How Iran Can Use Bitcoin To Avoid US Sanctions

Authored by Mike Shedlock via MishTalk,

Effective Nov. 4, Trump demands all trade with Iran to cease. Iran can potentially use Bitcoin as a workaround.

In case you missed it, Trump Effectively Declared Economic War on Iran.

Trump is pressuring the world to stop trading with Iran. And starting November 4, Trump will sanction any country or company that does.

The feature image is from Iran Bans 1,300 Imports, Prepares To Resist Threatened US Sanctions.

The order suggests the US sanctions threat is pushing Tehran back towards running a "resistance economy" designed to conserve foreign exchange reserves

The EU announced a "Blocking Statute" that would allow companies to deal with Iran but companies that do so will be cutoff from US markets. And any EU bank that skirts the rules will find it is quickly locked up.

Thus, Trump unilaterally decides sanction policy for most of the world.

However, India, a top Iranian oil importer, announced it Will Not Heed U.S. Sanctions.

This leads to a potential two-part sanction avoidance mechanism.

Sanction Avoidance Part 1

  1. India and or China refuse to honor the sanctions.

  2. Iran accepts payment in Rupees and Yuan.

  3. India and China convert Rupees and Yuan to Bitcoin, Ethereum, EOS, etc.

  4. Iran is paid in cryptos.

  5. Iran converts cryptos to dollars or Euros.

That is only half the puzzle.

Why?

Iran will have hard currency but will have no way to spend it.

Sanction Avoidance Part 2

  1. Iran buys US or Euro denominated goods but needs to get them into the country.

  2. Some country, Pakistan is the best choice, takes delivery of the goods and ships them across its land border to Iran for a fee (cheap oil).

  3. Alternatively, the goods are shipped to India, then Pakistan, then Iran. As another possibility, the goods are sent to China or India and travel by sea to Iran, again for a fee (cheap oil).

India has a trade surplus with the US, complicating matters. But what if India got a huge discount on the price of oil?

If India has oil importers that do little business with the US, then my avoidance idea is solid, at least through part 1.

Part two involves risk of confiscation on sea routes or destruction by drones on the land. Of course, that response from Trump would be an effective declaration of physical war on the countries involved.

Would Trump shut down India, a nuclear power? Pakistan a nuclear power? China, a nuclear power, even if China tells Trump to go to hell?

China Hardball

That last question is interesting. China can in theory demand tariff relief for honoring US sanctions on Iran.

There is obviously a huge risk of this getting out of hand if we start down one of these avoidance paths.

* * *

[ZH: As a reminder, shortly after Trump’s initial announcement in May on the Iran deal, the rial nose-dived to 85,000 to 1 US dollar, down from 57,500 rials to 1 US dollar at the end of April, and 42,890 at the end of last year.

Since April, Iran has been attempting to get in front of a sell-off, first unifying official and free-market exchange rates and freezing the rate at 42,000, while banning all other trading in the currency, under threat of arrest.]

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Comments

tmosley Spaced Out Wed, 06/27/2018 - 09:53 Permalink

I suppose you could use BTC for a very few transactions, but why use something so fragile that is on its way out?

BCH follows the white paper and can handle PayPal levels of transactions TODAY, and a block size increase could be pushed in a week or two if the need arose, scaling to 30X Visa levels with gigabyte blocks. BTC couldn't service a town of 100,000 people.

In reply to by Spaced Out

Exponere Mendaces tmosley Wed, 06/27/2018 - 12:03 Permalink

You're such a lying faggot.

Bitcoin handles WAY more transactions on its main network (not including Lightning, which is growing rapidly) than your ShitCash altfork -- http://fork.lol/tx/txs

But there I go again, shoving your face into your own shit-pile of lies, like a misbehaving dog.

Give it up you fossil - you don't understand a fucking thing about how crypto works, especially the knock-on effects of bandwidth and larger block sizes.

Mandatory reading for the n00bs that still want to learn -- https://hackernoon.com/the-ethereum-blockchain-size-has-exceeded-1tb-an…

ETH, EOS, BCash -- they're fucked.

 

In reply to by tmosley

Solid Gold Bubble Cryptopithicus Homme Wed, 06/27/2018 - 17:37 Permalink

Yeah, I had noticed that. In every single trolling post on here and reddit, just "huh duh Bcash Roger china bitmain".

 

Zero arguments, because there are none to support the Core narrative. They really especially tipped their hand by so fervently opposed SegWit2x.. like.. OMFG.. TWO MEGABYTES?? OF DATA??? PER 10 MINUTES??? THE INTERWEBZ WILL EXPLODE!!!!111111

 

The Flippening could not come a day too soon to wipe out these fucking retards.

In reply to by Cryptopithicus Homme

pods DogeCoin Wed, 06/27/2018 - 09:39 Permalink

That's a good question.  

If trade were equal from place to place it would work well.  If there was a large imbalance, the debtor nation would run out of gold. Then there is usually a war, if history is any indicator.

Or the debtor nation crawfishes on their deal and issues a militarily enforced reserve currency.

And then we are back to where we are now.

pods

In reply to by DogeCoin

Huh Reeeally pods Wed, 06/27/2018 - 10:31 Permalink

Turkey was the 'gold for oil' transit hub for Iranian oil before, I believe they sourced the gold on the open market, not from reserves, same as the Yuan/oil/gold contracts do.

Certainly India and China are happy to use real money to transact, Turkey, OBOR countries... lots of customers, representing about 40% world population, for Iranian oil.

Cryptos are vulnerable to hacking and evaporation, gold - not so much.

In reply to by pods