Local media reported that Iran plans to issue its own cryptocurrency tied to gold. It is expected to be approved by the Central Bank of Iran and is aimed at fending off economic sanctions from the United States.
In Iran, which is under economic sanctions, the financial system is not functioning and bitcoin mining is thriving. On the other hand, many cryptocurrency exchanges have banned Iran from using it.
The Iranian government has expressed concern about private bitcoin mining, but so far it has not been illegal. Iran’s government is supplying electricity at cheap rates and is not willing to use it for mining.
Some reports have reportedly moved to restrict imports of bitcoin mining equipment.
It is speculated that the reason Iranians are mining bitcoins is because they are concerned about the decline in the value of Iranian reals. The weak currency has raised Iran’s inflation rate to 40 percent, and the IMF estimates that the size of the economy in 2019 will decline by about 6 percent year-on-year.
The Central Bank of Iran’s issuing of cryptocurrencies, which are backed by gold, is a decline in the price of Iranian reals, and there is a need for an alternative to the statutory currency that has damaged credit.
The move to issue a new currency linked to gold as an alternative to the falling legal currency is also seen in Venezuela, which is hit by hyperinflation. It is likely that countries with weak currencies will continue to issue cryptocurrencies linked to physical assets such as gold.