Iran recently revealed its “Hormuz Safe” initiative that aims to use Bitcoin (BTC) to ensure safe passage of ships through the Strait Of Hormuz. According to the Iranian government, the move could generate $10 million in revenue. The move comes amid the US-Iran war seeing no end in sight. Let’s discuss what the move could mean for the country, and what it means for the US dollar.
What Does Iran’s Use Of Bitcoin Say About The US Dollar?
Iran’s desire to use Bitcoin (BTC) is not entirely surprising, given that the country was oust of the US dollar-based system. According to cryptocurrency analysis firm CoinShares, Iran’s BTC adoption has significantly surged over the last few years. About 14 million Iranians use BTC, representing around one in six people. Annual transaction volumes have risen around 12% year-on-year, and represent about 2.2% of Iran’s GDP.
The US has increasingly weaponized the US dollar, especially against countries that have gone against American interests. Western sanctioned counties, such as Russia, Iran, and North Korea, have pivoted to cryptocurrencies, such as Bitcoin (BTC) to settle international trade. According to analyst Chris Bendiksen, sanctioned countries may be moving to Bitcoin (BTC) to bypass the global US dollar-based trade settlements system.
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However, things may not pan out as Iran hopes. While using Bitcoin (BTC) could be a way to move away from the US dollar, BTC is an extremely volatile currency. Prices often see violent swings, and profits could fizzle out in a bear market. The US dollar, on the other hand, is a well-oiled machinery. Moreover, the dollar has the highest liquidity in the world, which makes transactions and settlements simple. While using BTC could be a way to navigate the current situation, it may not prove problematic in the long run.