Bitcoins Become Popular Iranian Currency

Iran's covert nuclear program has the world on edge. This week, the nation announced it would be stepping up the uranium enrichment program that inspired sanctions from the U.S. and other Western nations.

These sanctions have rocked the Iranian economy throughout the year, causing oil revenue to fall and decreasing the value of the national currency: the rial.

In August, the rial was valued at 20,160 against the U.S. dollar, ending up at 36,500 by October. Now it's at 27,000, but Iranians are still concerned about what it will do next.

From Businessweek:

“We have no idea what will happen,” says Amir-Hosseirn Madani, who says he's traded tens of millions of street market dollars in Tehran over the past two years. “These days prices change every 10 minutes.”

This volatility has caused many Iranians to move their investments into foreign currencies for security. But this is difficult particularly considering the sanctions. That's why many Iranians have started using Bitcoins.

Bitcoins are a sort of universal Internet currency created by an anonymous programmer known by the alias Satoshi Nakamoto. They appeared in 2009 and have been gaining credibility lately, particularly as people in nations such as Iran look to invest their assets in stable currency.

This chart from Businessweek shows how they're valued:

The currency can be used worldwide, exchanged into nearly any physical currency. Transactions are very difficult to track and users can hide their identities.

And it also allows Iranians to easily send money outside the country. Children studying in Europe and America, for example, can receive funds from their parents in Bitcoins. Or Iranians can store their money in Bitcoins, protecting against the volatile rial.

John Matonis of Seattle nonprofit Bitcoin Foundation told Businessweek:

“Anyone with a computer is able to own, send, and receive them. You can be at an Internet cafe in Iran and managing a bitcoin account.”

Iranians are also capable of getting around sanctions from the West with the the currency. Musician Mohammad Rafigh, for example, is selling his newest album Beyond Matter on coinDL.com, an online store that accepts bitcoins. Downloads in the U.S., however, violate sanctions.

And the FBI isn't too pleased with the sudden popularity of this new currency. Businessweek reprinted part of a report from April leaked to Wired and Betabeat:

“Since Bitcoin does not have a centralized authority, law enforcement faces difficulties detecting suspicious activity, identifying users, and obtaining transaction records—problems that might attract malicious actors to Bitcoin.”

But that hasn't stopped the currency from growing.