Bitcoin: How Iran Bypasses US Sanctions


Bitcoin Hezbollah Iran US Sanctions

Abstract

The Islamic Republic of Iran is a regional power with an ambitious and aggressive foreign policy, perhaps looking to achieve an Achaemenid restoration. Facing an American world order, both in polity and economy, the Islamic Republic has taken to the game of proxy warfare and democratic subversion by utilizing such groups as Hezbollah. Financing these operations is costly to say the least, causing the Islamic Republic and affiliates to resort to alternatives outside the American global monetary architecture. Of these alternatives, Bitcoin remains the most convincing option, an effective tool that would allow Iran to bypass US sanctions. The Iranian case-study takes on a prophetic outlook when considering the coming multi-polar world, a world partially enabled and sustained by Bitcoin. Politically, economically, Bitcoin will do away with the effective use of sanctions on a worldwide scale, rendering them obsolete, and will continue to increase in value as the hegemonic competition between polities increases. Bitcoin, as they say, is going ‘to the moon’.


I would like to acknowledge and thank Dr. Fadi Assaf for his invaluable input in writing this paper. I would also like to thank Mr. Jack Khamo for his economic insight.


Introduction

The unipolar world order is fraying at the seams. The United States’ monetary hegemony was institutionalized in the Bretton Woods system, wherein all state-issued currencies were pegged to the US Dollar which was, in turn, pegged at $35/oz. of gold. Today, China is threatening to dethrone the United States as the world’s leading capitalist state (which is ironic given that it is ruled by the CCP). Chinese ascendancy causes friction (i.e. an inefficiency, or loss of energy) in the world system.

While the Bretton Woods system is no longer in place, its influence is still felt. This asymmetric strength of the American juggernaut has allowed it to impose rather deadly sanctions on rivals and opponents. American sanctions can truly spell the death of a budding economy because there is simply no alternative. It is thus truly remarkable that the Islamic Republic of Iran, a nation that since its inception has been at ideological, economic, and political odds with the United States, has managed to last (and indeed thrive) so long. The first economic sanctions were applied by United States President Jimmy Carter in 1979, yet the Islamic Republic still stands and has not suffered a regime change. The Islamic Republic not only stood against the might of Saddam Hussein but also managed to expand overseas in lieu of an aggressive foreign policy. Hezbollah in Lebanon, the Houthis of Yemen, and the vassalage of Iraq; these are all expensive endeavors even for prospering nations. Iran, a nation besieged, is pursuing these interests successfully – so how does Iran bypass US sanctions?

This is a tough question to answer, mainly because of the ongoing (indeed escalating) nature of the conflict but also because both sides value secrecy. Getting cold, hard proof which can then be presented in a court of law will be impossible. Regardless, a few things can be established.  The Islamic Republic and its proxies, whether Hezbollah or the Houthi, are extremely intelligent state actors. Therefore, they can be trusted to exploit and make use of any friction in the world system to ease their yoke. Ergo, it is no longer necessary to collect proof that would put the question to rest beyond a reasonable doubt, but only to present enough evidence to create doubt itself. If I, the relatively unaffected author, can conjure up a way for Iran to effectively bypass US sanctions, then it is indeed certain that Iran (having a vested interest) has already been doing that for some time and has garnered proficiency in the matter. Proof is in the fundamental concept, not in deeds. Countries will go after their self-interest, and if one’s self-interest can be mathematically determined, then there is little need for actual hard proof as these rational states can be trusted to pursue their interest to the fullest extent (and to find such solutions long before outsiders do, by virtue of being ‘in the know’). Therefore the lack of any decisive evidence is no longer a question of “Does this evidence exist?” rather, “When will this evidence inevitably come to light?”

The question of exactly how Iran bypasses US sanctions is an important question to answer for many reasons –  first, the international scope of Iran’s (read: Hezbollah’s) operations requires a certain degree of currency exchange. Using the US Dollar to do this would be problematic, as shall be explained below. Second, the Islamic Republic of Iran does offer Hezbollah (and other proxies) direct monetary aid, oftentimes in US Dollars, when the Islamic Republic itself is cash strapped. While this has caused a shortage of aid and an entry to the global drug trade in a bid to self-fund, external funding has not yet reached zero. How does an entity under sanction continuously supply its proxies with fresh US Dollars?

