by Kenneth Schortgen Jr, The Daily Economist:
Almost from the moment that President Barack Obama shipped Iran over $100 billion worth of cash, gold, and other frozen assets that the U.S. had controlled during their decade’s long sanctions against the Islamic State, the Middle Eastern oil power began fomenting a new policy in which they would completely divest themselves from the dollar, and protect themselves from any future attempts by the U.S. in using the reserve currency as an economic weapon. Additionally, Iran has been none too keen…
Additionally, Iran has been none too keen on transitioning towards the Euro as a full time replacement, and this has opened the door for the government to find alternative mediums of exchange that are outside the dominion of Western central banks.
As Iran moves away from using the US dollar, bitcoin has emerged as a potential replacement. The cryptocurrency could thrive in a country where more than 50 million people are connected to the internet, financial experts claim. In the wake of US President Donald Trump’s travel restrictions on seven countries including Iran, the governor of the Central Bank of Iran announced last month that the US dollar will be replaced with a stable reserve currency more frequently used in foreign trades. Two possible replacements are being explored such as using one currency, potentially the euro, or allowing Iranians to select from multiple currencies, reported the Coin Telegraph. The announcement has caught the attention of the country’s first bitcoin exchange, BTXCapital, which sees Iran as a market with potential to grow. “The market is massive. A large population with a high proportion connected to the internet means there is a lot of completely untapped market potential,” Ganesh Jung, CEO of Draglet who develop an exchange platform used by BTXCapital, told IBTimes UK. – Russia Today
Yet because Iranian and Islamic law designates currency as being only physical money and coins, the use of Bitcoin would most probably be limited to official government and bank settlements, which are allowed now in a digital capacity through SWIFT.
This leaves backing their domestic currency with a much different form of money, and following December’s ruling by the Council on Sharia Finance regarding investment and ownership of gold, we could soon see Iran become the first nation in 46 years to back their currency with a precious metal to protect it from the effects of the dollar.
Eurasian Golden Triangle
“We’re seeing the emergence of a true Eurasian Golden Triangle with China, Russia and Iran as the three key points,” Engdahl underscores. “With the stated plan to route the Silk Road rail infrastructure to assist the mining of new gold for currency backing of the Eurasian member states, including now Iran with its significant own unexploited gold, the hyper-inflated, debt-bloated dollar system is gaining a formidable positive alternative, one committed to peace and development,” the researcher concludes. – Hang The Bankers
In the past year foreigners have been selling more dollar reserves than they have been buying, with Japan and China dumping nearly $1 trillion over the past 12 months. And with all signals pointing towards the Euro collapsing once elections in France, Italy, and Holland take place, Iran is looking to be well prepared for the next monetary system to emerge, whether it be with gold, Bitcoin, or a combination of both.