Author: Marius Farashi Tasooji, Compiler: Qin Jin, Carbon Chain Value
In this report, I will explore the increasing use of Bitcoin by Iranians, who are facing an economic challenges and scrutiny from governments and foreign powers. My goal is to describe how Bitcoin can be a tool to protect freedom and preserve value in a complex economic and political context.
For many people who are not familiar with decentralized financial infrastructure (commonly known as blockchain or cryptocurrency), it is difficult to understand Bitcoin The importance of coins to certain communities.
From a Western perspective, people often divide the world's population into two broad categories, perhaps unconsciously. The first group is Westerners, who benefit from electricity, drinking water, the Internet and the banking system. The second category is the extremely poor people living on the margins of society.
But the reality is more complex and nuanced. In different parts of the world, there are people who have easy access to the Internet but neither the means nor the need to open a bank account.
Another part of the world, the Iranians, have access to the Internet and banking system. However, the use of these services is subject to strict government control, monitoring and scrutiny.
Forget the Western perspective and we realize that Bitcoin is more than just a speculative asset.
In fact, Bitcoin is a censorship-resistant and anonymous value exchange network. These characteristics give Bitcoin a social function that its detractors overlook.
In my article "Orange is the new Green", I highlighted Bitcoin's role as a catalyst for ecological transformation and refuted the argument that it is an excessively polluting asset. The irony is that this point is often made by those who are at the forefront of policy and investment that produce millions of cubic meters of CO2 every year.
Through this article, I will continue to reflect and try to prove that Bitcoin is also an effective tool against government censorship.
Being French and Iranian, questioning established authority is deeply ingrained in me. Therefore, I began my research with a desire for revolution and change.
I quickly learned how difficult it is to talk about tools like Bitcoin that are used to circumvent censorship in the Islamic Republic of Iran.
When I tried to collect testimonies on several social networks, I was excluded from certain groups, my information was deleted, and I was even accused of being a government agent.
Of those I contacted, most did not respond or explicitly refused to testify.
One of them volunteered to translate my question into Farsi and then share it with other members of the Iranian Bitcoin/crypto community.
Unfortunately, this person has received a lot of criticism for promising to obtain information from people circumventing the law. After days of hesitation, he finally shared the questions and made it clear that answering them was not mandatory. In the end, 7 people answered the translated questionnaire.
I collected a total of 13 testimonies. Although some participants agreed to reveal their identities, I decided not to reveal any names or pseudonyms. The statements and actions described in these testimonies may subject them to government retaliation, including the risk of imprisonment.
Therefore, in the narrative reported in this document, I will use fictional sources with the most popular names in the country: Ali, Muhammad, Fateh, Reza, Zahra, Maryam , Hussein, Nima and Laila.
In January 1979, Iran’s last king, Mohammad Reza Pahlavi, was forced to leave Iran after numerous protests. His departure paved the way for Ruhollah Khomeini, who after 15 years in exile united communists, mujahideen, liberals and democrats.
After returning to Iran, Khomeini announced the end of the monarchy on February 11, 1979, first established a provisional government, and then established the Islamic Republic of Iran on April 1 of the same year.
In November 1979, Iranian students attacked the U.S. Embassy in Tehran, taking embassy staff hostage and accusing them of espionage. The hostage crisis seriously worsened relations between the United States and Iran, leading the United States to impose economic sanctions on Iran.
In 1980, Iraq invaded Iran, hoping to take advantage of Iran's instability. The war lasted eight years and killed between 600,000 and 1.2 million people, ultimately strengthening the Iranian regime and fueling a martyrdom cult in the country.
The sanctions imposed on Iran have seriously affected Iran’s international relations and economic development. Sanctions have led to high unemployment, especially among youth, and severe inflation in the Iranian rial.
My purpose is not to evaluate the rationale for international sanctions, but to provide a more accurate understanding of the economic role of Iranians. Daily life under lockdown and geopolitical influences.
Inflation is a direct result of years of economic instability in Iran. The Iranian rial (IRR) has suffered from high inflation for at least half a century, with inflation peaking at 49.7% in 1995 and averaging around 40% annually since 2019. In the past 10 years, the Iranian rial has depreciated by more than 95%.
Inflation rate in Iran from 1960 to 2023 - World Bank
Unemployment rate in 2023, official statistics show is 7.5%, and the unemployment rate for people under 24 years old reaches 20.5%. However, these figures are controversial and have been accused of being underestimated by the government.
