Will Bitcoin and Crypto Assets Aid in the Rescue of the Revolution Unfolding in Iran?
Persia is an ancient land with places mentioned in the Old Testament found there. As is often the unfortunate case, the continuously poor policies of the current government have landed the economy in the doldrums. So much so that it is now steadily heading towards hyperinflation. Unfortunately, the solution suggested is one that doesn't have a promising past record.
Irans Solution To Address Growing Inflation: Cutting Off Zeros
The Iranian government's solution towards controlling its spiraling inflation is to reduce the number of zeros on its national currency. Local media have widely noted this proposal to redenominate its currency. Reports quote Irans central bank, Bank Markazis governor as saying
“A bill to remove four zeros from the national currency was presented to the government by the central bank yesterday and I hope this matter can be concluded as soon as possible,”
Mismanaged Economy Sees A Spike In Cryptocurrency Usage.
Badly managed economies across the spectrum, from Brazil to Zimbabwe have tried to follow the same solution, each time changing the denominations has done nothing to combat growing hyperinflation. Following them, Iran had been looking at this option ever since their economy was adversely affected by President Trumps announcement that the US was pulling out of the 2015 nuclear deal.
However, the reimposed sanctions should not be a cover for the years of poor decision making. For example, the country saw a yearly increase of money supply by nearly 30 percent for the better part of this decade. This would naturally lead to the state of inflation and increasing lead to the local currency, Rial, rapidly losing value.
There is a lot of seething anger against the government and that has driven many to hit the streets to let their voices be heard. Perhaps the average citizen realizes that removing zeros is not the answer. Many Iranians have now taken to reposing their faith in cryptocurrencies instead. At the moment various metrics are showing its quick growth, something that is likely to continue in the immediate future.
Forced To Use Nontraditional Means.
It is not that the Iranians are a blockchain loving lot, embracing crypto is more a marriage of convenience. The financial jeopardy that the county finds itself in is further exasperated by external factors. The continues anger leads to street protest which further damages the economy, a cycle with no solution in sight.
Thus the people are forced to look at alternative solutions and bitcoin offers just that. From foreign students who need to work around a banking system that they can't use anyway to the common man who wants to conduct everyday transactions without the hanging sword of daily inflation hanging over their heads. Unsurprisingly a peer-to-peer digital currency is everyone's favorite flavor at the moment.
In fact, that has been the case for more than a year now. As per P2P trader Localbitcoins.com, trading shot up at the end of 2017 when the US pulled out of their deal. Since then crypto demand has stayed consistently high.
Winds Of Change.
As recent as September last year, various forces from within and without have been pushing for change, arguing that only a government change can save the economic situation. Crypto users agree but are looking for a different sort of establishment change. The rampant inflation of the Rial should answer any demonstrations against the important role that digital assets, an asset that cannot be devalued by central banks, can play.
This fact coupled by the scarcity of European and American fiat currency has led many such as Computer professional Abed Pariazar to look at cryptos. He predicts “Use of cryptocurrency will increase this year. Our currency will lose its value as inflation is an endless road. I can’t change my income to [the U.S.] dollar easily so I prefer to change my income to cryptocurrency. More and more people are doing this.”
Iran had made headlines a decade ago when the government relaxed internet access rules and that led to mass protests dubbed a “Twitter revolution.” Therefore, with technology becoming a greater part of their daily life, it would not be incorrect to assume digital assets have a greater chance of mass acceptance.
Like Venusvela, where inflation is rampant and crypto solutions are being considered, Iran could soon be forced to look at the cryptocurrency movement. Even the current clime of ineffective government solutions and international sanctions, the demand, and use of digital assets will undoubtedly grow.