SEPARATISM AND THE BLOCKCHAIN

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As the drama over the DDoS attack on Bitcoin Gold continues to unfold, a completely different drama is unfolding in the heart of the European Union. Its member – Spain – is facing the most severe constitutional crisis since the end of the Franco era. The main issue at hand, is the potential push for independence by one its “historical regions” – Catalonia. Interestingly enough, if the Catalans do manage to break away from Spain blockchain based crypto currency might play a key part.

While the origins of this dispute lie buried beneath hundreds of years of complicated European history, the speed with which the dispute has spiraled out of control has alarmed not just the citizens of Spain but indeed all members of the European Union. The dispute has once again raised the specter of separatism – a sore spot not just for European governments, but many national governments world-wide. But apart from its geopolitical implications, it is the velocity with which developments occurred, that continues to stun observers.

Only about a month ago, the Catalan regional government announced that it will be holding a referendum vote on independence, on October 1st. The announcement was met with stern disapproval from Madrid which declared, that not only would such a referendum be considered unconstitutional and therefore illegal, but that the Spanish national government would do everything in its power to prevent such a vote and any subsequent attempts at secession – by physical force if necessary.

What followed on October 1st, was a fiasco. Spanish national police was ordered to disrupt the theoretically illegal voting process. Catalonia – being an autonomous region of Spain – maintains its own police service. In a dramatic show of discord, Catalan police (which normally is supposed to work hand-in-hand with the Spanish national police) refused to follow orders from Madrid and instead pledged loyalty to the separatist-minded Catalan regional government – headed by Carles Puigdemont. Supporters of independence filled the streets and scuffles broke out, as the Spanish police attempted to seize ballot boxes and disrupt polling stations.

The central government ended up seizing 10m ballot papers; arrested key officials; dismantled the technology to connect voting stations, tally votes and vote online; blocked and removed voters from polling stations; and blocked Catalan government websites that provided information about the vote. The national police even jostled with Catalan police and firefighters as the chaos unfolded. The immediate result of the violence was hundreds of casualties and at least 11 wounded officers. According to the Catalan government, about 2.3 million out of Catalonia’s 5.3 million registered voters – or 43% – cast their ballot (about 770,000 votes were lost after Spanish police confiscated ballots.)

While Madrid was hoping to enforce the unity of the Spanish realm, the events of October 1st might have had the opposite effect. Until that point, a significant number of Catalans were indifferent or opposed to secession. But the perceived, heavy-handed crackdown by Spanish authorities seems to have pushed politically moderate Catalans into the arms of the secessionists. “Who wants to be ruled by a state like this?!” was a phrase heard over and over again on the streets of Barcelona in the aftermath.

Although Mr. Puigdemont signed a declaration of independence within the weeks following the referendum, he has subsequently proposed that its effects be suspended for two months to allow for talks. This too came to an impasse as Spain’s Prime Minister – Mariano Rajoy – refused to hold any talks with Mr. Puigdemont, until the latter drops his insistence on independence.

The Catalan parliament, which is dominated by pro-separatist parties, will meet in Barcelona on Friday, where it will consider a declaration of independence. It’s previous session on Thursday yielded no resolution despite intense speculation that an attempt to to defuse the situation by announcing fresh, regional elections in return for a similar shows of good faith from Madrid. Instead Mr. Puigdemont enunciated that the position of the Catalan government is that no elections can be held until Madrid suspends its threats of imposing direct rule.

In a situation more and more resembling a showdown, the Spanish national parliament is also supposed to convene this Friday to cast a formal vote about the the revocation of Catalan autonomy. Madrid – viewing the behavior of Catalan politicians as nothing short of sedition – announced that it will be invoking article 155 of the Spanish constitution – suspension of regional autonomy. The measure, which is expected to be approved by the Spanish parliament, would see Carles Puigdemont’s government stripped of its powers and its functions assumed by the relevant ministries in Madrid.

But the coup-de-grace would not just be the formal suspension of Catalonia’s autonomous status, it would also imply a loss of control over its finances. The Spanish government has threatened to take direct control of Catalan government bank accounts all financial transactions in the region. Cristóbal Montoro, Spain’s finance minister, confirmed that a mechanism had been approved for the state to take control of Catalonia’s finances including money intended for public services and salaries, to prevent any of it from being spent on the secession.

That’s where it gets difficult for the would-be rebels. Politics are politics, but you can’t very well have a breakaway republic without having control over its finances. This is where blockchain based digital currency might enter the picture. In fact, Catalonia‘s current dilemma could make for a very interesting case study for how (would-be) sovereign states could adopt decentralized cryptocurrencies on a large scale. Countries like Venezuela have proven, albeit on a smaller scale, that Bitcoin and other cryptocurrencies can be a viable solution for politically unstable regions. China, despite its recent restrictions on ICO’s, is still another example of country with a thriving cryptocurrency market. Given that the case of Catalonia is different in many ways than the former, some similarities can be observed.

Besides an array of left wing and anti-establishment parties, Wikileaks and its colourful founder Julian Assange, have pledged their support to the cause of Catalan independence. Even before the referendum, back in September Mr. Assange tweeted his support for Catalan independence, as well as a comment on the importance of cryptocurrency in this situation.

@JulianAssange 7:40 PM – Sep 15, 2017”

Why all freedom loving people and states need Bitcoin part 29192: https://twitter.com/wikileaks/status/908731595938570240 …

As Bitcoin or any of its fellow cryptocurrencies it is not controlled by either Madrid or for that matter any other government, its use could be one way in which Barcelona could wrest control of its finances from Madrid. If the vote to block Catalonia’s finances passes in the Spanish parliament – it would implement this weekend. If the Catalan government would theoretically convert its funds into cryptocurrency beforehand – it would at that point be out of Madrid’s grasp. Catalonia currently has around 7.5 mln inhabitants. In the as of yet unlikely event that Bitcoin or another cryptocurrency would be implemented as an immediate method of payment, the Bitcoin Blockchain would see a significant surge in demand and therefore undergo another price explosion. Indeed some have even suggested that the Catalan government holds its own initial coin offering. Various governments print and sell bonds to raise capital, especially in times of crisis. Digital tokens could potentially be considered as a new sort of electronic bond. If this does occur, then the case of Catalonia would not only be unprecedented in modern European history but also in the history of finance.