Thanks to U.S. sanctions, dollars are scarce in Iran. Enter Bitcoin, the handy-dandy stateless peer-to-peer crypto currency! Iranians are using the hard-to-trace digital currency (which can be exchanged for dollars) to buy things they want or need abroad. And Americans are using bitcoins to evade sanctions:
At online store coinDL.com, shoppers can use bitcoins to buy Beyond Matter, the latest album from Iranian artist Mohammad Rafigh. Anyone in the U.S. downloading songs, which fetch .039 bitcoins or 45¢ each, risks violating U.S. sanctions. That doesn’t bother Rafigh, who’s studying computer engineering as well as playing music. “Bitcoin is so interesting for me,” Rafigh wrote in an e-mail. “I wish the culture of using digital money spreads all over the world, because it does not have any dependency on anything like politics.” Rafigh has translated some bitcoin software into Farsi for his friends. “I love Iran, and if bitcoin is good for me, it can be good for more Iranians like me.”
Here’s Reason TV on Bitcoin and the end of state-controlled money:
Bitcoins Become Popular Iranian Currency
Iran’s covert nuclear program has the world on edge. This week, the nation announced it would be stepping up the uranium enrichment program that inspired sanctions from the U.S. and other Western nations.
These sanctions have rocked the Iranian economy throughout the year, causing oil revenue to fall and decreasing the value of the national currency: the rial.
In August, the rial was valued at 20,160 against the U.S. dollar, ending up at 36,500 by October. Now it’s at 27,000, but Iranians are still concerned about what it will do next.
“We have no idea what will happen,” says Amir-Hosseirn Madani, who says he’s traded tens of millions of street market dollars in Tehran over the past two years. “These days prices change every 10 minutes.”
This volatility has caused many Iranians to move their investments into foreign currencies for security. But this is difficult particularly considering the sanctions. That’s why many Iranians have started using Bitcoins.
Bitcoins are a sort of universal Internet currency created by an anonymous programmer known by the alias Satoshi Nakamoto. They appeared in 2009 and have been gaining credibility lately, particularly as people in nations such as Iran look to invest their assets in stable currency.
This chart from Businessweek shows how they’re valued:
The currency can be used worldwide, exchanged into nearly any physical currency. Transactions are very difficult to track and users can hide their identities.
And it also allows Iranians to easily send money outside the country. Children studying in Europe and America, for example, can receive funds from their parents in Bitcoins. Or Iranians can store their money in Bitcoins, protecting against the volatile rial.
John Matonis of Seattle nonprofit Bitcoin Foundation told Businessweek:
“Anyone with a computer is able to own, send, and receive them. You can be at an Internet cafe in Iran and managing a bitcoin account.”
Iranians are also capable of getting around sanctions from the West with the the currency. Musician Mohammad Rafigh, for example, is selling his newest album Beyond Matter oncoinDL.com, an online store that accepts bitcoins. Downloads in the U.S., however, violate sanctions.
And the FBI isn’t too pleased with the sudden popularity of this new currency. Businessweek reprinted part of a report from April leaked to Wired and Betabeat:
“Since Bitcoin does not have a centralized authority, law enforcement faces difficulties detecting suspicious activity, identifying users, and obtaining transaction records—problems that might attract malicious actors to Bitcoin.”
But that hasn’t stopped the currency from growing.