One of the things that make cryptocurrencies disruptive is the fact that it doesn’t need a third party. It only means that you don’t have to worry about a central bank. Today, there are countries that have utilized cryptocurrencies in order to fight inflation and other economic problems. One of which is Iran.
Iran has already been looking to have its own cryptocurrency in preparation for the US sanctions imposed by the Trump administration. And this nightmare has already begun. The Iranian Rial crashed a record low against the US dollar.
The Iranian Rial was just gaining momentum recovering a bit after years of depreciation. Agitation is at its all-time high that the economy is on the verge of collapse. The authorities restricted the use of foreign currency transactions. And also, there is also a crackdown on those purchasing gold coins in the black market.
And when faced with economic concerns, some Iranians have been reported to have picked up Bitcoin and other decentralized assets. Since May 2018 when the US started its sanctions, Bitcoin trading spiked up in the country. According to its local media, Iranians spent around $2.5 billion to purchase Bitcoin and other cryptocurrencies.
Not the First Time
Could this be a trend among countries facing economic problems? In fact, Venezuela relied heavily on cryptocurrencies in order to stay afloat and in order to provide a solution to hyperinflation experienced by the country. Venezuela is even going to have its new currency that is going to be tied to its cryptocurrency instead of an actual asset. Subsequently, the national cryptocurrency is then tied to Venezuela’s natural resources, Petro.
Also, Venezuelans are also relying on cryptocurrencies other than Petro. There is an increase in the number of Venezuelans using cryptocurrencies such as Dash. In fact, businesses are accepting Dash. In addition to this, there are those who are running their own mining operations.
Those who run their mining operation take advantage of Venezuela’s socialist stance of controlling the price of basic commodities such as electricity.
A National Crypto for Iran
Iran announced in April that it will be launching its own cryptocurrency. Recently, Iran confirmed this move and that they have created a national encryption key that uses blockchain tech. This effort is believed to be a move that is aimed towards bypassing sanctions by the US. But of course, it is important to ask the question if this is going to work? Trump administration threatened countries who are going to be doing any form of business with Iran saying that it would also be getting sanctions.
Will blockchain technology be able to help Iran survive sanctions? Will there be countries that are willing to transact using its national cryptocurrency? You can consider this move by Iran as an experiment. In fact, Iran is already thinking of legalizing the industry.
According to Abolhassan Firouzabadi, the head of the High Council of Cyberspace, “The final decision has not been made yet, but a working group in the Majlis Social Commission is studying it to establish online exchanges for virtual currencies, mining of virtual currencies and what currencies will be declared legal”.