Bitcoin could be used by Iran as a tool to partially combat the dramatic situation it is going through.
There are three main problems:
- the American dollar.
In fact, the health emergency in the country is now at dramatic levels, with a real explosion of contagions and deaths since October.
According to the Iranian Ministry of Health, the number of daily infections with Covid-19 has more than quadrupled in the last two months, leading not only to a worsening of the health crisis but also to economic collapse.
Added to this is a continuing loss of purchasing power of the local fiat currency, the Iranian rial, which continues to decline dramatically.
According to the professor of applied economics at Johns Hopkins University, Steve H. Hanke, an expert on hyperinflation, the situation in Iran from this point of view would now be “a classic death spiral”, given that since the beginning of the year the rial has depreciated by 54% against the US dollar, with the annual inflation rate rising from 22% to 158%.
Furthermore, the country has enormous problems in accessing its dollar reserves, as they have plummeted by more than 33% in the last 24 months.
As if that were not enough, international sanctions still make it very difficult for the country to spend US dollars, for example, to pay for imported goods.
However, the country is not only rich in oil, since already in August 2019 it regulated cryptocurrency mining, so much so that it has somehow encouraged the development of this industry.
A few days ago, a new law required all miners operating in the country to sell the mined cryptocurrencies to the central bank, and allowed the central bank itself not only to acquire and hold crypto, but also to use them to pay for imports.
The fact of being able to have BTC extracted by its citizens, for example, and then force them to give it to the central bank, could in fact help the country to get around the problems of not being able to acquire enough dollars to be able to spend them to buy imported goods.
The way Bitcoin will help Iran
Using its considerable energy sources it could easily acquire a certain amount of bitcoin, although probably not very high, to be used freely on international markets. In fact, the use of BTC can also help the country to circumvent the sanctions imposed by the US.
This way, also thanks to the recent appreciation of BTC, it could partially face the considerable difficulties it is experiencing in imports, using bitcoin instead of the US dollar as currency for international payments.
It is not yet clear if this is indeed the case, but since it seems that the Iranian central bank is acquiring BTC on the one hand, and is authorized to use it to pay for imports on the other, everything would suggest that such a scenario is absolutely plausible.