News has been circulating on Twitter that LUNA Classic(LUNC) could be used to settle foreign trade fees in China. Not much information is available right now. We will update this article as soon as we get some concrete evidence.
It is also unknown how many other cryptocurrencies are being allowed to operate besides LUNA Classic.
The tweet is attached below:
The reason for such use, according to my understanding, is because of anonymity and because of low transaction costs in cryptocurrency.
Even if the news is correct, the adoption rate would be low considering volatility. But it would definitely send LUNC way too high. The price can rise more than 30%, as per my estimates.
Several countries and businesses have switched to cryptocurrencies for their convenience.
Many countries under active sanctions from western countries are reportedly using cryptocurrencies to settle external trades. Russia had earlier sought to use cryptocurrencies for the same purpose.
Moreover, countries such as Iran have also turned to cryptocurrencies which have been under crippling US and European sanctions due to its nuclear weapons program. In August, Reuters reported that Iran had successfully imported goods by paying in cryptocurrencies. The order was worth $10 Million.
Venezuela switched to the cryptocurrency Petro due to the galloping inflation in that country. It was announced in December 2017. Venezuela was one of the first countries in the world to switch to crypto as its official currency.
Why China might be doing so?
The cash shortage in China is not hidden. Several people protested against cash shortage after a series of liquidity crises. These crises were caused by Evergrande Collapse, whose liabilities exceeded $300 Billion.
Further, cryptocurrencies have the following benefits over fiat currencies.
- They are easy to store. One Wallet can store billions of dollars worth of several cryptocurrencies.
- It is cheap and easy to transact. A cryptocurrency overseas transaction occurs in minutes compared to a fiat overseas transaction that costs at least two days. Further, the costs are not even 1% of the payment in crypto for $100+ transactions.
- Another reason could be the anonymity that cryptocurrencies provide.
My experience with overseas billing costs me about 8%-10% in fees, and I receive money after two days of payment.
What is LUNA Classic(LUNC)?
LUNA Classic (LUNC) is the original cryptocurrency of the Terra blockchain, which collapsed after users began to sell UST to mint LUNA (automated way) on a massive scale. Users also sold LUNA subsequently to get cash or other cryptocurrencies. The reason for such a sell-off was the de-peg of UST stablecoin.
It was rebranded and again launched on May 27, 2022, as LUNA Classic, and the new Terra’s blockchain token is to be called just LUNA.