Venezuela launched its own cryptocurrency last year. Now Iran is following. The middle-eastern country is reacting to US sanctions that will be enforced from the 6th of August on. To avoid the sanctions, Iran relies on cryptocurrencies. While Iranians buy into Bitcoin & Co. to avoid losing money through the plummeting Rial, the Iranian state is working to launch its very own cryptocurrency. All of this sounds like a big package of bad news. But there are some positive aspects to it.
Cryptocurrencies are a viable alternative to Fiat
Venezuela and Iran will now rely more and more on cryptocurrencies. This fact alone proves to thousands if not millions of sceptics that cryptocurrencies are more than just a bubble, a scam or anything similar. They are a legitimate and viable option to Fiat money. While some of them might still have some technical flaws, they are still preferred over Venezuela’s Bolivar. A currency that is losing value by the hour so heavily that the IMF predicted that the Bolivar might hit an inflation rate of 1,000,000% by the end of the year. An inflation rate that lets Bitcoin & Co. seem like stable coins.
A way to disapprove of the government
Rogue states can enforce the use of their own currencies. But it’s much more feasible with fiat money than with crypto money. To transfer fiat, you have to have a bank account. Any bank can be easily controlled and regulated by its government. They can enforce taxes on you this way, they can seize your funds or freeze your bank account. But more importantly, the government could and still can always manipulate the quantity of the official currency without the public participating in that decision. That is no longer possible with cryptocurrencies. As a matter of fact, now the opposite is feasible. If you disapprove of your government, you can easily swap aside your government’s currency. Whether it is Fiat or Crypto now. And the example of Petro exactly shows this disapproval of the Venezuelans. The Petrodollar has a measly market cap of less than $500,000 USD and sank from $0.10 to less than $0.007 USD in less than a year.
Rogue state money has to compete with legitimate crypto money
It is no secret that the Venezuelan population is relying more on Altcoins than on the Petro (XPD). The Eat BCH team has no problem to spend Bitcoin Cash where ever they go to. So the question that people have to ask themselves when choosing their currency is the same for governmental as for free-market currencies. Do I trust the originator and the people behind the project? What advantages does the currency have? Is the technology behind it good enough to stick out? etc. And all of these questions seem to have negative answers in the case of XPD. This might be different though for Iran’s cryptocurrency. The New York Times called Iran an undemocratic democracy. The Iranian state has undemocratic elements no doubt, but the Iranian people support their government nonetheless. At least much more so than the Venezuelans support their socialist regime. As Anti-Americanism is widespread in Iran, Iran’s cryptocurrency might find adoption in Iran precisely out of defiance for the USA.