The Iranian Rial (IRR) is experiencing a hyperinflation rate of 132% annually and rising rapidly according to calculations by Professor Steve Hanke of John Hopkins University. Now, the Iranian government and the Iranian people appear to be looking to use cryptocurrency as a safe haven as their native fiat currency weakens.
#Iran's annual inflation rate measured for today, 6/29/18, is 132% pic.twitter.com/4NzcWIi9rZ
— Prof. Steve Hanke (@steve_hanke) June 29, 2018
The rapid rise in inflation rate is mostly the result of the United States pulling out of the Joint Comprehensive Plan of Action, also known as the Iran Nuclear Deal. Essentially, the deal was that Iran would stop producing nuclear weapons technology in exchange for the dropping of international sanctions. President Trump of the United States threw out the deal in May 2018, indicating that crippling financial sanctions against Iran would soon resume.
The sanctions will be a full embargo on all Iranian economic activity. No businesses or countries will be allowed to facilitate Iranian trade. The Iranian government could find cryptocurrency to be a good alternative since it is a decentralized system that provides cryptographically secure payments. Therefore, no government can stop Iran from buying or selling goods with cryptocurrency.
The Head of Iran’s Parliamentary Commission of Economic Affairs (ICPEA) says, “[IPCEA has already] obliged the Central Bank of Iran to start developing proposals for the use of cryptocurrency. Over the past year or two, the use of cryptocurrency has become an important issue. This is one of the good ways to bypass the use of the dollar, as well as the replacement of the SWIFT system. They [Russia] share our opinion. We said that if we manage to promote this work, then we will be the first countries that use cryptocurrency in the exchange of goods.”
Cryptocurrency is a potential safe haven as it more likely to maintain value and potentially go up significantly in the long term.
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