There is reason to believe that the Islamic Republic utilizes Bitcoin, whose properties like fungibility, security and decentralization offer an easy mode for the international transfer of funds outside the American monetary architecture, thereby bypassing both the US Dollar and its sanctions.

The International Monetary System

First, it is important for the reader to understand a few fundamental concepts about the global monetary system in order to truly grasp the challenges faced by the Islamic Republic. If this is already familiar, then clicking on the link would be useful. First, it is important to note that the terms money and currency are not interchangeable, in fact today’s currencies are not intrinsically monetary in nature but have been assigned that function ex officio. Mike Maloney explains the system best in the highly informative video below.

Investopedia defines money as ‘an economic unit that functions as a generally recognized medium of exchange for transactional purposes in an economy. Money provides the service of reducing transaction cost, namely the double coincidence of wants. Money originates in the form of a commodity, having a physical property to be adopted by market participants as a medium of exchange. Money can be: market-determined, officially issued legal tender or fiat moneys, money substitutes and fiduciary media, and electronic cryptocurrencies,’

In short, it is a store of value. That value is then subject to many factors to determine just exactly how much value is assigned to the money. Gold, for example, is much more valuable than silver. Principally this is due to supply and demand, the greater the demand relative to the supply, the more valuable a money is.

Currency, on the other hand, is simply a medium of exchange. That is, currency is a symbol, with no intrinsic value. Currency is a medium of exchange designed to help facilitate the flow of money and make it more portable, easier to use. Currency is a term independent of ‘money’; a currency can be backed by money, and just as easily it does not have to be so. Traditionally, gold has been the universal money, accepted species-wide as a store of value and then turned into currency in the form of minted gold coins, usually issued by the central government. Currency is fungible, portable, durable, recognizable, and stable. Enter the Bretton-Woods system. In the wake of the Second World War, and the recent emergence of Central Banks worldwide, the nations of the world opted to usher in a new and centralized financial system. The world’s gold reserves would be transported to the United States (among other places), the world’s currencies would then be pegged to the US Dollar, which was in turn backed by the gold reserves. The respective central banks would be held responsible to maintain the relative scarcity of their currencies to the US Dollar, and the Federal Reserve of the United States would be in charge of maintaining the value of the Dollar at $35/oz. of gold.1

Thus, the currencies of the world became representative of the Dollar, which was itself a currency for gold (the real money). This system worked marvelously and for the entire period in which it was implemented there were no economic crashes in the world, least of all any catastrophes on the scale of the great depression. That era is long gone – US President Nixon decoupled the US Dollar in 1972 and since then the world has entered the era of fiat money. Also, gold rose from $35/oz. to around $1900/oz. as of writing – a 54x increase in the last half century.

What is fiat money? It is the US Dollar, the Euro, the Pound Sterling, the Iranian Rial, and even the Lebanese Lira. As the name suggests, it is completely made up. Fiat money, or more accurately fiat currency, is essentially a symbol of the issuing state’s economic prowess. Essentially, those using fiat currency are trusting the state to pay back their debts, hence the utility. The US Dollar, for example, reads ‘this note is legal tender for all debts public and private,’ meaning it is essentially a promise that the US Government will reimburse you and cover the credit. Gold, on the other hand, is trustless – gold is gold, and has intrinsic value. Not only is the user trusting the government to repay the debt, but also trusting the government not to devalue the note at hand by arbitrarily printing it (thus disturbing the demand-supply equilibrium). Which, by the way, happens all the time.

