Iran had accused the US Navy of sinking one of its patrol craft off the island of Abu Musa three weeks ago. One of the lookouts on the Porter claimed he saw a submarine next to the Iranian patrol craft. The crew of the US destroyer also stated that the Iranian submarine started firing first, a claim that made the entire US story seem far-fetched. US intelligence had confirmed that all of Iran’s subs were in port. Due to the hazy and humid weather conditions, the US Navy video from the Porter was inconclusive.
There was still confusion surrounding what had really happened, but the bottom line was that both the US ship and the Iranian ship had fired rounds at each other. The Iranian ship had exploded, killing all three of its crewmembers. There were no American injuries. The Iranians were furious, the American politicians issued apologies the next week. Admiral Manning had apparently become the fall guy.
“Mr. Jackson—”
“Elliot.”
“Elliot, may I presume that you didn’t come here to make me feel better about my father’s career situation? And may I further presume that, as far as I am aware, station chiefs don’t normally come flying out to have conversations with lowly Special Operations Group men like myself? Would you say that is accurate?”
“Yes, Mr. Manning, that is accurate.” A soft smile.
“May I ask why you came down here?”
Elliot sighed and contorted his lips as if he was mulling something over.
“I’ve known your old man for quite some time. He’s loyal, and I’m willing to bet that his kids are too. Plus, I read your file. You were a top performer with the SEALs. I knew that you must have been. You had to be, to get picked for SOG. But still… your record was shinier than most I see.”
“Thank you, sir.”
“Chase, I’ve got a task for you. And it’s a delicate one, to say the least.”
“I’m all ears.”
Elliot stood up and walked over to the window. Chase could hear the roar of a twin-engine fighter jet taking off outside. Seconds later, a second roar followed as another jet took off behind it.
Elliot waited for the noise to quiet and said, “Chase, we have a leak.”
Chase raised an eyebrow.
“You’re familiar with the Dubai Financial Summit?”
“Somewhat. I just got back from Iraq a few days ago, so I’m catching up on my news.”
He grunted. “Mark my word, son. The Dubai Financial Summit is the biggest thing to hit this part of the world since they struck oil. China’s new version of the World Bank, the Asian Infrastructure Investment Bank, is rolling in here as one of its primary backers. The most powerful countries in the world have each sent their financial gurus. They’ll go over trade deals and talk about oil production in the region. But the main event is going to be this new currency exchange they’re setting up.” He looked at Chase. “You know what an exchange is?”
“Like a stock market exchange?”
“Right. Like that. Only this one is for money. People trade money. Well, banks trade money. I trade baseball cards.”
Chase smiled. Elliot was a likeable guy.
Elliot said, “So the Emirates and a few global investors are building this new monetary exchange. A few countries in the Middle East have agreed to try something out. They’re restructuring their national currency so that they are backed by bitcoin. You heard of bitcoin?”
“Sure.”
“Of course you have. You’re young. A lot of people thought bitcoin would end up being a fad, but it’s gaining a lot of traction.”
“How does bitcoin fit into this?”
“I’m not an expert, but as it was explained to me, a type of currency — whether it’s a euro or a dollar or whatever — it’s just paper. Actually, what’s more likely is that it’s just a bunch of electrons on a server somewhere. What gives that currency a value is when people agree to give it value. You catch my meaning? Well, sometimes, people get nervous and one type of currency looks more stable than another. So all those traders — banks, mostly — will pile their money into the stable currency and out of the risky currency.”
“Sounds like the stock market.”
“It is just like the stock market. And just like the stock market, there is something behind the investment. Something that backs it, that gives people a reason to believe in its value. Or a reason to get spooked. In the case of the stock market, it’s the company. If the company keeps making money and earning profits, people believe that the company’s stock has value. But money isn’t like that.”
“I thought it was backed by gold. Doesn’t the US Treasury have gold at Fort Knox or something?”
“A lot of people share that misconception. But in actuality, the US dollar has not been redeemable for gold since the 1930s.”
“So then what backs it up?”
“Fiat.”
“The Italian car brand?”
“Yes. The Italian car brand.” He shook his head. “No… not quite. Where’d you get your degree again?”
“The Naval Academy.”
“Figures. A fiat currency is a type of legal tender that isn’t backed up by a commodity… the opposite would be a commodity currency, like one backed up by gold. The dollar is backed by the full faith and credit of the US government.”
“Well, that’s a scary notion.”
“Well, not when you consider the alternatives. Better the US government than the others, I’d say.”
“True.”
Chase’s eyes looked up at the ceiling, moving rapidly as he thought. “So in this case, bitcoin is the commodity.”
Elliot nodded, proud of his pupil. “You got it. The Dubai Financial Summit is about to create a new currency. A commodity-backed currency, backed by bitcoin reserves. A whole lot of heavy hitters in the I-banking world are investing in this. But the biggest investor is this Chinese version of the World Bank I was telling you about, the AIIB.”
“So what’s the problem?”
“There are a few. Right now the US dollar is king. We as Americans don’t ever want that to change. Another issue is that bitcoin is untraceable. So as these countries change their currency to be backed by bitcoin, that apparently means that new currency is a lot less traceable than others. That’s the way it’s being set up right now, anyway.”
“Isn’t the US fighting that?”
“No one’s asking us. But trust me, we’re protesting. One important part of this is that a currency needs a host. It’s kind of like a new product launch. You need a test market as a proof of concept. It makes adoption much faster.”
“So who’s the test market?”
“There are two. Iran and the UAE. Iranian rials — that’s their currency — would basically be tied to bitcoins. The theory is that eventually, many Iranians could just switch over to using bitcoin altogether. This could have a big economic impact if it proves successful.”
Chase frowned. “I’m surprised that the UAE and Iran were able to agree to partner on this. I thought that everyone on this side of the Gulf hates Iran?”
Elliot said, “Iran’s got some rising-star politician who’s actually related to the Ayatollah. Name’s Ahmad Gorji. From what I understand, he’s a pretty reasonable guy. His ideas are progressive, but it seems he’s given a lot of leeway because… well, because when you’re related to the Supreme Leader, you get a lot of leeway. Might be the perfect mix. The Ayatollah has put him in charge of Iran’s bitcoin-backed currency. He might make a difference in relations around here. The Emirates like him. So they’re willing to allow use of this type of money in the UAE as a secondary currency.”