Iran wants international trade using cryptocurrency

Iran wants to allow companies to trade internationally using cryptocurrencies such as bitcoin. The central bank and the Ministry of Commerce have signed an agreement to this end, the Iranian newspaper Mehr News reports. The central bank’s payment infrastructure is linked to a payment mechanism that allows payments to be made in crypto.

Translations based on Google Translate

?ǣWhat we have agreed with the central bank is the use of blockchain systems and cryptocurrencies in the international trading environment ,?ǥ said Alireza Peyman Pak, Secretary of State for Industry, Mining and Trade.

He argues that guarantees, securities and the ability to make transfers are essential in business development and foreign trade. Various financial instruments are already being used for this purpose and crypto currencies such as bitcoin are comparable, according to the State Secretary.

?ǣPayments can be made through cryptocurrencies ,?ǥ he said, ?ǣThat is, cryptocurrencies can be a means of transferring credit from the exporter to the importer of goods.?ǥ

The head of Iran’s Trade Organization added that cryptocurrencies offer many practical applications for business, despite the central bank’s concerns and objections. He points to the risks of missed opportunities.

Payment infrastructure

To facilitate international trade based on crypto currencies, a payment infrastructure is being set up that can be used by the business community and other economic actors. “We are working on the mechanism of this system ,” said the head of the Trade Organization. “The international part of it is done and within the next two weeks the linking of the ‘Ramzarz’ system with our systems will take place.”

In 2020, Iran already introduced a new law that requires bitcoin miners to make their mining proceeds available to the central bank for the import of goods from abroad. According to Secretary of State Peyman Pak, the central bank has offered to use those funds for the new trading system.

?ǣAll economic actors can use these cryptocurrencies,?ǥ explained the head of the Trade Organization. ?ǣThe trader takes the ruble, the rupee, the dollar and the euro, with which he can obtain cryptocurrencies such as bitcoin and tether, a form of credit, and pass them on to the seller or importer.?ǥ

He emphasized that using cryptocurrencies does not involve currency exchange fees and that they are easy to use on a large scale. It would boost exports. He seems to ignore the (admittedly relatively low) transaction costs on the Bitcoin network in the form of miner’s fees .

Iran & Bitcoin

Iran has a fickle relationship with Bitcoin. Bitcoin mining is popular in the oil-rich country because of the low energy prices. About 4% to 5% of the global hashrate (computing power) of bitcoin miners is said to come from Iran.

Initially, this led to a lot of resistance from the Iranian government. The power grid was heavily burdened by the amount of mining and in response the government introduced legislation that restricted the mining sector and banned the trading of bitcoin. However, according to rumors, many bitcoin miners secretly continued to mine. In 2019, some miners were found to have hidden their mining equipment in Mosques, to stay out of sight and because of the subsidized power supplies that the Mosques are allowed to use.

Later, the government slowly came around. It introduced a licensing system for bitcoin miners and the ban on bitcoin trading was lifted. At the end of 2020, things seemed to have changed completely: a new law was introduced that obliges local bitcoin miners to make their mining proceeds available to the central bank for the import of goods from abroad. The new trading system announced, which may also be used by normal companies, seems to be an extension of this.

Sanctions

Bitcoin is decentralized and therefore an open and freely accessible monetary network. No one is in control of the network, making it a level playing field that is inclusive and politically neutral. It is one of the properties that makes Bitcoin unique and allows it to grow into a global and universal money system. Whether you live in the rich west or in one of the poorest countries in the world, as long as there is electricity and an internet connection you can use Bitcoin.

This is useful for many reasons, but it is especially important for the world’s 1.7 billion unbanked people. Often they are too poor or the costs are too high, the banking infrastructure is lacking or they do not have the necessary identity papers. Usually they do have access to a smartphone. With Bitcoin, they can skip a station and become a direct part of the global and digital economy. The social impact of this should not be underestimated; financial inclusion can fundamentally change millions of lives.

The downside is that Bitcoin is also interesting for countries with a reprehensible regime, such as Iran. Sanctions have been in place for years that make international trade more difficult and block access to international banking payments. That is why there have been calls in Iran for some time to circumvent the sanctions with the help of bitcoin. After all, the Bitcoin network is relentlessly reliable and it knows no identities or distinctions: a bitcoin transaction with a sufficient miner’s fee is irrevocably processed.

Is a global and open monetary network good or bad? Maybe a little bit of both. It may be very useful to millions of the world’s poorest people, but so is it to all sorts of crooks and oppressive regimes. At its core, Bitcoin is just a technology and technology is neutral; it’s up to people what they do with it. In that sense it is a bit like the internet: a worldwide and open communication network. That is not necessarily good or bad, but just a technology.

Venezuela has also been experimenting with Bitcoin for some time due to sanctions. The government has a ‘national mining pool’ and the Venezuelan military has a bitcoin mining farm.

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