If they end up as a financial game-changer or the mother of all scams, crypto-currencies have, at the very least, gone some way to make the world rethink what money is, how it works and why we need it. And even what can happen when a country doesn’t have it.
Take Iran. In February, just after Donald Trump’s administration had announced another round of sanctions aimed at companies and individuals with suspected links to Iran, Tehran said it was going to develop its own state-run crypto-currency.
“In a meeting with the board of directors of [state-run] Post Bank, on digital currencies based on the blockchain, I am prescribing measures to implement the country’s first cloud-based digital currency,” said Minister of Information and Communications Technology, Mohammad-Javad Azari Jahromi.
This was, as analysts pointed out, only to allow the country to keep trading whilst avoiding Washington’s punitive reach. There were even rumors last year that the Islamic republic was going to set up an official bitcoin trading network in an attempt to circumvent the international sanctions that were, step-by-step, draining the juice out of Iran’s finance, energy and shipping industries.
“The Ministry of Information and Communications Technology has already conducted a number of research studies as part of efforts to prepare the infrastructure to use Bitcoin inside the country,” the Caspian News reported last October.
This announcement came as President Trump’s “worst deal ever” rhetoric became louder and Iran’s central bank, in retaliation, tried to ban the use of the US dollar. But what other currency could they use in foreign trades? Bitcoin, it seems, was the answer. Briefly.
Iran’s economy has suffered more since then. The rial has lost around a quarter of its value in the past six months and, something like $30 billion has gushed from the country since January, via an ever-flowing network of black-market money and gold exchanges, via suitcases and, yes, through Bitcoin.
Something like $2.5 billion may have been smuggled using crypto-currencies and, in an attempt to “control and prevent” this, last month Tehran banned all domestically registered banks from trading crypto.
So what next?
Venezuela, North Korea
Tehran might still follow President Maduro in Venezuela, who says his state-backed Petro coin, launched in 2017 to also sidestep US trade restrictions and ease Venezuela’s rampant inflation, has raised a much needed $5 billion via a public sale.
Critics, domestically and internationally, say his oil-backed coin is a Ponzi-type scam, but Maduro appears to be so flushed with its supposed success that he now says he will launch a gold-backed state-backed digital currency too.
Another so-called ‘rogue leader” supposed to have turned to crypto, to ward off President Trump’s economic threats, is Kim Jong-un.
Pyongyang was, according to various Washington and Seoul government agencies, allegedly behind various crypto-related crimes. These supposedly include the May 2017 WannaCry ransomware cyber-attack in which victims were asked to pay Bitcoin to have their frozen computers unlocked; the hacking of numerous South Korean crypto exchanges; the mining of Bitcoin using hacked personal computers around the world; and the $530-million Coincheck exchange hack in Tokyo in January.
North Korea is economically starved, it needs dollars and it can’t get them – well, unless it prints its own. So, the theory goes, it steals Bitcoins, which it then trades for greenbacks on Asian crypto exchanges.
Ten Bitcoin bet anyone, that says this won’t be discussed around the table at the Singapore summit on June 12th?
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