The process of efficient trades in the oil industry requires a concerted effort of costliest technology, toil and care by the workers who struggle over its diverse facets. It is an industry that functions on trust networks and relies on continuous innovation. It has seen the oil behemoth that is BP transform from the British Petroleum Company into BP Plc to become one of many integrated industry companies. To efficiently invest in Oil trading, you must have a trusted trading platform like Oil Loophole.
The scope of this vast industry has had a profound influence both on people’s lives and also on our planet’s environmental health. However, its complexity makes it difficult for smaller players to enter or stay in this significant market, which often inhibits growth and creates monopoly-like conditions by heavyweights such as Saudi Aramco, Royal Dutch Shell Plc, Exxon Mobil Corp. and many others. The competition thus fosters innovation and hard work by the companies who want to stay ahead in this industry.
The history of oil is derived from its main industrial application of producing energy for the machines of this world. Once the oil was discovered, it took only seven years for respective companies to discover ways to extract oil from the ground using drilling technology which was then followed by a series of bottlenecks that had to be overcome by hard work and technological advancements that the user required to increase supply and accessibility.
The oil trading and cryptocurrency domain are linking up with each other as; first, the price of digital currencies correspondingly have an impact upon the overall price volatility of the oil; moreover, oil companies are seeing digital currencies as a significant help for the entire oil industry, let’s explore how.
How it All Started?
In 2017, the year that saw the acceptance of cryptocurrency by the public, countries such as Venezuela and Iran were placed under sanctions by the US government to destabilize their economies. The country’s oil production was severely affected in the meantime.
Shortly after, Iran started trading oil in another form of digital currency called (IRR) which is backed by physical gold, and the US sanctions on Iran forced it to find alternatives to trade its oil with. The new digital currency was quickly announced and led to a very successful ICO campaign in which over $2 billion was raised from investors from over 180 countries worldwide.
The cryptocurrency market has thus become the most suitable method for global oil trading transactions because it comprises many smaller players in this industry. The best way to approach this enormous industry is to understand how needs have shifted from conventional means of payment to digitized platforms that enable faster transactions and payment management between parties. It also opens up new opportunities for players planning on entering this market and those wishing to stay on top with their existing clients.
The Impact of Cryptocurrency on the Industry:
The impact of cryptocurrency on the oil and gas industry has been a story of emerging new realities for the players in this industry. As per a report published by Global Data Plc, the US is projected to gain $500 billion in revenue by 2030. This significant rise can be attributed to the increasing growth in the oil demand (Currently at 10 million barrels per day (BPD)) along with an increase in clean energy alternatives such as solar power, wind energy and other renewable sources.
The increase in demand means that supply will have to follow suit, which can be achieved by a more diversified team working towards exploration and extraction. In addition, the growing use of blockchain technology and digital currencies in the energy sector seems to be a trend that will continue to grow.
There is also a trend of successful companies accepting cryptocurrency as the only way to make payments. However, the current remittance payment system is not just slow but also expensive, complex, and laborious due to its multiple steps.
However, with blockchain-enabled remittance payments, all transactions are recorded in one place and can be settled in real-time without delays, saving time and money. Also, since funds or funds transfers are involved everywhere, there is always a need for a reasonable payment processor or gateway service provider who can integrate with the different blockchains.
Where can cryptocurrencies help the oil industry?
The rise of new clean energy alternatives such as solar power, wind energy, hydropower and bio-fuels has put immense pressure on this well-established industry. The ‘growing number’ of global oil companies find themselves with future opportunities due to increased demand arising out of the price trend that OPEC has left behind.
The structure of the oil market is also based on trust networks that have been built over many years. Thus, changing how this market operates from its conventional norms can be disruptive. Even minor tweaks to the system may significantly impact how prices are determined and distributed across countries. In addition, how transactions are conducted and the settlements are being made also follow a particular set of rules or guidelines.
Similarly, trade volumes depend upon how much is being extracted by producers. However, the cryptocurrency market has thrown down a new challenge to conventional norms by injecting new unknowns and uncertainties into a system that was once considered by companies stable. The critical question is will digital currencies pose disruptive changes to this industry?
With the help of blockchain technology and digital payment methods such as smart contracts, we can eliminate the concept of trust, leading to decentralization in an otherwise decentralized system.