Since December 28, Iranians have been protesting in the streets, driven by the country’s high unemployment, growing inequality, high costs for basic necessities, and government corruption. The protests have been deadly, with over 21 people killed and 450 arrested.
As it has done during other times of unrest, the Iranian government has responded by shutting down popular digital communication channels like Telegram and Signal, in an attempt to make it harder for protesters to organize.
But with one type of technology curtailed, another interesting technology phenomenon started occurring even before the protests broke out last Thursday. Iranian peer-to-peer trading of Bitcoin, which was just over 5 million IRR at the end of November, doubled nearly every week in December, leading to a high of 71+ billion IRR by December 23, before falling back to 32 million the week after the protests started. This peak represented an astronomical increase to 14 times the trading volume of November.
So is there a connection between the protests and Bitcoin’s increased popularity?
While it’s hard to define the exact relationship between political unrest and Bitcoin adoption, there is evidence of a link between economic uncertainty and Bitcoin use. This is especially the case with currency issues. Because cryptocurrencies were designed to be a separate financial ecosystem from the world’s monetary systems, they aren’t tied to any nation’s economic situation in the way that local currencies are. Instead, a virtual currency’s valuation is based purely on market demand. As currencies have faltered in Kenya, Sudan, South Africa, bitcoin usage has increased.
In fact, with Venezuela’s out of control inflation, some Venezuelans have turned to bitcoin mining, which can generate up to $500 US per month. The country is even looking to launch its own cryptocurrency, which would be backed by the country’s natural resources.
But the link between economic uncertainty and cryptocurrency is not limited to developing nations, with even Wall Street turning to digital currencies as a new type of investment.
Financial troubles are definitely a root cause of the growing discontent in Iran, which has suffered economic setbacks due to international sanctions. Even after sanctions were lifted in 2016, however, life did not improve as much as expected, leading to rising discontent — especially amongst unemployed young men.
As Tehran-based Blockchain researcher Ziya Sadr told the International Business Times, “I hold all my money, all my capital, in bitcoin… because of the economic situation in Iran.” Sadr expects this trend to increase.
Peer-to-peer purchases of Bitcoin and other cryptocurrencies are the most common way for Iranians to hold the currency, since many international banking institutions still do not accept Iranian currency as payments. This is also true of most Bitcoin exchanges.
The work-around that creative Iranian crypto users have come up with to buy virtual currencies is, in an ironic twist, more akin to the original, decentralized promise that cryptocurrency represented all along.