Iran, which recently came under fire from President Donald Trump, may become the latest troubled economy to embrace cryptocurrencies. According to a Forbes post, bitcoin use is becoming popular as an option to transfer money out of the country’s borders following Trump’s decision to pull out of the nuclear deal signed by his predecessor. (See also: Iran Central Bank Rebukes Bitcoin, May Develop Own Cryptocurrency.)
The report quotes an anonymous person as saying that closure of exchange offices, sanctions and a decline in the valuation of the national currency, the rial, might spur greater use of bitcoin. “I know that there’s a few people selling and buying bitcoin in Iran with LocalBitcoins,” he said, adding that bitcoin was the "only way" to transfer money from the country. Iran’s central bank banned bitcoin-related transactions in April. Mohammad Reza Pourebrahimi, chairman of Iran’s economic commission, said that more than $2.5 billion has flowed out of the country through cryptocurrency-related transactions. “A majority of people active in this area are in it for speculative activities and macro profits,” he said.
Bitcoin use was reported to have similarly surged following a decline in Venezuela’s economy and national currency. The South American country has developed its own national cryptocurrency called the Petro, which is backed by its oil reserves. (See also: Venezuela's Petro Isn't Oil-Backed; It's Not Even a Cryptocurrency.)
Iran has already indicated its growing interest in a similar proposal. Last year, Amir Hossain Devaee, deputy minister at Iran's Ministry of Information and Communications Technology, told reporters that the country was putting together “infrastructure as early as possible” for use of bitcoin and other cryptocurrencies.
Why Bitcoin May Not Catch on in Iran
But bitcoin holders might find the going tough in Iran for several reasons, according to the Forbes post. For starters, the falling valuation of the Iranian rial makes bitcoin more expensive for the common man. Then there is the fact that transacting using bitcoin or any other cryptocurrency is not an easy task and requires technical knowledge. Finally, bitcoin has yet to prove itself as a viable medium for international transactions.
Cryptocurrencies are both a curse and blessing for troubled economies. They enable countries to circumvent embargoes and trade with the rest of the world. But they are also a headache from the regulatory perspective because governments have a hard time tracking and recording transactions made using cryptocurrencies by citizens.
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