While there are benefits of Bitcoin, there’s also a serious and unexpected danger of the cryptocurrency that you should be concerned about. The Iranian government may be able to use it as a way to avoid the effects of US sanctions. Here’s what you need to know about this:
Blockchain Technology Keeps Bitcoin Anonymous
Blockchain transactions are conducted using a ledger, and there is no centralized regulation for the transactions. Individuals who use Bitcoin are not identified by name in the ledger of transactions, and they are randomly assigned a number instead.
Iranians Could Earn Large Amounts Of Virtually Untraceable Money By “Mining” Bitcoin
Equations need to be solved in order for the Bitcoin public ledger to function properly, and this is conducted by individuals who “mine” Bitcoin. While much of the Bitcoin mining that takes place currently originates from China, there currently is some Bitcoin mining that takes place in Iran.
In fact, a reporter from the New York Times toured a Bitcoin mining facility that is located near Iran’s capital, Tehran. He described the operation as quite large, and it contained multiple shipping containers that collectively hold thousands of computers that are used for the mining process.
The amount that this Bitcoin mining farm would be capable of generating would vary considerably, but it could be around 20,000 dollars per month at current prices of the cryptocurrency. While the farm that he visited was fairly large, the technology that was being used to mine the cryptocurrency is considered highly outdated. In fact, outdated Chinese computers were used, and these devices are rarely used nowadays. The computers that he saw being used are called Antminer V9s.
Iranians May Be Able To Do Business With US Banks Illegally
Sanctions prevent Iranian companies from doing business with US banks, but they may be able to hide their identities using blockchain technology. Here are some examples of effects that this could potentially have:
- Hackers in Iran could steal Bitcoin, and then they could use these funds to conduct business within the United States.
- Iranian criminals have already orchestrated cyber-attacks, and there was a major one that happened in Atlanta. The hackers targeted hospitals and even the city government of Atlanta, and this allowed them to steal 6 million dollars worth of Bitcoin by collecting ransom! Each computer that was compromised in this ransomware attack required a $51,000 ransom to be paid.
Iran Is Considering Creating Their Own Cryptocurrency
Iran has been considering creating a cryptocurrency of its own, and government backed cryptocurrencies are not as new of a phenomenon as you might expect. In fact, Venezuela attempted to create a cryptocurrency of their own as well. Here’s what you need to know about the potential implications about an Iranian Cryptocurrency and what you need to know about it:
- If Iran begins to use its own cryptocurrency, it could be much more difficult to trace financial transactions within Iran.
- The Iranian currency will be easily identifiable as coming from Iran since it will be called “crypto-rial”, which is based off of the name of their fiat currency.
- The fact that the cryptocurrency will have the backing of the Iranian government could make it stronger, and it could also allow the Iranian government to influence fluctuations in the cryptocurrency.
Large Iranian Companies Could Use The Cryptocurrency To Get Around Sanctions
The Bitcoin addresses of major Iranian companies have often been logged by the authorities, but there are ways that one’s Bitcoin address can be hidden from the view of the US government. Here’s what you need to know about what the impacts of large Iranian companies getting around the sanctions could be:
- It could be much easier for major Iranian companies to avoid detection than you’d think. In fact, major Iranian companies would be able to create online Bitcoin wallets for free that are completely anonymous!
- Anonymous wallets could be used in conjunction with tools that could hide one’s IP address, and this could make it nearly impossible to identify the location of Iranian companies using Bitcoin.
- In addition, there are programs known as Bitcoin tumblers that can allow individuals to further conceal their identity when making transactions using the cryptocurrency.
Bitcoin Fluctuates In Value
Bitcoin does not stay the same value all the time, and there are large rises and falls in its price. In fact, Bitcoin was once worth more than 20,000 dollars, but its price then fell to less than half of this value. If prices rise rapidly again, could allow Iranian investors to make an even larger amount of money through the currency while they are illegally investing in the United States. Here’s what else you need to know about how the price fluctuations of Bitcoin:
- The inflation rate in Iran tends to be fairly high, and it’s currently nearly 30% per year. Therefore, the fact that Bitcoin fluctuates in price rather than steadily declining in value significantly can make it a profitable investment for Iranian investors.
