As tensions between the U.S. and Iran increase, after an American airstrike killed Iran’s General Qassem Soleimani, it appears like yet another war in the Middle East could be imminent.
It's crazy to think that Iran would be tempted into a war with the U.S. It doesn’t have the capabilities to hurt American mainland, and America’s power is way beyond that of Iran’s.
After the airstrikes, however, tensions rose to further heights, as retaliatory attacks were inflicted on the U.S. Embassy in Baghdad yesterday. And symbolically, the Middle Eastern nation raised a 'red flag' over the Holy Dome Jamkaran Mosque, warning the United States that it intends to engage in a 'severe battle.'
In response, Washington is sending 3000 troops to the region with immediate effect. Although U.S. defense officials have said the deployment was not in response to the Embassy strike, surely Tehran is seeing it as a further act of aggression.
With war seemingly closer than ever, what effect might this have on Bitcoin? How will it affect the adoption and usage of Bitcoin, especially in a war-torn Iran? And how will it affect the price of Bitcoin?
Well, since the airstrikes, the price of Bitcoin in Iran was reported to have shot up to about $29,000, with the global average rising by about 6%.
This is comparable with the price rise of gold and oil, both of which rose immediately after the airstrikes. But oil is bound to rise with any tension in the Middle East and gold is always seen as the true safe haven, especially in times of uncertainty
Isn’t Bitcoin a safe haven?
Many people say it’s too early for Bitcoin to be seen as a safe haven. However, Forbes journalist, Steven Ehrlich, claims, the feud between the two is ‘feeding the narrative that Bitcoin is a safe haven asset.’
We will see, and if tensions do keep rising, Ehrlich claims, any looming war ‘will serve as a defining test of Bitcoin’s presumptive role as “currency of last resort” or the “final port in the storm”.’
No doubt most people moving money to what they see as a safe haven will opt for gold. Bitcoin, however, is somewhere astute investors might choose to store at least some of their wealth.
After all, moving the price of gold takes a huge amount of collateral. The market cap is over $7 trillion, whereas the Bitcoin market cap is roughly $137 billion. This fact could spur the more discerning investors to move a small portion of their wealth into Bitcoin just to test the waters, even in times of uncertainty.
It’s uncorrelated to everything in the legacy financial world. Although it’s untested in times of any major war, it is beginning to gain approval from some of the bigwigs on Wall Street, and they know a small investment in Bitcoin could bring them a much bigger return.
What about Iran?
Iran would be crazy to initiate a full on war with America’s military might. But it’s an unlikely possibility that Tehran could openly buy and use Bitcoin in retaliation to U.S. aggression. Tehran knows that a move towards a currency that’s outside the global monetary system will hurt the very economy that benefits most from it: America’s.
The Iranian government is already thought to be using cryptocurrencies to get around the sanctions. The Financial Crimes Enforcement Network (FinCEN) issued an alert to U.S.-based institutions about Iran’s ‘illicit and malign’ exploitation of financial transactions.
It’s a desperate attempt by Tehran to get around the sanctions, and it is reportedly in talks with other sanction-hit governments about the creation of a gold-backed cryptocurrency, so each of them can trade with a currency they trust. This could be a short-term answer for Iran and others but it probably isn’t something that would suit its people.
Would Iranians really fall for a government-controlled shitcoin? President Maduro has tried it in Venezuela with the Petro, but the people aren’t interested. Bitcoin is starting to bloom there as people try their best to beat corruption, and it’s conceivable to think that Iranians would also put more trust in Bitcoin than something controlled by the very people who created the mess.
Since the airstrikes, it’s reported that Iranians are buying BTC at more than x3 the price on peer-to-peer market place LocalBitcoins. The native currency there, the rial, has plummeted in value over the last few decades, and with sanctions crippling the economy and inflation rising as high as 35% in the last few years, why wouldn’t Iranians turn more to Bitcoin?
The thing Bitcoin has to prove, however, is whether it has resiliency during a war and whether the usage isn’t affected. If Iranians are buying it to use and the Internet becomes fractured, then some might struggle to use it.
But having no Internet does not mean it’s impossible to send Bitcoin. It just makes it more difficult. You can of course send Bitcoin with SMS nowadays, and it’s also possible to send it using a high-frequency radio waves.
Another way around it is to use the TxTenna device, and an eventual Internet connection. Using it this way, you have to rely on the goTenna mesh network and the Samourai Wallet. To send a transaction. Mesh nodes receive the transaction until a TxTenna Internet connection is found, and this is when the transaction is sent to the Bitcoin network.
All these ways would be less convenient, but it emphasises how difficult it is to stop Bitcoin. And in times of desperation humans have proven to be so resilient, and in its short lifetime, so has Bitcoin.
War is wanted by only a few people. It hurts everyone connected. It only aggravates more tension between nations involved and the only people who gain from it are the ones who send us into war.
It might be too early for Bitcoin to be a safe haven for the wealthy to store much of their wealth in these uncertain times. And it’s not easy for Iranians to purchase, especially at mega-inflated prices.
But it does give them another option. It does give them a chance to remain a part of the global economy, and best of all it gives everyone the best vote against war we have ever had.
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