a gold-backed stablecoin called the “Persian Gulf Region Token” and use it in their foreign trade. .
A little later, in a meeting between a member of parliament of Iran and Russia, this plan was mentioned again, and prominent media such as Forbes and Sputnik of Russia also reacted to the plan of the two countries.
But how feasible is this possible project and can blockchain and digital currencies facilitate foreign trade between Iran and Russia and make it different from before? In this regard, we had a conversation with Saeed Khoshbakht, a blockchain expert, which you can read in detail below.
“Blockchain is at best a tool, not a problem solver”
Do you think the idea of using a gold-backed token for trade between Iran and Russia is viable or not, and what challenges might it have for the parties?
Suppose we want to have a financial system based on which payments are to be made; We have nothing to do with blockchain, cryptocurrency, etc. Here, practically when we are defining a common thing, it means that we have defined a financial agreement. That is, if we say that we want to have a cryptocurrency that we can exchange with, we are signing a financial agreement. The problem should not be solved the other way around, blockchain does not solve any problems. Blockchain is a tool at best. Therefore, this issue must be solved from a political, economic and finally technical point of view.
Is it mentally conceivable that countries like Iran, Russia or Turkey have the necessary characteristics to implement a financial agreement? It seems that this is not the case at all, and these countries not only do not have this capability, but are also in financial conflict and are in fierce competition with each other.
However, let’s assume that these countries have this feature. Setting up a multilateral financial agreement is a very difficult task. Let’s look at the agreements that exist in different parts of the world; The most famous of them is the Euro. It is very difficult to reach a single currency that can be used in exchanges. Even if it is possible, it is an activity that takes at least five years to design; That is, the designer of a financial agreement that the parties accept.
Another problem is that transaction secrecy is one of the features we expect from this payment system. That is, we don’t want the pay lines to be easily discovered. If we consider this point, by the way, blockchain can be a very bad solution, because every node has all the information and it is enough to find a malicious node in the network and want to remove all the information and then The entire network is exposed.
This raises the question of whether blockchain technology is useful for such a system. It might work for a transparent financial agreement, but I doubt it would be a good method for a financial agreement that wants to have hidden aspects as well.
The next challenge is related to the support of this token. The important question is where the gold backing this common token is going to be stored? The first way is to collect all the gold and give it to one country. For example, give all the gold to Russia. It is definitely not possible for all countries to hand over their gold to Russia, and none of the parties trusts it.
The second situation is that they all give their gold to a neutral country. This work will definitely not be done, and for example, Iran, Russia and Turkey will not be willing to give their gold to, for example, India and mediate this country. The third situation is that each country keeps the reserves it has pledged. Here we come across a problem that is a classic problem in game theory The problem of two prisoners returns
A classic example of the two prisoners problem is as follows:
Two suspects have been arrested by the police. The police must gather enough evidence to convict the suspects, and for this they interrogate the suspects individually. If one of the suspects testifies against the other and the other suspect prefers to remain silent (a prisoner who preferred to remain silent has “collaborated” with his accomplice), in this case the first suspect will be released and the other will be sentenced to one year in prison.
If both choose to remain silent, both prisoners will be imprisoned for only one month, but if both testify against the other, each prisoner must be imprisoned for three months.
As a result, every prisoner must choose between betrayal and silence; But none of them knows which way the other will choose.
Happy continuesd…
The optimal situation for these two people is that they both remain loyal to each other [پس از یک ماه] be released But the equilibrium point of this system is not here. The balance point is for both of them to betray each other, because they say that if I don’t betray, I will go to prison for one year, but if I do, I will go to prison for three months; Only if the other party does not betray, I will be freed. Finally, both betray each other and both go to prison for three months.
It has been proven many times in society and economy that the balance point of this issue is here. If we consider the same issue about the gold-based contract, the question arises in the minds of the parties involved that if the other party cheats and spends the backing assets and I have not done this, then I have actually worked for the other party and he has someone else. It uses money without backing. The equilibrium point of this system is that all actors betray the reserve reserve and the system eventually collapses.
A challenging scenario is that a country collects all its tokens from the market and gives them to, for example, Iran and wants to receive gold in exchange. In this case, are the actors willing to give their gold to this country? We are building a contract that is backed by gold, and if it wants to be reliable, it must be possible to exchange backed tokens with gold. Now, if the countries are not willing to make such an exchange, this system has not created any value and the same problems Bretton Woods system has the
The need to seriously change commercial laws in countries, the need to design financial instruments based on this token, pay the side costs of business using it and accept it by all the groups involved, manage the risk of gold price fluctuations, the need for systems to monitor, audit and create markets. To buy and sell it is one of the other common issues related to this token.
Can Bitcoin also play the role of gold in such a system?
We are looking to create a cryptocurrency-based tool that both parties accept, can use it in transactions, has high liquidity and does not have risks related to the issue of trust. All this is the definition of Bitcoin. The risk of price fluctuation is true for both gold and bitcoin. So why don’t we use Bitcoin?
The answer is clear. These designs are not meant to do anything. These projects are not meant to be done. Otherwise, all these exchange requirements are covered by Bitcoin or a basket of cryptocurrencies. Why don’t we use these?