Currently, five state-issued currencies make up the world’s reserve currencies. These are the US Dollar, the British Pound Sterling, the EU Euro, the Japanese Yen, and the Chinese Yuan. Of these, the US Dollar is still the predominant world currency, making up around 61% of the international foreign currency reserve. The US economy is by all accounts still the world’s number one economy, a fact buttressed by the global prestige that the US Dollar carries with it. Indeed, in today’s credit based economic system, actual economic power can only make up 20% of an entity’s wealth or value – the other 80% is trust.2 Therefore, a huge reason that the US remains the dominant world economy is the predominance of the US Dollar; inversely, the reason the US Dollar is the world’s number one foreign reserve currency is because the peoples of the earth believe in the United States’ perpetual economic hegemony. The pillars holding up this temple of American divinity are its Habsburgian politics, its fearsome military (more significantly, the US Navy), and its gargantuan economy. These all support and reinforce one another in a positive feedback loop. Realistically, the US is far and above any other great power at the moment, allowing it to impose great and overbearing sanctions on its political rivals in an attempt to secure its political interest. Iran, North Korea, and Venezuela are some of the most memorable recipients of US Sanctions. China, too, has been on the receiving end of these sanctions, causally for the CCP’s integration of Hong Kong, but truly in an attempt to curb its rise to the top. China at the moment is the only state in the world that is capable of posing a serious threat to the US hegemony, and it is inevitable that we witness a war between the two in the coming generation or two, as the long game of geopolitics and demographics ripen to fruition, Anglosphere v. Sinosphere. In the here and now, while we await tomorrow’s armies to levée, expect the friction in the world system to increase as our unipolar reality slowly becomes a multipolar battle royale. The Punic Wars shall come again.

As we wait for the next Carthaginian peace, one can expect bilateral economic sanctions to increase in frequency. The US will continue to sanction China (et. al) and the Chinese will continue to sanction the Americans. To understand how sanctions work, it is imperative to understand a few key aspects.

First, 92% of the world’s currency is digital; it only exists as software code. This isn’t in sole reference to cryptocurrencies, but also to the US Dollar and other foreign reserve currencies.[2] Of course, this presents no issue; we have already established that currencies are not indeed money, a change in medium from paper cash to digital is only a technological update to keep up with the times, and not a drastic change to the fundamental nature of the substance. Then, it is equally important to understand how that currency is transferred. Let us consider Person A (with an account in Bank A) attempting to transfer USD $100 to Person B (with an account in Bank B). Person A would wire the money to Person B’s bank account, however it would first have to be rerouted through a major American bank in New York City, such as JP Morgan & Chase, before being then transferred to Person B’s bank account. Of course, Banks A and B have their fees for conducting such an operation, and so does the New York Bank in question. FATCA is also a very powerful tool in the hands of the United States, ensuring complete global compliance. This is a powerful tool allowing the US Treasury to keep track of all the USD in circulation and to effectively sanction whomever it wishes. Hence the below taunt becomes very, very interesting.

“I don’t have a penny of assets abroad. Isn’t it in vain to impose ‘sanctions’? Of course, I can also send 100 U.S. dollars to Mr. Trump for freezing,”

The head of China’s liaison office to Hong Kong, Luo Huining.

How is such a statement plausible? While it is doubtful that Mr. Huining was referring to cryptocurrencies, such an operation is entirely feasible via Bitcoin.

Bitcoin

It is important to understand that in the realm of cryptocurrencies, Bitcoin is not like any other cryptocurrency. Equally important to understand is that cryptocurrency represents a technological leap forward in the medium, and does not fundamentally change the way the monetary economy works. For the purposes of this study, there are two types of cryptocurrencies; Bitcoin, and altcoins. When drawing parallels, Bitcoin is gold, while the altcoins are just another form of currency like the world’s dollars, liras, and dirhams. Let us recognize that one does not need to truly understand a tool to use it. Similarly, this paper does not aim to explain the fundamentals behind Bitcoin, which is a truly gargantuan task. Bitcoin fundamentally incorporates many disparaging disciplines into one ‘tool’, including mathematics, thermodynamics, game theory, and of course economics. However, Bitcoin does possess a few notable qualities which are noteworthy, and relevant to the aim of this paper.

Source Unknown

Finite Scarcity

“Money doesn’t grow on trees,” except that sometimes it does.3 Fiat is easily the least financially sound medium known to mankind, the supply-demand equilibrium is loose on both ends as both are in constant flux. Furthermore, since it is the Central Banks that control the supply, they effectively hold the purchasing power of every person with assets in fiat hostage, much to the dismay of the victims of the Lebanese Banking Crisis. The market is ruled by the supply-demand dynamic, and governments never lose, they never go bankrupt.