Many Iranians work informally or receive partial informal wages to reduce the burden of taxes and the impact of inflation.
About this, Muhammad explained to me:
Suppose my salary is $500. On the first of every month, my employer officially pays me $150 to reduce expenses. He then informally pays the remaining $350.
Sanctions imposed on Iran by the United States and the European Union severely restrict the financial transactions of Iranians. They are unable to send or receive money from abroad and are restricted from purchasing international products or services.
To circumvent these restrictions, Iranian companies often open subsidiaries and bank accounts abroad, especially in Dubai and South Korea.
In addition to international sanctions, the Iranian government also implements strict censorship, which is manifested in the following different aspects.
Despite widespread invitations to vote, the results are always rigged in favor of the Supreme Leader, leaving Iranian citizens without any influence over the elites who run the country.
This censorship also extends to the Internet, which is severely restricted in Iran. Iranians cannot access many websites and social networks commonly used in the West. The only way they can circumvent these restrictions is to use a VPN. Encrypted messaging apps like Telegram are one of the few means of free communication.
Speaking of which, Ali told me:
We can’t even use the global financial system, and many of the daily activities that young people in rich countries take for granted are not available to us. . For example, we have limited access to Spotify. Many may find this funny, but we are fighting two enemies: a domestic enemy that imposes many restrictions on us and takes away our freedoms; and a foreign enemy whose sanctions directly affect ordinary people. life.
It may be hard to believe, but having a free Internet has become our main goal.
Since 1979, more than 4,000 Iranian citizens have been killed in various protests, at least 36,000 People were imprisoned.
To better understand the magnitude of these protests, let’s take the killing of Mahsa Amini as an example.
The 22-year-old woman was arrested for improperly wearing a hijab and died of injuries from the police on September 16, 2022. Authorities said she suffered a cardiac arrest, while her family accused police of beating her.
Protests broke out in response, initially locally and then quickly spreading across the country. In protest, many women burned their headscarves and cut off their hair.
In the face of these movements, the police and military responded with brutal measures, resulting in the death of more than 500 protesters, the arrest of about 20,000 people, and the execution of seven of them.
While centered on women's rights, these protests reflect widespread dissatisfaction with the existing regime.
How do Iranians position themselves?
Iran is a country full of life. While almost everything is banned and controlled, Iranians always find ways to circumvent every prohibition.
Forbidden temptation has always been a fundamental aspect of human nature, and Iranians are no exception. Government bans alcohol? But it's easy to get. Are certain types of music banned? Nightclubs, rap/rock/metal bands, and more. Banned from social networks? However, almost everyone has an Instagram account.
Until recently, it was nearly impossible for Iranians to circumvent banking sanctions or obtain a store of value. Bitcoin is changing this game.
Despite the government's stance and the image the media may spread, the Iranian people are very open to the West. In total, it is estimated that nearly 4 million Iranians have emigrated abroad, including 1.5 million to the United States and 1.2 million to Europe.
Although the word "republic" appears in Iran's official name, the Iranian government is far from a democracy. Many immigrants and opponents of the Islamist regime believe Iranians are "sleeping" because of their religion and idealize the regime's supreme leader.
On the subject, Ali told me:
Following massive public protests last year over the government’s killing of Mahsa Amini, Iran The domestic desire for change has become stronger. Although many professionals and intellectuals have left Iran and Iran is currently facing a shortage of skilled labor, we all hope that the dark days will pass and show the world that Iranians are a peace-loving people who want to communicate with the rest of the world. nationality. We want to show that these people are different from the Islamic regime. It is worth mentioning that most Iranians do not consider themselves Muslims and have abandoned their faith.
Bitcoin is a decentralized digital currency that is censorship-resistant. Unlike traditional monetary systems, Bitcoin operates without a central authority, instead verifying transactions through a network of independent nodes. This structure makes it extremely difficult for a single entity to block or restrict transactions, ensuring greater financial freedom for users.
Other blockchain infrastructure, such as Ethereum, benefit more or less from the same censorship-resistant properties and allow the exchange of tokens backed by another asset, such as Tether’s USDT. USDT is a stablecoin designed to maintain parity with the U.S. dollar.
Unlike the U.S. dollar and fiat currencies, Bitcoin is scarce, which means there is a long-term upward trend in Bitcoin value.
One of the main reasons Iranians use Bitcoin and cryptocurrencies is to fight inflation.
