Iran Could Become First Country Forced to Use Bitcoin
The significance of Bitcoin as a borderless and neutral money is becoming increasingly apparent as the U.S. is attempting to block Iran from accessing its bank account.
The Money in Your Bank Account is Not Yours
On Tuesday, U.S. ambassador Richard Grenell revealed that the U.S. government is extremely concerned about Iran’s plans to withdraw 300 million euros in cash held in German banks, Reuters reported. “We encourage the highest levels of the German government to intervene and stop the plan,” said Grenell.
Iran seems to be feeling the pinch of new U.S. sanctions imposed after Washington withdrew from the 2015 nuclear agreement. However, as the Trump presidency ramps the pressure on Tehran, Iran’s population has been increasingly turning to Bitcoin as a safe-haven due to its borderless and apolitical nature.
In other words, the Bitcoin network does not care who you are or why you’re making the transaction. It is revolutionary in that it’s the first neutral form of money that can be freely transacted with anyone across the globe. What’s more, it can be easily stored — unlike gold — and control of the private key ensures that you have complete control of your money.
It is for these reasons that cryptocurrency is becoming increasingly attractive, according to Weiss Cryptocurrency Ratings analyst Juan Villaverde, who explains:
In the past, when corrupt governments devalued their local currency or seized assets from citizens, investors ran to the US dollar or gold. […] Today, many are moving into cryptocurrencies, where their money sits on a global distributed ledger that no central bank or government can touch.
The balance on your bank account, on the other hand, is for display purposes only. Not only are there strict limits on accessing your funds, the bank can freeze your account and the money that you thought you had is no longer yours — something that Iran will find out the hard way.
People of Iran vs. U.S. Sanctions (And Their Own Gov’t)
Despite the aforementioned benefits, Iran’s government has not been too fond of Bitcoin. In April, Iran’s banks were banned from dealing with domestic Bitcoin exchanges amid rumors that a national cryptocurrency may be in the works.
Senior market analyst at eToro, Mati Greenspan, however, believes cryptocurrencies can thrive during government crackdowns and capital controls. He explains:
[A crackdown in Iran] would create a secondary market for crypto assets within the economy, which—normally speaking—would have a very high markup compared to the asset’s price elsewhere in the world …So, there will be places where they’ll be able to trade peer-to-peer. They don’t need an exchange. Obviously, it’s a lot easier if you have a local exchange that accepts credit cards or bank transfers, but if that infrastructure’s not there, they can still trade it peer-to-peer.
While trading volume data from peer-to-peer exchange LocalBitcoins does follow bitcoin price, the spikes also coincide with times of heightened economic uncertainty.
The biggest occurred during the ‘winter of discontent’ from December 2017 to January 2018 with the second biggest in May 2018 when protests also took place as it became clear that the U.S. would not renew the nuclear deal with Iran.
Use It or Lose It
While the Chinese invented gunpowder almost 1,000 years ago, they were actually forced to use it in warfare when the Europeans subjugated their continent with guns in the 19th century. As history shows time after time, either you adopt the technology or someone else does and uses it against you. The same pattern repeats over and over — whether its guns, tanks, planes, bombs, banking, computers, the internet, etc.
Some Iranian officials have discussed possibilities of using cryptocurrencies to replace traditional international banking systems like SWIFT and bypass international sanctions. Unfortunately, the idea of Iran having its own national cryptocurrency is a farce.
A national cryptocurrency cannot be borderless by definition, much less neutral. Even if ‘IranCoin’ is supposedly ‘backed’ by oil, for example — such as the ‘Petro’ in Venezuela — getting other countries to accept it will be next to impossible. The United States will certainly make sure of that.
Therefore, Iran will sooner or later realize the value of a truly global, decentralized, and neutral form of money, with which transactions cannot be censored and funds cannot be frozen. With increasing pressure from the U.S. and its allies, Iran may just become the first country to use Bitcoin as financial dynamite.
Will Bitcoin play an increasingly important role in global geopolitics? Share your thoughts below!
Images courtesy of Shutterstock, coin.dance, Bitcoinist archives.