During a continued divergence in the crypto markets, where ether posted new all-time highs while bitcoin wallowed at levels almost $10,000 below its peak, the politics and buzz around both continue to spur thought and debate.
In the spirit of that, this week’s newsletter dives into Iran’s ostensibly pro-bitcoin strategy and shows how it contravenes the level playing field values on which bitcoin is built. It also looks at the explosion in non-fungible token (NFT) sales and offers a lesson from Crypto Twitter on how to deal with rumors.
After you’ve read all that, please find time to listen to this week’s excellent episode of our “Money Reimagined” podcast.
In the latest stop on our world tour of crypto hot spots, Sheila Warren and I talk to two Nigerian entrepreneurs: Yele Bademosi, the CEO of payments app Bundle Africa, and Adia Sowho, a venture builder and operator. Among this entertaining pair’s many cool insights was the idea the Nigerian Central Bank’s February order that banks shut down crypto companies’ access backfired. It spurred even more innovation, inspiring local developers to dream up new decentralized solutions for getting around the banking sector’s gatekeepers.
Iran is the Cuba of the crypto age
Be careful what you wish for.
News this week that Iran will allow a small set of qualified entities to pay for imports with cryptocurrency mined by licensed operators might sound like an enlightened move to some bitcoin enthusiasts.
It fits a narrative that when governments start accepting bitcoin, they jump-start its role as a universal reserve asset. Meanwhile, the free trade-minded who chafe at all government intervention in markets may view Iran’s use of bitcoin to get around U.S. sanctions as a positive blow for global commerce generally.
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But look closer and you’ll see in Iran’s bitcoin strategy the hallmarks of an authoritarian system that flouts the freedoms crypto advocates like to embrace. When viewed alongside a crackdown against unlicensed crypto mining, the regime’s moves could widen the divide between government-favored elites and average Iranians. (Below we delve into the lessons on this taken from Cuba’s destructive dual-currency system.)
It’s not clear if federal officials in Washington will care about that inequity. But it will view Iran’s bitcoin solution for sanction avoidance with alarm, as it undermines the United States’ self-appointed role as cop to the global financial system. Concerns about that will be amplified if it’s apparent that China, which is eager to knock the dollar off its international reserve currency perch, is directly or indirectly supporting Iran’s approach. (The pathways for Beijing to do so are already laid.)