In Iran, resistance also involves cryptocurrencies: where the national currency is worthless, Bitcoin is a tool for survival

Iran is experiencing a period of internal revolution. At the end of December, mass demonstrations erupted against the country’s governing regime, which had triggered an unprecedented economic crisis. Here, Bitcoin is a tool of resistance.

What is happening in Iran? The context between inflation and repression

Iran is facing an extremely complex internal situation, with mass protests and outbreaks of civil war, often violently repressed. It all began around 28 December, when a group of protesters, mostly traders from the bazaars of the capital Tehran, took to the streets to protest against the Islamic regime.

The protests are mainly focused on the economic situation: with annual inflation at 40% and the price of necessities skyrocketing, the Islamic Republic of Iran is in the midst of an unprecedented financial crisis. Since 7 January, the rial, the national currency, has been officially valued at 0 (zero) euros.

A few days later, what seemed like a localised street movement took on a national dimension, reflecting widespread discontent.

At the same time, repression is becoming increasingly intense: the number of deaths is rising, although we do not know the exact number, and the regime is blocking access to the internet nationwide.

At the time of writing, the government led by Ayatollah Ali Khamenei is in serious difficulty: many analysts consider this one of its weakest moments since 1979, when the previous ruler, the Shah of Persia, was overthrown. On the other hand, the violence of the Iranian security forces against the demonstrators testifies to their desire to stifle dissent and maintain control.

Iran and Bitcoin: what do the on-chain data say?

In Iran, Bitcoin serves as a means of survival and, by extension, as a form of resistance. This is according to Chainalysis’ report, in the section entitled ‘Inside Iran’s Growing £7.8 Billion Crypto Ecosystem’. What is the on-chain picture? What can be deduced? In the words of the report, ‘the most recent data available to us reveals a significant change in on-chain behaviour during the current mass protest movement‘.

Methodology

To reach this conclusion, the Chainalysis team of analysts examined both the average amount transacted – i.e. withdrawn from exchanges – in dollars and the number of transactions from exchanges to wallets, both daily. In addition, to attribute changes to specific events, the analysis was divided into two periods: “before the protest (1 November – 27 December)” and “during the protest (28 December – 8 January, the day of the internet blackout)“. Finally, transactions were divided into categories: small withdrawals (under £100), medium (under £1,000), large (under £10,000) and very large (under £100,000).

Results

Comparing the period “before the protest” with that “during the protest“, a substantial difference in on-chain behaviour emerges, to quote Chainalysis’ thesis.

During the protest, the £1- £100 range saw a 111% increase in exchange withdrawals and a 111% increase in transactions compared with the pre-protest period. The situation was different for the ranges between £101 and £1,000 and between £1,001 and £10,000, where the growth was even more pronounced: in terms of withdrawals, the former recorded an increase of 228%, the latter 236%; in terms of the number of transactions, however, the £101-£1,000 bracket ‘stopped’ at +128%, while the £1,001-£10,000 bracket saw an expansion of 262%.

What does all this mean?

This behaviour, according to Chainalysis, represents a logical and rational response to the collapse of the Iranian rial, which, as noted, is currently worth absolutely nothing.

Bitcoin, amid this chaos, has taken on the role of a lifeboat on a sinking ship. Bitcoin is the alternative asset that has allowed Iranians to protect their savings from the nefarious policies of a bloody regime. But there is more.

“Bitcoin’s role in this crisis,” the analysts conclude, “goes beyond simple capital protection: for many Iranians, it has become an element of resistance, providing liquidity and freedom of choice in an increasingly restrictive economic environment.”This is thanks to its decentralised, anti-censorship and self-custodial nature.

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