This is an opinion editorial by Q Ghaemi, a stock and bitcoin analyst and author of the Qweekly Update newsletter.
Earlier this month, Reports surfaced That the Central Bank of Iran is working with the Russian Association of Crypto Industry and Blockchain to create a stablecoin that will be backed by gold to settle trades. This is not the first step into the crypto universe for any country, nor will it be the last. But the plan would be futile, ultimately bringing the two countries one step closer to adopting Bitcoin.
Iran’s cryptocurrency race favors Bitcoin
In August 2022, a headline came and went and most people didn’t hear about it, and those who did thought little of it: “Iran approves use of cryptocurrency for imports to circumvent sanctions” ignoring the fact that the source of this headline was the same. A Saudi-funded media outlet With the potential goal of destabilizing and delegitimizing Iran, it is important to acknowledge that Iran successfully completed a trade in August with an estimated value of $10 million, measured in Bitcoin.
Based on daily volume, there are about 20 Potential Cryptocurrencies which could have been used to complete this transaction, however, if we take these cryptocurrencies by daily volume and agree that any with a daily volume of less than $1 billion (Anything more than 1% of daily volume will increase the price. Very significantly: 1% of $1 billion is $10 million) We are left with seven potential cryptocurrencies. : Ripple (XRP), Solana (SOL), USDC, Ethereum (ETH), Binance (BNB), Tether (USDT) and Bitcoin (BTC).
We can finish early. USDC, Solana And the wave Because they are all run by American corporations and, because of embargo laws (see: Tornado Cash), they would be forced to block Iran from using their platform (it’s also safe to assume that the Iranian government chose to avoid US companies for the sake of simplicity). Tether Given its link to the US dollar, it can also be thrown out. I would also ditch Ethereum because the Iranians are too cheap to pay those gas fees. This leaves us with two options: BNB and Bitcoin. Personal bias aside, no one is settling international trades with BNB without Binance CEO Changpeng Zhao (CZ) taking a victory lap. Bitcoin won.
Iran too Earlier Bitcoin mining was banned. Operation due to stress on Tehran’s power grid. It has been since. Returned all mining equipment. And, as noted above, it claimed that $10 million in international trade was completed using cryptocurrency. Suffice it to say that Iran has begun to see the potential of Bitcoin.
Russian meddling in cryptocurrencies shows the need for unsanctioned exchanges.
Russia has also started dipping its toes into the broader cryptocurrency space. after the The US government responded to the attack on Ukraine with sanctions., Russia was forced to find alternatives to complete international trade. President Vladimir Putin’s response was to give up. It has more than 500 billion dollars in reserves. and mandate that every buyer of Russian natural gas Pay in Russian Rubles. The ruble responded very positively to the news (see the chart below with a red arrow indicating when U.S. sanctions began and a green arrow indicating when the ruble became the sole currency for Russian natural gas. became payment).
Source
Russia then slowly began to reverse. His 2020 position on cryptocurrencies. Late last year, Russia announced that it will allow international settlement of cryptocurrencies without restrictions, a huge reversal from its previous position. These moves prove that Russia sees the potential of cryptocurrencies as a means of exchange.
Sanctions make the bond stronger.
Both countries are on the cusp of US/Western sanctions but have found ways around them to stay in power. The lesson these two countries have learned is to trust no one, especially in the financial world. Putin made a big announcement. That by freezing Russia’s dollar holdings, it became “virtually defaulted,” an indication that even the mighty dollar may not be as powerful as America would have you believe.
Iran is also no stranger to the West’s empty promises: after negotiations and agreements Nuclear deal in 2015President Donald Trump came in and tore up the old contract.. While this may be common practice in some (serious) business ventures, it is an affront to Persian culture. Every hint of Iran signing a new nuclear deal was absurd: Why would Iran assume that the next deal would hold after this president left office? Needless to say, the Iranian government has little faith in foreign governments.
“The enemy of my enemy is my friend” and “keep your friends close but your enemies close” equate to Iran-Russia relations.
In 2023, it almost makes sense to Westerners that Russia and Iran will work together. Many Western countries view both countries as villains, and strict sanctions prevent both from selling their resources to the world. Both have oil and gas reserves that the world desperately needs. and yet, Their history is far from harmonious.
By the 1920s, both Britain and Russia were fighting for control of Iran’s resources. The Qajar dynasty used to kneel down and give whatever foreign powers demanded in exchange for wealth and riches for their family. After that it all changed. The Revolt of 1921 Qajar dynasty ended. Brought Raza Shah to power.
Reza Shah refused to make concessions to foreign powers and increasingly focused on Iran. gave The Soviet Union came into being a year laterDue to which the USSR also focused on the country’s development. As Iran began to grow in importance to the West (especially to Britain and the United States), Reza Shah and his son (the last Shah of Iran, Mohammad Reza Shah) Use the West’s fear of communism to your advantage.. If Iran doesn’t get what it wants from its Western trading partners, it will make a small deal with the USSR to remind them who’s in charge.
Despite the once contentious history between these two nations, they seem to have found a common ground: the perception of the West as an enemy.
Why the New Stablecoin Will Fail
I made a big claim that the stablecoin experiment between Iran and Russia would fail and they would be forced to adopt Bitcoin. How will it fail? There is no trust: never was and never will be.
Trust can be lost during network formation. While many Russian and Iranian leaders believe their countries’ top engineers can develop a product capable of stopping any hostile attack, what about giving the other country backdoor access? to stop? What’s stopping someone from creating a way to spend double tokens? Now, this is all speculation: I’m just offering a few possible flaws in this system – how many more can you think of?
The biggest question concerns the gold reserves backing the stablecoin: where will the gold be stored and who will verify that the amount of gold in the inventory still exists? Given the lack of trust, neither country can be expected to blindly accept that the other has the gold it claims (see “Bitcoin standardfor more on this topic), and sanctions prevent a well-known third party from getting involved (although China may somehow fit into the puzzle here).
Since this huge and very important hurdle has been met, another question will continue to arise: Why? Why do we need to do any of this when there is a cryptocurrency out there that has enough liquidity to meet their needs and doesn’t require any party to trust?
Iran and both Russia has banned it. Residents from using Bitcoin, but that too Changed some of their positions over time. It is safe to say that both governments are still in the process of understanding the power and scope of cryptocurrency offerings. It is also worth considering whether this joint effort will be successful. This won’t be the first gold-backed cryptocurrency..
Result
Both countries are still in the data-gathering stage and, if by some miracle, a researcher stumbles upon this article, let me put it plain and simple: History has shown that when money is controlled, the opportunity Given, the people in charge manipulate the money for their benefit.
There is a reason for the fall of the Roman Empire and we don’t use it Guilders or the pound as world currencies. Instead of bringing this temptation into the equation, adopt a distrust of money that cannot be manipulated or expanded. Bitcoin is the indispensable currency you are looking for. Whether you get there before your enemies is up to you.
This is a guest post by Q Ghaemi. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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