For those who think bitcoin’s value is performing poorly, then they may have not heard the news about Iran’s currency, the rial. The rial is faring a lot worse and is expected to lose at least 57 percent of its value by the end of 2018. The decrease in value has dire consequences for those in Iran who hold fiat,- it is expected that half of their savings will be wiped out as a result. A
There are several factors that influence the crash in Iran’s currency. Perhaps one of the most influential is the strict sanctions imposed by the United States on Iran. Since the sanctions were put in place, Iran’s currency has been declining severely.
In contrast, the price of bitcoin has fallen by 70 percent, and this is after a correction that took place in 2014. There are predictions in place that the drop is not final – bitcoin is expected is expected to continue dropping.
According to Professor Steve Hanks, “#Iran’s annual inflation rate measured for today, 6/28/18, is $132.15.” Even though iran’s inflation rate is bad, Venezuela may have it much worse. It’s current inflation rate is over 30,000 percent. There is a difference between the two currencies – the Iranian rial is still being used to store value and for exchange within the country, while the Venezuelan bolivar has stopped being used altogether because it has no monetary value.
Interestingly enough, bitcoin and ethereum may be the answer to failing national currencies. Iran’s government may be considering a move that will allow it to use cryptocurrency to transfer money amongst its allies, such as Russia.
According to Mohammad Reza Pourebrahimi, the head of Iran’s Parliamentary Commission of economic Affairs,
“[IPCEA has already] obligated the Central Bank of Iran to start developing proposals for the use of cryptocurrency. Over the past year or two, the use of cryptocurrency has become an important issue. This is one of the good ways to bypass the use of the dollar, as well as the replacement of the SWIFT system. They [Russia] share our opinion. We said that if we manage to promote this work, then we will be the first countries that use cryptocurrency in the exchange of goods.”
Although there is still a great deal of banking that needs to take place from national governments with failing currencies, such a move does remain a possibility. Such currencies may be able to survive better under the global financial network. The downside is that U.S. sanctions may no longer have the same desired effects – such as stifling a currency. This may require governments to become more creative in terms of how they try to influence the political arena.