As Iran sinks deeper into a major political and social crisis, the promise of a censorship-resistant Bitcoin is coming up against the harsh reality on the ground. Internet blackouts orchestrated by the regime are paralyzing cryptocurrencies, leaving users helpless in the face of daily emergencies and calling into question Bitcoin’s effectiveness in conflict zones.
Bitcoin Is Useless Against the Mullah Regime’s Repression in Iran
The situation in Iran has deteriorated significantly in recent weeks, marked by a violent response from the regime to the numerous protests that have swept through more than 100 cities. To stifle the protests, the authorities are resorting to a formidable weapon: cutting off the Internet.
This “digital kill switch” strategy has direct consequences for the Bitcoin-based underground economy that was beginning to take root there, as well as for trading volume on exchange platforms.
Learn more about “The Rise of Bitcoin in Iran: A Response to Inflation and Repression”
Without internet access, the Bitcoin network remains technically functional thanks to the distribution of its nodes around the world, but its accessibility for end users becomes difficult, if not impossible.
As a result, holders of digital assets find themselves with wealth they cannot use or exchange for basic necessities, while the rial, the local currency, has lost almost all of its value, falling from 40,000 rials per dollar to 105 million in just two weeks.
Dollar exchange rate against the rial
An anonymous source on the ground, whose account reached us via access to the Starlink satellite network, describes this stalemate:
“Right now, our biggest problem is that we can’t easily convert our Bitcoins into cash because the internet is down and the market lacks liquidity. But I’ll find a solution. Supermarkets are still open, although some aisles are empty and remain restocked. We’re having trouble finding products like cooking oil, for example.”
This inability to sell their BTC puts users in a vulnerable position, preventing them from meeting their immediate basic needs.
One might imagine a merchant accepting Bitcoin payments via personal access to Starlink, but beyond the limited accessibility of this solution, growing uncertainty now surrounds the sustainable return of the internet in Iran, discouraging its adoption.
Does the example of Iran put a definitive end to the Bitcoin narrative?
Recent events in Iran perfectly illustrate the current limitations of Bitcoin’s adoption as a shield against state coercion.
As long as the Internet remains centralized and therefore controllable by governments, both freedom of expression and transactional freedom will remain conditional. And this doesn’t just apply to Bitcoin: the entire financial system is affected, including fiat currency payments via credit cards, as well as access to cash, since ATMs also depend on an internet connection.
However, while Bitcoin may temporarily fail in its role as a means of daily exchange, it retains its fundamental property of resistance to seizure. Unlike bank accounts frozen by the regime, funds secured by private keys remain beyond the reach of the authorities.
For many, adopting Bitcoin remains the only way to wrest monetary power from the hands of the state. It serves as insurance against the currency devaluation engineered by central banks and as protection against targeted financial censorship.
Holding Bitcoin won’t let you buy bread during a power or network outage, but it is, above all, a way to limit a government’s power to manipulate currency and fund freedom-destroying policies that justify an Internet shutdown—a battle that must be fought in advance, before censorship is in place.
