Iran recently revealed its “Hormuz Safe” initiative The aim is to make use of Bitcoin (BTC), to guarantee the safe passage for ships in and out of the Strait Of Hormuz. According to Iranian officials, this move may generate revenue of $10 million. It comes as US-Iran warfare continues unabated. What does this mean for US dollars and for the US country?
What can Iran tell us about the US dollar by its use of Bitcoin?
Iran’s use of Bitcoin is not surprising given that they have gotten rid of their US dollar-based currency system. Iran has seen a significant increase in BTC use over the last couple of years according to CoinShares. BTC is used by 14 million Iranians – one sixth of the population. The volume of transactions has increased by around 12% per year, representing about 2.2% in Iran’s Gross Domestic Product.
US Dollar has been weaponized more and more, particularly against nations that are not in the US’s interests. Western-sanctioned countries, including Russia, Iran and North Korea have shifted to cryptocurrency, like Bitcoin (BTC), to settle their international trade. Chris Bendiksen says that sanctions countries are likely to move to Bitcoin to bypass global US-dollar-based settlements.
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Iran’s hopes may not be realized. Bitcoin is extremely volatile, and while using it as a currency could allow you to get away from the US Dollar, this may not be the best option. The price swings are often violent, and profits can disappear in a down market. In contrast, the US Dollar is an efficient machine. In addition, because the dollar offers the greatest liquidity, transactions and settlements are made easy. While BTC may be an option to help navigate through the current economic climate, the use of BTC in the future might not pose a problem.
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Source: watcher.guru