Gold has commonly been said to be a rare element. That is only partially true; gold is relatively rare and relatively scarce. The truth is that there is always more gold out there, whether within the earth itself or without it amongst the stars.

Bitcoin, in contrast to every other medium, is finitely scarce. There are only ever going to be 21 million Bitcoins available, the decentralized nature of the network and its open source dictates that. In contrast, demand for Bitcoin is increasing steadily over time, just look at its price increase in the last decade. In 2011, Bitcoin was worth USD $2 only, and in 2021 it is now worth more than USD $40,000, indicating a 20,000x return. This may seem surprising, but let us examine the Demand/Supply ratio (DSR) of Bitcoin. The limit of the DSR as demand approaches infinity is infinity itself, since the supply is a predetermined finite number. Therefore, the theoretic price of Bitcoin in its endgame is, for all intents and purposes, infinite itself should the system hold.

It is important to note that the number of Bitcoins has increased once, but the mechanism to do so is ‘democratic’ and determined by the decentralized market. As of writing there are only 18.5 million Bitcoins in circulation, the rest undergoing ‘mining’; a process expected to finish by around 2140.

Decentralized

Unlike Fiat, which is controlled by the central banks, Bitcoin is not issued by any single entity. It is open source code regulated peer-to-peer via network, meaning that the market is in effective control of Bitcoin. Not even Gold is as decentralized as Bitcoin.

Portability, Security, and Fungibility

One billion dollars’ worth of Gold weighs approximately 25,000 kilograms, in cash it would weigh about ten tons. There are logistics involved towards transferring any large amount of money, there are certain considerations to be made towards storing them as well. That is the main reason banks are useful to begin with; securing and transferring money.

Bitcoin solves all of that, and really makes banks obsolete. Transferring 3000 satoshi is as easy as transferring 10 million Bitcoin, it is all weightless computer code. However, due to the unique system of wallets in use, it is almost impossible to truly steal any Bitcoin. All thefts of Bitcoin that have so far occurred have been due to social hacking, and not any liability on the network or software. That is, people and institutions are careless with their keys; Bitcoin itself remains uncompromised.

Legend says that the Knights Templar began the first modern banks, in an effort to facilitate the secure transportation of money across Christendom – from Frankia to Tyre. Bitcoin does the same – it makes sure that everyone has a personal bank, in essence. As long as the owner of the wallet holds the keys to that wallet, then the money is secure and can be accessed instantly from anywhere in the world (or on Mars) with an internet connection. Bitcoin will really become viable as a form of interplanetary money as long as the networks are in sync (distance becomes a telecom issue).

Furthermore, Bitcoin is fungible. One can easily exchange Bitcoin for any type of good or service imaginable. This will only increase with time as more and more users and institutions buy into the network.

Anonymity

Banking is a risky enterprise. When using the banking system, one exposes himself and his funds to governmental and non-governmental surveillance and arrest. Prominent examples include FATCA, a law which allows the US government to inter alia tax all US citizens by accessing their bank accounts wherever they may be, even outside the US. Furthermore, to open a bank account, one must give up their personal information, making them easily identifiable. The use of electronic banking services such as credit or debit cards further makes the user traceable.

Bitcoin is completely anonymous. While the wallets and the nodes, as well as the balance of each, is publicly accessible to anyone on the network, the identity of the owner of the wallet is never stored in the network. Wallets are also easy to make, they’re just electronic addresses on the network, meaning that one can distribute his wealth across potentially infinite wallets so as to remain under the radar. Bitcoin is peer-to-peer, meaning that ultimately it is untraceable if the parties take their precautions to make it so.

