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December 4, 2012

Bitcoin in Iran

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I found interesting the news that Iran, whose currency is circling the drain, is proving an outpost for bitcoin.

I've been fascinated by bitcoin ever since it appeared in 2009, invented by a programmer named Satoshi Nakamoto whose very existence remains shrouded in an almost Gibsonian haze and veil of mystery.

Excerpts from Max Raskin's November 29, 2012 Bloomberg Businessweek story follow.

Under sanctions imposed by the U.S. and its allies, dollars are hard to come by in Iran. The rial fell from 20,160 against the greenback on the street market in August to 36,500 rials to the dollar in October. It's settled, for now, around 27,000. The central bank's fixed official rate is 12,260. Yet there's one currency in Iran that has kept its value and can be used to purchase goods from abroad: bitcoins, the online-only currency.

Bitcoin transactions are encrypted and handled by a decentralized global network of tens of thousands of personal computers. Merchants around the world accept the currency, from a bakery in San Francisco to a dentist in Finland. Individuals who own bitcoins and wish to exchange them for physical currencies like euros or dollars can use exchange sites such as localbitcoins.com, a Finland-based site.

The advantage for Iranians is that bitcoins can be swapped for dollars that can then be kept outside the country. Another plus: Regulators can't easily track the transactions, since bitcoins aren't issued from a central server. Bitcoin users can conduct business on virtual private networks, which hide customers' identities.

Iranian-American bitcoin consultant Farzad Hashemi recently traveled to Tehran and talked up bitcoin to his friends. "They are instantly fascinated by it," he says. "It's a flash for them when they realize how it can solve their problems." Iranians working or living abroad can send bitcoins to their families, who can use one of the online currency matchmaking services to find someone willing to exchange bitcoins for euros, rials, or dollars. Bitcoins are useful to Iranians wishing to move their money abroad, either to children studying in Europe or America or simply to stash cash in a safe place.

The uncertainty has led some Iranian software developers to ask clients to pay them in bitcoins. "Anyone with a computer is able to own, send, and receive them. You can be at an Internet cafe in Iran and managing a bitcoin account," says Jon Matonis, a founding board member of the Bitcoin Foundation, a Seattle nonprofit that promotes the currency. The exchange rate in Iran is 332,910 rials per bitcoin. It isn't known how many Iranians use bitcoins to skirt sanctions.

For now, Iranians are using bitcoins to maintain a fragile connection to the outside world.

December 4, 2012 at 05:31 PM | Permalink


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Quite a bit more on Bitcoin: http://www.grc.com/sn/sn-287.htm

Posted by: 6.02*10^23 | Dec 5, 2012 12:08:41 PM

interesting joe - have you ever tried a bitcoin transaction in podunkville?

Posted by: sherlock | Dec 5, 2012 12:13:31 AM

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