Bitcoin (BTC) as a bulwark against inflation and repression in Iran

According to a report by an Iranian newspaper, a quarter of Iran’s population holds cryptocurrencies. For Iranians, cryptocurrencies are a way of circumventing the restrictions imposed by the country’s authorities, protecting themselves against the inflation hitting the national currency and easing the economic difficulties linked to international sanctions.

Crypto adoption on the rise in Iran, with Bitcoin leading the way

In just fifteen years of existence, cryptocurrencies are already an asset class too popular with investors. Nearly 580 million people use cryptocurrencies according to some players in the ecosystem. Although there is little interest in digital assets in some countries such as El Salvador crypto adoption is undoubtedly growing worldwide. This is also the case in Iran.

In its new report entitled “the Cryptocurrency space in Iran 1402“, Iranian newspaper ArzDigital reports that 25% of Iranians hold the cryptocurrency. This figure represents around 20 million users in a country where 78 million people have access to the internet. This is far from the highest number of crypto users in any country in the world. For example, India and the USA have 91 and 53 million crypto users respectively according to Triple A.

However, the number of crypto users in Iran is largely high when considering the proportion of adoption in relation to the country’s overall population. Worldwide, only the United Arab Emirates have higher crypto adoption than Iran, with 27% of crypto holdings.

As on a global scale, Bitcoin (BTC) remains the preferred cryptocurrency in Iran. Bitcoin is closely followed by Doge, Shiba and Cardano in Iranians’ wallets. Ethereum (ETH) only comes fifth.

Iran, crypto preferences, holdings, hodl, iranian, Iranians' preference for different cryptocurrencies
Iranians’ preference for different cryptocurrencies

According to the ArzDigital report, the average profile of an Iranian investor is that of a 38-year-old male resident of Tehran, whose portfolio consists of 22% BTC, 18% DOGE, 17% SHIBA, 15% ADA, 12% ETH, 10% TRON and 6% USDT stablecoin.

Why is there so much interest in Bitcoin in Iran?

As said earlier, nationwide adoption of Bitcoin in Iran is significant. With 25% of its population holding crypto, Iran surpasses several crypto-friendly countries in adoption. What explains such a high level of adoption of cryptocurrencies and especially Bitcoin? A Franco-Iranian bitcoiner looks into this question and provides some answers.

In his blog entitled the Bitcoin revolution in IranMarius Farashi Tasooji believes that there are three reasons why Iranians are attracted to Bitcoin. Firstly, Iranians are using Bitcoin as a hedge against the inflation that has hit the national currency. Indeed, the Iranian Rial has lost over 95% of its value in the last ten years. By 2023, inflation had reached almost 40%. Against this backdrop, Bitcoin, which rose by over 120% in 2023, is seen as a credible alternative.

Iran, Inflation, 1960 - 2022, Iranian rial, RI, RIs, farsi, Marius Farashi Tasooji
Inflation in Iran from 1960 to 2022

Another reason why Iranians use Bitcoin is to circumvent international sanctions and internal restrictions. Indeed, Iran has been under international sanctions for several years. These sanctions have had adverse economic consequences in the country, including rising unemployment and banking restrictions. In addition to international sanctions, internal governance in Iran is autocratic. The government controls virtually everything: from how people vote, to what clothes they wear, to what music they listen to. Moreover, any attempt at peaceful protest is brutally repressed in the country.

Against this backdrop, Bitcoin has become an indispensable ally of the persecuted Iranian people, both at home and abroad. On the one hand, BTC enables citizens to escape government bans. On the other, users can easily bypass international restrictions and make transfers and payments abroad using this cryptocurrency.

Finally, the use of Bitcoin is propelled in Iran by the payment of wages in cryptocurrency. Indeed, many Iranians prefer to receive their salaries in BTC to minimize their tax liability. In addition, the explosion of crypto businesses is propelling the culture of paying wages in Bitcoin. According to data from ArzDigital there are currently over 200 companies and 2,000 workers active in the crypto sector in Iran.

The adoption of Bitcoin in Iran reveals once again just how much more there is to it than economics. This asset has a much more political dimension than you might think. In Iran, people are using Bitcoin to protect their inflation-ridden savings. However, many use Bitcoin primarily to avoid government censorship. And it’s working.