Hyperinflation at 132 Percent
Due to an amalgamation of a variety of factors including strict sanctions imposed by the U.S. government on Iran, the national currency of the country has been on a steep decline since the beginning of 2018.
Since its all-time high at $19,500, the bitcoin price has fallen by 70 percent, replicating the correction it experienced in 2014. But, if the cryptocurrency market moves similarly to its correction in 2014, which was the worst correction in the market’s history, the price of major digital assets like bitcoin and ethereum would bottom out at a 75 to 80 percent drop.
Although the Iranian rial also experienced a substantial drop in its value throughout the past six months. the drop of the rial’s value was not as intense as the correction of bitcoin, and while the dominant cryptocurrency is expected to recover from the $5,000 region, the value of the rial is expected to decline by 57 percent based on mathematical data and its hyperinflation rate at 132 percent.
The inflation rate of the Iranian rial is not as harmful to the economy as the extreme hyperinflation rate of Venezuela at over 30,000 percent. The difference between the Iranian rial and the Venezuelan bolivar is that the former is still being used as a store of value and a medium of exchange within the country and amongst its allies, while the people of Venezuela have stopped using the bolivar due to its lack of monetary value.
Cryptocurrencies like bitcoin and ether, the native currency of the Ethereum blockchain protocol, have evolved into proper alternatives to failing national currencies. Even the government of Iran has expressed its intent and mid-term plan to utilize cryptocurrencies to transfer money amongst its allies, most notably Russia…