With inflation approaching 40% in 2023 and reaching 95% over the past 10 years, the Iranian rial is not a currency that can be held long-term.
Iranians can choose to convert rial to US dollars. While feasible, it is a complex and expensive operation, mainly due to international restrictions.
As a result, USDT is one of the most stable currencies in the world that allows Iranians to hold and exchange it.
However, using USDT is not without risks. Under the stewardship of Tether, USDT has diverged from the actual value of the U.S. dollar on multiple occasions. Other stablecoins similar to USDT have also lost parity with the US dollar and never recovered, and this phenomenon may also happen with USDT.
In addition, if Iranian use of USDT attracts attention in the United States, Tether may be required to freeze all Iran-related tokens, which will prevent its users from continuing to use it and cause the loss of their funds.
It’s also important to note that the U.S. dollar is also affected by inflation, although not as much as the Iranian rial. Over the past 10 years, the U.S. dollar has lost about 25% of its value.
As for Bitcoin, although it is volatile in the short term, it has proven to be the asset that best retains its value in the long term, rising from about $3,000 in 2018 to nearly $50,000 in January 2024. Dollar.
Bitcoin offers greater protection than the Iranian rial, and its current value exceeds 22 billion rials, an unprecedented record.
Bitcoin price against the US dollar (orange) and against the Iranian rial (blue) - Nobitex
The following are some comments about inflation:
I invest in Bitcoin to preserve value and avoid loss of principal. - Fatemeh
The key issue here is that cryptocurrencies are primarily used as a store of value in Iran. Iranians often line up to buy U.S. dollar cash, which is now in short supply. After people learned about Tether, their interest in it increased. Currently, there are very few people who are unfamiliar with cryptocurrencies. -Alibaba
Due to the decentralization of the Bitcoin network and other blockchains, BTC and USDT have become circumvention Means of review.
On the one hand, these assets can evade government bans, and on the other hand, users can easily circumvent international restrictions and make transfers and payments abroad.
As a result, many online services and products are purchased undeclared with Bitcoin and USDT.
Why not declare it? Most of the time, it's because the government prohibits the purchase of the desired product.
Here are excerpts from testimonials describing the different ways they use Bitcoin:
Yes, [Bitcoin] has impacted the lives of close family and friends of mine as well. Life. Government censorship reduces our quality of life. - Fatemeh
The main reason I use Bitcoin is because of the sanctions and restrictions Iran has imposed on certain products. This forces me to use cryptocurrency for payment. These limitations apply to others as well, and in my opinion, they should adopt Bitcoin as well. These bans severely impact our ability to live normal lives.
I mainly use Bitcoin to purchase software and transfer money to desired destinations. There are already some stores that accept Bitcoin payments. -Reza
As you may know, Iranians are very involved in Bitcoin because our economy is the weakest in history. People live with Bitcoin, but no one talks about it openly. If you want to include this information in your research or article, you can mention that even the rent of some apartments in expensive areas in northern Tehran is paid in USDT. In Iran, everyone knows they are not supposed to reveal that they own Bitcoin. But almost everyone has some. In Iran, Bitcoin’s political significance is far greater than its economic, social or cultural significance. People mainly use it to oppose the government. -Muhammad
International transfers and purchases with Visa and Mastercard are very complicated and come with a lot of extra fees and sanctions, so Bitcoin solves all these problems. -Zahra
I used Bitcoin to transfer money on the recommendation of a friend. While exchanging Bitcoin for fiat currency wasn’t that simple at the time, for an Iranian, this tool was a godsend. Subsequently, I deepened my understanding of the technology and began exploring blockchain. It's a fascinating world, especially since I can purchase certain subscriptions with Bitcoin or other cryptocurrencies. - Ali
The first time I heard about Bitcoin from my friends was in 1396 (equivalent to 2017), but it was not until 1401 (2022) that I Buy a VPN with Bitcoin during protests for Mahsa Amini. -Maryam
I have used Bitcoin at fast food restaurants and at the dentist’s office, and it is also my store of value. -Hossein
With the growth of the Lightning Network, there are many stores that accept Bitcoin. -Nima
Some interviewees confirmed that they and some of their acquaintances requested payment in USDT or Bitcoin in full or part salary.
According to them, Iranians adopt this method to minimize their tax burden, which can have serious consequences for their savings.