The Islamic Republic of Iran

Justice is a precise matter, and requires that the truth be known beyond a reasonable doubt in criminal matters. Impossible in our case, there is no direct proof (that is public knowledge) that proves the Islamic Republic of Iran uses Bitcoin to fund its activities, especially that of its international proxies such as Hezbollah. Fortunately, when examining the case under a different legal standard, namely the balance of probabilities, it becomes easy to move forward. This is useful because the Islamic Republic is authoritarian and mysterious, and engages the United States in an international struggle. First-hand information will be at the very least difficult and at most dangerous to come by, especially considering the tensions and intelligentsia involved. Let us then consider the following:

  1. The Islamic Republic is an intelligent and tenacious state actor, capable of defining and pursuing its interests competently,
  2. The Islamic Republic maintains an infinite interest in sustaining its previous foreign investments (i.e., Hezbollah, Houthi) indefinitely, by whatever means necessary,
  3. The Islamic Republic, once faced with difficulties, can be trusted to adopt solutions and strategies that mitigate these difficulties.

The Islamic Republic of Iran should not be underestimated, its fundamentals are better than that of most other nations. First, the Iranian peoples have since Elam had some kind of political unity, culminating in Achaemenid Imperialism. Iran is indeed one of the world’s oldest nation states, a group of peoples with a shared history, language, and culture.  Geopolitically blessed, the Iranian ‘heartland’ is secure and far from other Asian population centers to the east, and yet dominates the peoples to the west thanks to linguistic delineation and natural boundaries. Iranian soil is rich soil, and the sea bears its fruits. Where other nations overflow with milk and honey, Iran overflows with varied natural resources, whether energy, metallic, or mineral. The Caspian Sea and the Persian Gulf are both of the utmost importance to Iran, and the Strait of Hormuz gives it diplomatic leverage. Most importantly, Iran is possessed by ideology. The Islamic Republic stands for a set of values, ideals, and principles that it aims to export. Of course, this is nothing but a velvet glove covering the iron gauntlet of imperialism, yet the glove remains ornate. The fact that this dogma is religious in nature only serves to cement its long term position in the collective psyche. The Islamic Republic managed to overturn the onslaught of Saddam Hussein barely a year after its inception, and has since then only escalated its conflict with the United States. One generation (and multiple sanctions later), the Islamic Republic is still here; where is Saddam Hussein? In fact, the Islamic Republic has not caved in under the pressure, rather it has expanded. Arguably the only effect of US sanctions has been to slow down its expansion and consolidation rather than to stop it, and while this isn’t unprecedented, it is certainly remarkable that a nation should so oppose the Atlantean hegemon.

Iranian foreign policy is distilled from its national character, not unlike their Persian carpets. Patience and perseverance are the main ingredients, with just a tinge of faith. The Islamic Republic is not bound by space and time, it is not an Iranian entity. Rather, it is an Islamic entity that happens to have taken root in Iran – there are no true geographic constraints, it is an empire of Islamized nations. Any and all foreign undertakings must be processed in this light, not least of which being the long term investments in Lebanon, Yemen, and Iraq. Its most significant investment by far has been Hezbollah, and strategically it is the one with the best prospects.4 While Khamenei may be an ideologue, money does talk. The reality is that the Iranian economy is finally suffering. Iran has had to cut down some of Hezbollah’s funding, causing the group to turn to other means in pursuit of self-sustainability.

Making full use of the international character of the Lebanese diaspora, Hezbollah now dabbles in the international drug trade, with Latin America and West Africa being focal points of this international operation. Marijuana, Captagon, and Opium are just some of the drugs ferried by the group. Hezbollah denies engaging in this trade, mainly because it is certainly against their advocated values, but it seems like the evidence is overwhelming. In fact, there exists evidence to support the claim that Iran encourages this drug trafficking in a bid to bolster its foreign currency liquidity, as reported by Al Arabiya. This international character to Hezbollah’s drug activities has helped bring Iran and Maduro’s Venezuela together, in what some call the Maduro-Hezbollah nexus. This facilitated the infamous gold bullion sale between the two heavily sanctioned states, Iran and Venezuela.

There are a number of Hezbollah sleeper cells and agents operating throughout much of Europe, from Paris to Moscow, and even many in the United States. Of course, Hezbollah’s operations also include military deployment throughout the Middle East. This global network is dependent on constant cash flow to maintain its operations; except that Hezbollah hasn’t only just maintained its operations, rather it has arguably managed to expand them in the past few years. Iran cannot cut off Hezbollah, not after investing in them since 1982, not after its raging success; Iran maintains an interest in sustaining Hezbollah, by whatever means necessary. In fact, an educated guess would warrant that Iran is likely to cut off all other proxies and give up all other gains before abandoning Hezbollah.

