Higher Oil Prices Will Boost Saudi Investment into Ethereum and Other Cryptos
Saudi Arabia continues to flex its investment muscle into the realm of crypto currencies. In its latest venture, the Kingdom announced that it would partner with ConsenSys to run an Ethereum blockchain boot camp to support technological development. The Kingdom will continue to invest in its infrastructure surrounding smart contracts and payment structures as long as oil prices continue to rise and wealth can be spread from the government to the people. Saudi Arabia is also planning to IPO Saudi Aramco which is the state-owned oil company. This will provide the backdrop for further investment into blockchain technology.
What is the Goal
Saudi Arabia is looking to bring smart contract awareness to the world using Ethereum, along with payment processing through Ripple. The deputy minister for the technology industry and digital capacities, said the bootcamp is part of the Ministry of Technologies 2020 action plan objectives to build a digital environment that attracts, incubates and develops skills. He cited the investment in national capacities and entrepreneurship, as the key to future growth in the Kingdom. The focus is to enhance modern technologies such as artificial intelligence, Internet of Things and blockchain, as pillars of the development of their GDP.
How Will this Be Accomplished
The strategy appears to be very interesting. Saudi Arabia is trying to launch an initial public offering of its state oil company, in an attempt to monetize future oil capabilities, by raising capital on the public market. The risk will then be transferred to the public and the country will no longer have to live with the large fluctuation in public works solely based on changes in oil prices. Saudi Arabia clearly wants oil prices near $80 per barrel, which will give Saudi Aramco a robust valuation. The Kingdom can then take the money they raise from the IPO and invest it into a net global technology hub that is driven by the latest in blockchain technology. By reducing output and contracting exports, Saudi Arabia has helped buoy oil prices from $40 per barrel up to $71 per barrel, which has increased the likelihood of an IPO soon.
The Ethereum blockchain bootcamp is one of many partnerships Saudi Arabia’s government has struck to bolster its technology presence. Recently, the Kingdom signed a contract with Ripple to test drive cross-border payments on blockchain through the Saudi banking system.
The Saudi Central Bank also entered into an agreement to launch a Ripple blockchain project that will facilitate international payments. This project will instantly settle and track payment based in Ripple xCurrent, which is a blockchain enterprise software.
Saudi Arabia is also working with the UAE (United Arab Emirates) on other crypto currency cross board transaction as well as smart contracts coded in Ethereum used to facilitate international trade. The crypto currency that will be used by the two central banks will not be available to consumers. These digital currencies will be by the central banks as well as some commercial banks to exchange currency as well as to facilitate borrowing and lending.