Bitcoin: The Irresistible Attraction of Digital Currency

"Cryptocurrency", "digital currency", "global currency" ... These terms are used in Iran to describe a phenomenon that emerged not long ago from the depths of digital technology in relative anonymity, but today is gradually finding its place in the mysterious world of money and, despite its still marginal role in exchange and investment networks, is becoming a serious challenge for governments, central banks, and the international monetary system. The discussion centers around "Bitcoin", which was born in 2009 as a digital currency with very little value, and in January of this year, its price surpassed one thousand dollars, reached about 7500 dollars on November 6, and today (November 14) fluctuates between 6500 and 6600 dollars. Such rapid fluctuations in the history of world currency are quite rare, and for this reason, there are many stories about "Bitcoin" users that are heard here and there: stories of those who have lost everything and those who have found wealth. Alongside "Bitcoin", other digital currencies, numbering in the hundreds, have emerged, with "Ethereum", "Dash", and "Ripple" among the most famous. However, "Bitcoin" has left its competitors far behind and is currently the most well-known, although it is unclear how long it can maintain this superior position. The invention of "Bitcoin" is attributed to a mysterious figure named Satoshi Nakamoto, whose true identity remains unknown, and it is likely that behind this Japanese-sounding name lies one or more computer geniuses and financial experts, perhaps hidden in Silicon Valley, California. This digital currency operates on a technology known as "blockchain", which refers to an open and virtual ledger that records all transactions related to the use of this currency, and users oversee it. In fact, each user becomes a link in the chain that forms this network. Thus, "Bitcoin" relies on a community of users who use this currency as a means of payment for goods and services. Traditional currencies depend on the authority of a government (dollar) or a union of governments (euro) and are under the supervision of central banks. "Bitcoin" is a decentralized currency that is not under the control of governments and central banks, and its value depends on the community of users who use it for trading and investment. This characteristic is considered a significant advantage for "Bitcoin" by some experts, who even describe its emergence as a rebellion of citizens against the autocracy of governments and central banks. It is worth noting that "Bitcoin" appeared shortly after the 2008 financial crisis in the U.S., which was symbolized by the collapse of the famous "Lehman Brothers" bank. This financial storm and its consequences for the economies of the U.S., Europe, and Asia created a wave of skepticism against central banks and the concentration of monetary management in their hands. It became clear that even the most independent central banks in the world do not refrain from manipulating their money supply, doing so in the name of defending "national common interests". Following this crisis, governments injected large sums of money into banks, part of which was obtained through printing money and another part through increasing their debts, which ultimately fell heavily on taxpayers. Supporters of "Bitcoin" argue that governments and central banks should not reach into citizens' pockets in the name of "national will" and "protecting national interests" without consulting them. Furthermore, from the perspective of "Bitcoin" advocates, the emergence of this currency symbolizes individual freedom and is an important step taken by citizens who wish to free themselves from the control of the state, government, and central bank. Advocates of "Bitcoin" also cite other reasons to defend their currency. They claim that "Bitcoin" possesses all the characteristics of traditional currencies, meaning it is easily divisible, can be easily exchanged for physical money, and has greater portability and usability worldwide compared to traditional currencies. On the other hand, "Bitcoin" has an inherent credibility based on complex mathematical formulas and has gained the necessary trust, which is the foundation of any monetary system. Additionally, unlike traditional currencies that can be infinitely printed and issued by central banks, the number of "Bitcoins" cannot exceed twenty-one million units, and for this reason, despite its constant fluctuations, it will remain a scarce medium and be protected from inflation. Moving towards an Iranian "cryptocurrency"? Despite all these advantages, "Bitcoin" still has many critics and even enemies. Many ask what program or entity is hidden behind this currency? Why is the name and identity of its creator or creators not published? How have they allowed themselves to create money? How do we know this is not an international scam that could one day ruin thousands of people? Moreover, according to opponents of "Bitcoin", the number of people currently holding "Bitcoin" does not exceed one hundredth of one percent of the world's total population. Doubts about "Bitcoin" go even further. Opponents raise concerns about the survival of nations and international security, asking why a currency that provides a very favorable environment for tax evasion, money laundering, and financing terrorism should be allowed to exist? From the perspective of these opponents, "Bitcoin" can be tolerated as long as it is limited to small payments and low-scale financial operations. However, how can large investments and major transactions be financed with "Bitcoin" anonymously, unless governments are willing to abandon tax collection and ignore criminal and terrorist activities? In short, according to "Bitcoin" opponents, only governments that intend to commit suicide might be able to coexist widely with this "digital currency". In the heated debate between supporters and opponents of "Bitcoin", one thing seems certain: the confusion of countries in the face of this extraordinary monetary phenomenon. For this reason, we witness contradictory behaviors from them: China recently banned the use of "Bitcoin" due to fears of capital flight and tax fraud, while Japan has registered "Bitcoin" as legal tender, perhaps in the hope of becoming a global fintech hub. It seems that in Iran, monetary authorities have also become very curious about the phenomenon of "Bitcoin" and its implications and want to define their position regarding it. Attention to this phenomenon has increased in Iranian media and websites, and the publication of educational writings about it is significantly on the rise. According to the newspaper "Donya-e-Eqtesad" published in Tehran, in a press conference on Tuesday, November 22, Nasser Hakimi, the deputy of new technologies at the Central Bank, emphasized two main concerns of Iranian banking officials regarding the phenomenon of "Bitcoin" (and other digital currencies): first, its severe fluctuations that have led to confusion among financial market participants and monetary policymakers, and second, the active speculative rush into the market of such currencies, which, according to Mr. Hakimi, has created a new ground for "pyramid schemes". In this context, the deputy of new technologies at the Central Bank states that this institution "has not yet recognized Bitcoin as an official currency. Consequently, Bitcoin can create a platform for the financial ruin of some people." At the same time, he explicitly states that "the policymaker has not yet reached a final decision on the acceptance or rejection" of Bitcoin. Despite these warnings, Mr. Hakimi admits that "the likelihood of fraud in the structure of Bitcoin is close to zero." If we take the statements of the deputy of new technologies at the Central Bank as a benchmark, it seems that Iranian monetary officials still do not know what policy to adopt regarding Bitcoin. On one hand, he says that the Central Bank "has not yet recognized Bitcoin as an official currency", but on the other hand adds: "As long as no policy is made, we cannot say whether buying and selling (Bitcoin) is prohibited or not." According to Mr. Hakimi, the Central Bank needs a year to clarify its positions on "Bitcoin". He adds that the necessary frameworks for designing and implementing a "native cryptocurrency" will be developed.