- It’s especially easy for Bitcoin miners in Iran to profit off of the price fluctuations of Bitcoin since electricity in the country in the country is cheaper, and this makes it much more affordable to run the computers needed for mining the cryptocurrency. In fact, electricity only costs six tenths of a cent per kilowatt hour instead of the average of 12 cents per kilowatt hour in the United States.
- Foreign investors see Iran as an especially profitable place to begin mining bitcoin, and they have begun moving their Bitcoin mining operations due to the affordability of the business in the country. This could allow Iranian investors to make a significant amount of profit despite sanctions, and it potentially could even turn Iran into a hub for Bitcoin miners.
Is It Just Iranian Corporations That Use Bitcoin?
It’s not just Iranian corporations that use Bitcoin. The reporter from the New York Times who toured the Bitcoin mining facility outside of Tehran interviewed a man named Ziya Sadr, and he described himself as a “hardcore bitcoiner”.
He is an engineer and uses the cryptocurrency to outsource jobs and accept payment in the cryptocurrency, and he stores the cryptocurrencies on flash drives and hard drives. He strongly believes that if it were not for Bitcoin, the transactions that he made would have likely been blocked.
Is There Anything That US Authorities Can Do To Trace Bitcoin Transactions From Iran?
Luckily, there are steps that US authorities can take to combat the problem, and they are likely to have some degree of effectiveness. Here’s what the US authorities will be able to do to crack down on Iran’s use of Bitcoin to evade sanctions:
- In some cases, Bitcoin addresses can be linked to an individual or corporate website, and this can allow authorities to track who is conducting the transactions. This method was used to discover the identity of an individual who conducted a Bitcoin transaction with Iranian hackers.
- In addition, in some cases, it is possible for IP addresses of individuals who are conducting Bitcoin transactions to be located.
- It is possible for the US government to disrupt a small number of Bitcoin transactions, and this could help to prevent Iran from using the cryptocurrency to evade sanctions. It is impossible for Bitcoin transactions to truly be anonymous.
- Many experts believe that it is impossible for Bitcoin transactions to truly be anonymous.
Iranians Have Already Purchased 2.5 Billion Dollars Worth Of Cryptocurrency As A Result Of The Sanctions
The Iranian government has recently released a statement that says that numerous Iranians began purchasing cryptocurrencies in order to do business outside of the country despite the sanctions, and the total amount of cryptocurrency purchased is 2.5 billion dollars. Furthermore, attitudes towards cryptocurrencies have changed rapidly as a result of the sanctions, and cryptocurrencies were once banned by the Iranian central bank! However, the ban has been lifted.
How Is Iran’s Use Of Bitcoin Likely To Affect The Value Of The Cryptocurrency?
Bitcoin’s price is somewhat heavily influenced by how it is regarded by the press, and this certainly is not likely to help Bitcoin’s image in terms of how it is discussed by media outlets in the US. Due to the fact that a large number of Bitcoin investors are located in the US and other western countries, press coverage of Iran’s use of Bitcoin to avoid sanctions could potentially reduce the price of the cryptocurrency.
However, increased demand for Bitcoin by Iranians could counterbalance this to some extent. Factors that are unrelated to Iran’s use of Bitcoin to evade US sanctions are likely to play a much larger role in future price fluctuations of Bitcoin.
Could Iranians Use Other Cryptocurrencies To Evade US Sanctions?
Yes, it is possible and likely that other cryptocurrencies will be used by Iranians, and the price fluctuations of Bitcoin and other cryptocurrencies will influence which ones are likely to be most widely used. Here are some examples of other cryptocurrencies that could be used by Iranians to evade US sanctions:
- Ethereum: Ethereum is an extremely popular cryptocurrency, and it is likely to continue to become more popular in the future. This cryptocurrency has a significant value, and the market cap of Ethereum is smaller than Bitcoin.
- Dash (also called Dark Coin): This cryptocurrency could potentially become quite widely used by Iranians who are looking to evade US sanctions due to the fact that it’s designed to be even more difficult to trace than Bitcoin.
- Monero: Monero is also designed to be exceptionally anonymous, and it is often considered to be the most private of cryptocurrencies.
- ZCash: ZCash is becoming increasingly popular, and it uses a unique system to remain exceptionally anonymous.
- PIVIX: PIVIX is also designed to be exceptionally anonymous, and it could be used by Iranians to evade sanctions.