Iran’s currency is facing a tough time. With impending sanctions from the Trump administration, the Iranian rial is continuing to drop in value creating serious concerns for their economy. This is bad news for the rial but it is good news for Bitcoin.
There are reports coming in that bitcoin and other decentralized assets are gaining popularity with the locals as a way to elude these sanctions.
The rial has struggled for years but was slowly beginning to gain momentum when it once again hit a bump in the road. Only July 30, the currency posted its lowest price trading at 100,000 rials at black market prices. This is a very worrying sign for the local economy and has many Iranians fearing an economic collapse.
It does not help that the Iranian government has imposed restrictions on those seeking to turn their rials into more liquid foreign currencies. They are also trying to stop conversions into gold, which is a traditional way to convert assets into a commodity that is sure to retain its value.
Bitcoin To The Rescue
With their options being limited, savvy investors are turning to bitcoin and other digital assets as a way to weather the economic storm. The amount of bitcoin transactions in Iran has rise sharply since May 2018, when the US announced new sanctions on Tehran. The rise was quick but it still not as high as it was in the middle of the December 2017 bitcoin rush. At that time, Iranian media claimed that Iranians bought $2.5 billion worth of bitcoin and other cryptocurrencies.
Nowadays, many Iranians are seeking to put their money into bitcoin, despite the central government recently banning Bitcoin along with other cryptocurrencies in April. One Iranian who preferred to remain anonymous said she buys bitcoin and Ethereum every month with money from her salary. Many others are doing the same, thinking that the Iranian central bank won’t be able to resolve this issue in the near future.
Iranians are switching over to Bitcoin and other cryptocurrencies but their buying power is declining as the rial drops in value. In the past, buyers could buy one Bitcoin for the equivalent of $10,000. Now, buyers are shelling out as much as $20,000 to acquire one Bitcoin. This is in sharp contrast to the international price of bitcoin which is pegged at $8,120 at the time of this writing.
Seeking a National Cryptocurrency
The Iranian government is doing its best to resolves its economic woes and seems to be turning to blockchain technology. It has already confirmed the development of a national encryption key and it is moving to launch its own national cryptocurrency as a way to get through sanctions.