So how does a sanctioned group like Hezbollah (belonging to an equally sanctioned Iran) expand and maintain its cash flow in the face of US opposition? They operate outside the system, Bitcoin being the obvious solution.

Bitcoin solves all of the monetary problems faced by any entity under sanction by any other entity, but especially solves all of Iran’s problems in facing the growing US sanctions. Bitcoin’s unique properties offer Iran and its international proxies and partners a bypass on US sanctions. Bitcoin is a widely accepted and trusted form of money, it is highly fungible and can be exchanged into any worldwide reserve currency rather easily, namely the US Dollar. Where many institutions would be reluctant to do business in the IRR or the VES, few would object to Bitcoin, even less to the US Dollar. Bitcoin is a secure and appreciating asset; its inevitably increasing DSR means that it is a great hedge against the rapidly depreciating Iranian Rial. Bitcoin is decentralized and cannot be manipulated in any direct way by the US Treasury and affiliates. Bitcoin does not recognize the terms ‘sanction’, ‘regulation’. Bitcoin is also, and this is important, anonymous. This means that even sanctioned individuals can engage in transactions via Bitcoin because there is no link between the wallet and the owner of the wallet. Furthermore, sending large amounts of money through the Bitcoin network is incredibly easy, almost instantaneous, and peer to peer. Since one person can own multiple wallets, the true amount of Bitcoin owned and operated by Iran can be masked so as to avoid suspicion. Meaning, should Iran wish to send USD 30,000 to an operative in Munich, it can do so in multiple transactions from multiple wallets, thereby masking its operations. This is important because while the ownership of the Bitcoin wallets is anonymous, the blockchain technology records all transactions and the holdings of all wallets on the network, meaning that large transactions could attract attention. This in and of itself could sustain Iran’s operatives in the Western world. While the US Dollar would have to pass through three banks before finally reaching its destination, Bitcoin is peer-to-peer, similar to a cash handout. Even a small amount of Bitcoin would have been enough for Iran and its operatives to kick start operations, largely thanks to the current crypto bull run. Crypto’s high short term volatility coupled with its long term inevitability offers Iran a great opportunity – engage in Cryex (cryptocurrency exchange) activities. Bitcoin mining by far remains the most profitable venture for Iranian authorities to profit off of. Mining is when a miner unlocks a new Bitcoin block by solving a series of complex mathematical equations, this unlocked Bitcoin then becomes available on the market and can be traded. While it is unlikely that all of Iran’s foreign escapades are through Bitcoin, it undeniably has the potential to sustain significant shares of its operations in this way. When under siege, even dry leather becomes nourishing.

The glove fits, is there reason to acquit? Bitcoin has already witnessed a remarkably high adoption rate amongst the Iranian public, serving as an effective store of value against the depreciating Iranian Riyal. Bitcoin mining is proving to be very lucrative to the Iranian private sector, as the main cost is usually in (subsidized) electricity fees. This has caused mass blackouts in Iran as the government itself cracks down on these illicit private endeavors (mining is regulated in Iran). In fact, a study among 1,650 Iranians revealed that they earn up to USD $ 3,000 per month in cryptocurrency activities. In a country with a practically worthless national currency, this constitutes more than adequate living. That isn’t to say that the Iranian state itself does not itself engage in cryptocurrency activities. Foreign Policy reports that Iran has a Bitcoin strategy in place to beat Trump’s policies of maximum pressure. Sweden has agreed to invest in the Iranian stock market with Bitcoin, and Russia has invested in Iran’s blockchain technology infrastructure. The EU founded Instex, a transactional channel between them and Iran.

“Iran has clearly understood that cryptocurrencies are among the ways to challenge and subvert the U.S.-dominated financial architecture”. 

