Friday, November 30, 2012

Bitcoins Surface in Iran

Max Raskin writes at Bloomberg-BusinessWeek:
Under sanctions imposed by the U.S. and its allies, dollars are hard to come by in Iran. The rial fell from 20,160 against the greenback on the street market in August to 36,500 rials to the dollar in October. It’s settled, for now, around 27,000. The central bank’s fixed official rate is 12,260. Yet there’s one currency in Iran that has kept its value and can be used to purchase goods from abroad: bitcoins, the online-only currency... 
The advantage for Iranians is that bitcoins can be swapped for dollars that can then be kept outside the country. Another plus: Regulators can’t easily track the transactions, since bitcoins aren’t issued from a central server. Bitcoin users can conduct business on virtual private networks, which hide customers’ identities. 
At online store, shoppers can use bitcoins to buy Beyond Matter, the latest album from Iranian artist Mohammad Rafigh. Anyone in the U.S. downloading songs, which fetch .039 bitcoins or 45¢ each, risks violating U.S. sanctions. That doesn’t bother Rafigh, who’s studying computer engineering as well as playing music. “Bitcoin is so interesting for me,” Rafigh wrote in an e-mail. “I wish the culture of using digital money spreads all over the world, because it does not have any dependency on anything like politics.” Rafigh has translated some bitcoin software into Farsi for his friends. “I love Iran, and if bitcoin is good for me, it can be good for more Iranians like me.”
Read the full article here. 


  1. It reminds me of the saying: "What if they declared a war and no one showed up?"

    Bitcoin has the potential to make that statement a reality.

  2. An often under appreciated aspect of the bitcoin system is that it is politically neutral. Bitcoin is a truly person to person system, even more so than cash; governments are not involved in any part of a value exchange between individuals.

    If a government happens to want to fight terrorism, drugs, media piracy or tax fraud, then by all means fight them - but do it with out spying on all of our private money exchanges. This is why bitcoin is the future.

  3. Another interesting aspect about Bitcoin its ability to function merely as a settlement currency with other tremendously powerful financial cryptography tools like Open Transactions and Ripple (entering beta release). If you have not seen this interview with Chris Odom then I would highly recommend viewing it:

  4. This is why I say that bitcoin actually satisfies the regression theorem. First I differentiate between currency and money, like Mike Maloney and a few others. If paypal offered credits that could be traded between users of paypal, that would be currency, but not money.

    Second, the originating commodity in the regression theorem need not be something that is actually consumed, like classical examples of salt, metals, tobacco, crops, etc. It just has to have some kind of use of its own before becoming money.

    Well, what if you had a tool whose primary utility was to get around or through government barriers? A virtual "hammer" for trade barriers, if you will. What if people started exchanging cash for this special hammer, then traded that hammer for other goods?

    But what if the act of trading that hammer is also the same act of using it to break barriers? That is, its inherent commodity utility is exercised by the very act of its own trading. Imagine swinging it or throwing it to your recipient and smashing through barriers placed in between, metaphorically[1]. That virtual hammer is the commodity with some valued use identified by the regression theorem before becoming money.

    Now it is not yet money per se, because people still store most of their income/capital value in other units (fiat or commodity). So it is still a currency at this point, primarily used as a medium of exchange rather than a store of value. However, as it circulates, and if it gains more confidence to store bitcoin longer term, this virtual commodity--this "hammer", then shifts from being mere currency to becoming more money-like.

    It doesn't necessarily have to replace anything. It can just circulate along side other monies or supplement them. Who knows, maybe we'll have a gold or silver backed bitcoin bank/exchange/fund/instrument. This would also have the advantage of being able to set up some kind of secure proxy ownership of the hard asset that would be as private as you like. So long as you merely have a claim--an electronically secure title with no personal information--on the asset, you can remain anonymous. However it is reduced to being as private as those you trust once you ship it or claim it in person or via another person.

    In my opinion, bitcoin would likely not emerge as money in a free society. Interestingly that itself would also be evidence of bitcoin conforming to the regression theorem since in a free society--free of politically controlled fiat monies, where monies are denationalized and can be privately secure--bitcoin would not have that unique originating commodity utility it has today.

    [1] Technically, a more apt commodity metaphor would be like "oil" rather than a hammer, since bitcoin works around barriers rather than actually breaking them.

    1. Excellent observation. I think BitCoin is going break out soon, and rise quickly in value. I'm putting money in each week, and even if it drops in value in the short term, the long term qualities make me very bullish.

      They are trading at +/-$13 now, but I think they will go MUCH higher soon.