On the other hand, at home we face censorship and government restrictions, which is why we as freelancers use Bitcoin and Tether to generate income. -Maryam
One of the interviewees, who goes by the pseudonym Stupid Risks, conducted a months-long experiment to identify barriers and evaluate introducing Bitcoin to new people. degree of difficulty.
First, Stupid Risks believes that obtaining relevant information to understand the technical, economic and social aspects of Bitcoin is not particularly difficult for Iranians.
He believes that while speaking English is an advantage, there is enough content on social media (mainly YouTube and Telegram) to simplify Bitcoin and explain how to create and secure a Bitcoin/Lightning wallet, and how to use it.
However, Stupid Risks also points out some gaps that can be filled. He believes that building a growing, benevolent community, ideally led by celebrities or influential people, can go a long way.
He explains why this goal is difficult to achieve:
Part of the problem is the ignorance of celebrities and the so-called benevolent media about the importance and power of Bitcoin. . Another part of the reason is government restrictions and dangers for domestic Bitcoin users.
Solution: Some of us have to negotiate or even organize get-togethers.
Stupid Risks believes that even under a regime like Iran, prolonged power or internet outages are unlikely, but he still thinks it is a possibility.
In my opinion, the risk of internet outages is often overestimated, especially with the emergence of solutions that allow sending Bitcoin via SMS, such as Machankura 8333.
The main issues raised by Stupid Risks involve misunderstandings about currencies. Many people believe that holding physical currencies is safer than holding digital currencies, and currencies other than the rial are still backed by real assets.
In fact, no country’s currency has been backed by anything since the 1970s. They all depend on government monetary policy and central banks.
Stupid Risks rightly emphasizes that for wider adoption of Bitcoin in Iran, Iranians must understand that although Bitcoin is a digital currency, it is inherently scarce and more reliable than fiat currency.
The first psychological barrier, he said, is that people generally believe in the false dichotomy of "real currency vs. virtual currency" rather than "fiat currency vs. hard currency."
The last few problems mentioned by Stupid Risks are also common in the West:
-Most investors are attracted by the prospect of profits and turn to riskier investments. Cryptocurrencies that are high, less resistant to censorship and inflation;
-Iranians insist on third parties even though they are aware of corruption in the domestic banking sector and the risk of seizure Keep your own assets;
-Bitcoin, as a new currency and technology, cannot understand and learn how to use it effectively due to people's indifference and lack of curiosity.
While testimonials are important, they are often biased and are influenced by the person who posted the testimonial. views and positions.
Therefore, I would now like to refer to a report published by ArzDigital media titled “Iran’s Cryptocurrency Space – 1402”. The report is a statistical study of cryptocurrency usage by Iranian citizens and businesses.
The following is a non-exhaustive list of statistics, the most important of which are as follows
-25% of Iranians own cryptocurrency;
-32.2% expressed interest and 29% have owned it before;
< p>-48.9% of non-holders said that they lacked enough relevant information and therefore did not dare to try easily.Among Iranians who own cryptocurrencies:
-38.10% have not invested in other markets;
- As of 53% of people are at a loss in November 2023 (Bitcoin below $35,000)
- 61% of people invested before 2021;
-82.10% of people Investing to fight inflation;
- 21.90% use decentralized finance (DeFi)
- 9.60% use cryptocurrencies to transfer or receive money from abroad;< /p>
- 7.70% use cryptocurrencies to purchase goods or services;
- 76.6% believe international sanctions are a barrier to using cryptocurrencies;
- 57.20% People consider restrictions related to Internet access (such as the requirement to use IP changing tools) to be a barrier;
- 68.10% invest in the long term (months or years, Hodl).
The most common cryptocurrency is Bitcoin, followed by Dogecoin and Shiba Inu in second and third place. Ethereum is only ranked fifth, behind Cardano.
Local exchange platforms have been established with various advantages:
- 84.10% of people use these platforms instead of foreign platforms , because they can pay directly in rial;
- 45.5% because they are more likely to receive legal follow-up in case of bankruptcy;
- 34.70% of people use these platforms Not a foreign platform, as they can pay directly in rial;
However, these platforms also face some obstacles, especially high fees. In fact, 52.70% of users believe that withdrawal fees are too high, which is equivalent to the fees charged by Binance in Europe, which costs around $20 for BTC withdrawals.
Regarding handling fees, one interviewee told me a way to avoid handling fees, which is to perform an "atomic swap" through Boltz, withdraw BTC on Lightning, and then receive it on the chain. This will save about 90% of the fees normally paid to the platform.