Foreign Policy

Bitcoin has seen such a massive adoption rate in Iran that it has even entered legislation. It is now legal to import goods into Iran using Bitcoin, and the mining of Bitcoin using subsidized energy is strictly regulated by Iran’s Ministry of Energy.[7] According to the New York Times, Iran and Venezuela are attempting to launch their own cryptocurrencies.[8] It seems a naive and foolish thought that they would undertake such a venture without first-hand experience and experimentation with the pre-existing world of crypto – namely, Bitcoin.

Hezbollah especially has a vested interest in Bitcoin, even if they might not yet realize that. Money laundering and international drug trafficking go hand in hand, and Bitcoin would be the safest, most secure, and most private mode of transaction for large sums of illicit money typical of Hezbollah’s modus operandi. In fact, there are already links between Hezbollah and Bitcoin; in the summer of 2020 the United States Department of Justice extradited from Cyprus two men – a Bitcoin thief and a Hezbollah narcotics operative.[9] Hezbollah can trade its narcotics for Bitcoin, which can then be dispersed across its worldwide network instantly and then turned into USD. This USD can then be sent to its operatives in Lebanon (whom are not entirely under sanction). This would better serve their needs for secrecy since an abnormally large trading volume of Bitcoin in Lebanon would be suspicious (the options available are myriad in any case). Thereby Bitcoin may assist them not only in their drug trade, but also in their money laundering all the while keeping a positive trade balance.

That isn’t to say that there are other, more subtle indicators of Iran and Hezbollah using Bitcoin. The electricity is relatively as cheap in Lebanon, and there’s a formidable Bitcoin community in Lebanon. Furthermore, rumours (stress on that word, rumours) have pointed out that most of the Bitcoin in Lebanon originates in Hezbollah controlled suburbs. There is no proof for this, only indication; the nature of Bitcoin in any case makes gathering such proof impossible. It is reported that for now, Hezbollah steers clear of all cryptocurrencies due to Israeli technological superiority, but that is a hard claim to believe in the face of superior evidence and is much more likely to in fact be a ruse or feint.

Conclusion

The Earth has three poles; North, South, and Washington DC. The rise of China threatens to devolve the unipolar world order into multiplicity, the frays will be pushed. Friction at the fringes will only make Bitcoin politically indispensable in the future, both for nations and private entities. Bitcoin is no longer a gimmick, no longer a theory, it has entered the field of applicable and useful statecraft as a guarantor of a perpetual multi-polar world. Bitcoin ensures a parallel global monetary architecture, a bedrock against temporal political hegemony. The more competition there exists between polities, the more important Bitcoin becomes. If Iran and Hezbollah are not yet using Bitcoin to bypass the United States, then it is advisable that they start doing so. Will others follow suit?


Antoine Kanaan
Antoine Kanaan

Editor in Chief.


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  • US Regulator Sues Crypto Hedge Fund Founder — $25 Million in Digital Assets to Be Frozen , and SEC to Sue Ripple Over XRP Cryptocurrency — CEO Insists XRP Is Not a Security . “Iran’s New Crypto Law Requires Miners to Sell Bitcoin Directly to Central Bank to Fund Imports: Regulation Bitcoin News.” Bitcoin News, 30 Oct. 2020, news.bitcoin.com/iran-crypto-law-miners-bitcoin-central-bank/.
  • US Regulator Sues Crypto Hedge Fund Founder — $25 Million in Digital Assets to Be Frozen , and UK Crypto Exchange Exmo Hacked. “Iran Adopts Bitcoin for International Trade Amid Heavy Sanctions, Falling Rial, Soaring Inflation: Regulation Bitcoin News.” Bitcoin News, 6 Nov. 2020, news.bitcoin.com/iran-bitcoin-sanctions-inflation/.

  1. This is done through a cycle of injecting and printing the currencies, not dissimilar to Governor Riad Salameh’s performance with the Lebanese Lira these past thirty years.
  2. These numbers are arbitrary and are meant to convey a message, and are not necessarily accurate.
  3. Rather, currency does.
  4. It is very important to understand the following: Hezbollah is not a Lebanese organization, it is the Islamic Republic itself. Through and through, Hezbollah is an Iranian organization not dissimilar to the Pasdaran. So, while Hezbollah may have a certain financial and operational autonomy, it will always serve Iranian interests first and foremost, at Iranian discretion.