The fight to break away from using the United States dollar has intensified in the recent past. Interestingly, more Asian countries have been at the forefront. Fortunately, the birth of virtual currencies has offered an easy way out.
Iran, for example, is in the process of rolling out a gold-backed cryptocurrency. The currency is meant to enable Iranians to conduct international trades in the wake of economic sanctions imposed by the United States.
Trump threatens to add on the current sanctions on Iranian oil
Currently, the sanctions affect the Iranian oil industry. Due to the restrictions, Iran’s revenue from oil has significantly dropped, putting the country at a dangerous economic position. Unfortunately, the effects of the sanctions may even cut further if the United States president, Donald Trump, makes real his threat to add to the list of restrictions.
Recently, Trump said:
“We will continue to increase pressure on Tehran. Never can Iran have a nuclear weapon.”
In a move to reiterate the strength of the sanction on Iranian oil, the United States has imposed a ban on a Chinese company that was transporting oil from Iran.
Mike Pompeo, the US Secretary of State, noted:
“As part of that maximum pressure campaign, I am announcing that the United States is imposing sanctions on the Chinese entity Zhuhai Zhenrong and its chief executive, Youmin Li. They violated US law by accepting crude oil [from Iran].”
The US piles pressure, Iran continues to move away
As the US continues to pile pressure on Iran, Iran is looking for ways to reduce its reliance on using the United States currency or anything that leads back to the west. One way is by embracing a financial system that has no borders; cryptocurrency.
According to an Iranian media outlet:
“The Iranian cryptocurrency is backed by gold, but its functions are similar to foreign rivals. The domestically-encrypted money is to ease the optimal use of Iranian banks’ frozen resources.”
Iran’s deputy for management and investment, Directorate for Scientific and Technological Affairs, Alireza Daliri, said that the cryptocurrency would be used as a domestic digital currency. Additionally, the gold-backed cryptocurrency “would facilitate the transfer of money anywhere in the world. Besides, it can help us at the time of sanctions.”
Is a gold-backed crypto the way out?
But, will the cryptocurrency help Iran hinge away from the suppressive powers of the west? According to the American Foundation for Defense of Democracies (FDD), cryptocurrency is the way out.
A recent report by FDD noted:
“The US position of influence is not necessarily permanent. Technology has created a potential pathway to alternative financial value transfer systems outside of US control. [Iran, for example], envision a world in which cryptocurrency technology helps them eclipse US financial power.”
Apart from Iran, other Asian countries in the process or have already developed a state-backed cryptocurrency/digital currency, include Russia, China, and Venezuela.