Three reasons why Iran shouldn’t use bitcoin in oil trade
Baku, Azerbaijan, Dec.13
By Leman Zeynalova – Trend:
Countries like Iran may be able to use small amounts of bitcoin to evade some sanctions, but it’s unlikely they would be able to use it to seriously get round sanctions, Tom Pugh, the economist at British economic research and consulting company Capital Economics, told Trend.
“It’s certainly an interesting prospect and in theory it probably could be used in this way, after all it’s been used by criminals to evade the authorities for years. But I’m not convinced by it for a number of reasons,” said the expert.
First, it is far too volatile at the minute to be used as an actual currency which makes using it for actual transactions very risky, Pugh believes.
“Second, it’s not clear that the bitcoin system would be able to handle the billions of dollars in transactions that would be needed for oil exporters to effectively evade sanctions. Indeed, countries like Iran and Venezuela would be desperate to turn bitcoins into hard currency or at least trade them for other goods and services, it would seem that bitcoin is still a few years, at least, off the widespread acceptance that would be needed to support this,” he added.
Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly through the use of cryptography, without an intermediary. These transactions are verified by network nodes and recorded in an immutable public distributed ledger called a blockchain.
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