According to CoinDesk, the year 2024 is poised to be a significant election year amid global instability, including a war in Europe and challenges to the post-World War II international order. While decentralized technology cannot fully protect against a total collapse of the rule of law, it can help mitigate certain risks that businesses and investors face in unstable environments. Three primary risks can be addressed through careful application of decentralized technology: currency manipulation, political interference in the judiciary, and corruption at various levels.

Currency manipulation is a major concern, with central banks and treasuries facing political risks such as printing money to finance deficits or pre-election spending. Businesses can mitigate this risk by shifting from volatile local currencies to stablecoins, keeping minimal amounts of local currency where legally permitted.

Political interference in the judiciary is another significant risk. Courts are essential for dispute resolution, and corrupt judicial systems can lead to unfair outcomes. To avoid politically compromised courts, businesses can use blockchain-based smart contracts that are automatically enforced, reducing the risk of nonpayment or disputes and increasing the likelihood of automated, fact-based resolutions.

Corruption, both internal and external, poses a substantial risk. Corrupt officials may engage in arbitrary regulatory actions or selective enforcement against non-compliant firms. Transparency is the best defense against such corruption. By making all orders, shipments, purchases, and prices public, businesses can expose theft and corruption. An example of this practice is seen in the Indian state of Maharashtra, where cooperative farmers at the Sahyadri Farmers Producer Company used the Polygon blockchain to achieve lower overheads and fairer prices.

While most companies, especially large ones, must adhere to existing rules, cryptocurrency adoption by consumers often outpaces that by enterprises due to the lower risk of prosecution for individuals. Businesses, however, have significant real-world assets that can be seized as penalties, making them more vulnerable to political risks.

In conclusion, while blockchains and cryptocurrency can mitigate some political risks, businesses must still navigate the inherent risks of operating in unstable environments. The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.