Sanctions In Iran Causing Bitcoin Usage To Soar
Iran is in rough shape. The country is under sanctions from the United States which is basically cutting it off from the global banking system. At the same time, it has difficulty exporting anything, including oil.
As one can imagine, that is doing a number on the economy.
There is also the situation where the government needs to deal with hyper-inflation. The currency has little value and is becoming worth less each day.
For that reason, the government approved issuing a new currency, the toman, which is replacing the rial. The difference between the two is a few zeros. Each toman is now worth 10,000 rial.
The country hopes this will help to kickstart the economy which has been suffering.
Iran is in the midst of a major liquidity crisis. This is causing everything to be locked up, sending the inflation in the country skyrocketing.
While the government is trying to solve the problem by addressing its currency, many are turning to Bitcoin in an effort to sidestep what is taking place.
Many Iranians already started to hedge themselves by picking up Bitcoin. This gives them access to the global marketplace since Bitcoin can be sent and, more importantly, received from anywhere. It is also not dependent upon the Iranian economy.
Tehran is starting to get the picture, albeit a bit late. In an effort to get some commerce "coming into the country", it recently approved mining.
Earlier in May, the country’s Ministry of Industry, Mining and Trade also gave the go-ahead to Turkish crypto mining firm iMiner to establish a 6,000-rig facility in the Semnan province. Iran has also given tax breaks to crypto miners on the condition that they repatriate all foreign earnings.
This is believed to be only the start. It is expected that cryptocurrency adoption will increase in the coming months,with both Bitcoin and Ethereum benefitting.
“Mining, holding and trading of cryptocurrencies, especially BTC and ETH, is widely adopted in Iran. I’m sure in next months we will see more investment by the public, especially the middle class, in cryptocurrencies like BTC.”
As the global economy takes a hit, we could see more countries in a similar situation as Iran. While sanctions were the reason there, many countries will find themselves in a liquidity crisis if international trade freezes up.
This has a powerful effect on the population of those countries. Here is where Bitcoin, that is not dependent upon any single country's economy, could provide relief. In fact, most cryptocurrencies would be a better alternative than some of the fiat currencies out there.
It is very interesting to see all of this unfold.