According to the ArzDigital report, if one person were to represent the average Iranian cryptocurrency investor, he would be a 38-year-old man living in Tehran with the following portfolio distribution: 22% People hold BTC, 18% hold DOGE, 17% hold SHIBA, 15% hold ADA, 12% hold ETH, 10% hold TRON, 6% hold There is USDT.
Concerning cryptocurrency regulation in Iran, the government has implemented several important measures to regulate the industry. The following is an overview of the main current regulations:
- Bitcoin Mining Regulation: The Iranian government now requires a license for Bitcoin mining, with the aim of regulating this activity, especially in terms of energy consumption and Aspects of compliance with established standards. Specific guidelines regarding the power supply to Bitcoin miners have been released.
- Exchange transaction restrictions: The Central Bank of Iran has imposed limits on deposit and withdrawal amounts on cryptocurrency exchange platforms. These platforms need to obtain licenses to officially operate and ensure they comply with regulatory standards.
- Cryptocurrency Taxation: Currently, there is no tax on buying and selling cryptocurrencies in Iran. While Parliament had proposed taxing cryptocurrency transactions, the measure was defeated, largely due to the lack of a clear legal definition of cryptocurrencies.
The public has mixed views on the attitude of government agencies towards cryptocurrencies: 11.9% of respondents want to liberalize the use of cryptocurrencies to the greatest extent, while 65.0% of respondents prefer for appropriate legislation and control in this area. Finally, 23.1% favored limiting the cryptocurrency space as much as possible.
Bitcoin and other cryptocurrencies have proven to be part of the way Iranians have circumvented government censorship, international sanctions and influence over Iran for decades. A tool for severe inflation.
For Iranians, Bitcoin is not only a speculative asset but also a means of escaping government control. The growing adoption of Bitcoin in Iran is a promising sign for the country’s future. This is not just because I think Bitcoin will increase in value and enrich its users, but primarily because it represents a form of currency necessary for democratic life.
However, there are some disadvantages to the use of Bitcoin:
- Its volatility: Although BTC is often seen as a hindrance factors, but its volatility will decrease with its adoption. Furthermore, its impact will become less important in the context of a long-term investment strategy;
- Novelty: Educating users to use Bitcoin safely and prudently is crucial ;
-Transaction fees: When transaction fees are high, users will turn to more centralized wallets (exchange platforms or custodial wallets), Phoenix Wallet, Fedimint and other solutions This limitation is being addressed.
In addition, Iran's economic situation is undergoing major changes. After Iran joins the BRICS and forms an economic alliance with Russia, it will further open up to the outside world and get rid of Western restrictions.
By integrating Bitcoin, or simply by tolerating its use, Iran could facilitate the emergence of a parallel economy. This would be an opportunity for Iran to benefit from this new economic dynamic while freeing the Iranian people from the restrictions imposed on them by the international community.
Fiat currencies are designed by elites and for elites. The very concept of printing money excludes the people, even though it is the people who give value to this means of exchange. Bitcoin is an asset that is scarce, easily portable, transferable, and divisible, making it an ideal candidate to be the perfect currency. In addition, Bitcoin can resist censorship and liberate those who are not born at the right time.
In addition to showcasing the use of Bitcoin in Iran, the purpose of this article is to highlight the injustices ingrained in our economic and political systems. This system relegates some people to the margins of society, while others are deemed more “worthy.”
To add a touch of poetry, I will quote Figaro's soliloquy from the literary work: Figaro points out to Count Almaviva that his luck and merit are simply that he was born into the right family, the right family, and the right family. The right place and the right time:
What have you done to have so many benefits? You have gone through a lot of hard work to be born, and that’s all: other than that, you are just an ordinary person! And I, struck by a thunderbolt, lost among the inconspicuous crowd, had to use more knowledge and calculations in order to survive than it would have taken me to govern the whole of Spain for a hundred years, and you want to compete with me! -Beaumarchais "The Marriage of Figaro" (Act 5, Scene 3)
Bitcoin is a peer-to-peer payment network. By definition or code it does not differentiate between users. Humans cannot provide such a service because they are often driven by the pursuit of wealth, and Bitcoin is designed to be impartial.
Even though it seems complicated at first glance, I think it is necessary to take the time to study it, pay attention to it, adopt it, and discuss it, because Bitcoin can at least allow our neighbors to "survive".
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