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Harvard Economist: Bitcoin’s Future Value More Likely to Be $100 Than $100K

Ex-chief economist of the IMF and Harvard University Professor of Economics and Public Policy Kenneth Rogoff has characterized Bitcoin as “a lottery ticket.”

The former chief economist of the International Monetary Fund (IMF) has characterized Bitcoin (BTC) as “a lottery ticket,” in an article for major United Kingdom daily broadsheet The Guardian Dec. 10.

Writing in the midst of the recent crypto market price collapse, current Harvard University Professor of Economics and Public Policy Kenneth Rogoff suggested that the “overwhelming sentiment” among crypto advocates is that the total “market capitalisation of cryptocurrencies could explode over the next five years, rising to $5-10 [trillion].”

The historic volatility of the emerging asset class, he conceded, indeed indicates that Bitcoin’s decline from its all-time highs of $20,000 to under $3,500 earlier today is “no reason to panic.”

Nonetheless, the economist dismissed the “crypto evangelist” view of Bitcoin as digital gold, calling it “nutty,” stating its long-term value is “more likely to be $100 than $100,000.” Rogoff argued that unlike physical gold, Bitcoin’s use is limited to transactions – making it purportedly more vulnerable to a bubble-like collapse. Additionally, the cryptocurrency’s energy-intensive verification process is “vastly less efficient” than systems that rely on “a trusted central authority like a central bank.”

Even if Bitcoin should not necessarily be “worth zero,” Rogoff argued that national governments and “regulators are gradually waking up to the fact that they cannot countenance large expensive-to-trace transaction technologies that facilitate tax evasion and criminal activity.”

This, in his view, places Bitcoin in a double bind, with implications for its future value: “take away near-anonymity and no one will want to use it; keep it and advanced-economy governments will not tolerate it.”

While the economist noted that governments worldwide may in due time “regulate and appropriate” the innovations of the new asset class –– as shown by the interest of multiple central banks in digital currency issuance –– he argued that coorinatinated global regulation would eventually seek to “stamp out privately constructed systems,” with only certain geopolitical outliers as a possible exception:

“The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy. It is no coincidence that dysfunctional Venezuela is the first issuer of a state-backed cryptocurrency (the “petro”).”

Rogoff’s argument that “disgruntled” nation states –– Cuba, Iran, Libya, North Korea, Somalia, Syria, and Russia –– are turning to cryptocurrencies under the burden of sanctions has been raised by multiple analysts previously. A report earlier this fall indicated that the government of North Korea was “laundering” crypto into fiat to evade U.S. sanctions. Iran is going one step further, exploring the creation of its own national cryptocurrency, according to a report this summer.

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Iran's Recognition of Crypto Mining Prompts Local Bitcoin Price Spike

The Iranian government has recognized cryptocurrency mining as a lawful activity as part of its effort to introduce a national cryptocurrency – a move that saw bitcoin’s price briefly spike to record levels on local exchanges.

According to news agency IBENA, which is affiliated to the Central Bank of Iran, Abolhassan Firouzabadi, the Secretary of Iran’s Supreme Council of Cyberspace stated on Tuesday that cryptocurrency mining “has been accepted as an industry in the government.”

Further, the official said the decision was arrived at after consensus among other relevant government agencies such as the Ministry of Communications and Information Technology, the Central Bank and the Ministry of Economic Affairs and Finance, although a final policy legislating for the activity hasn’t been declared as yet.

The move to recognize cryptocurrency mining comes as the country is taking efforts to create its own central bank digital currency as a means to bypass the U.S. economic sanctions recently reimposed by President Trump, as previously reported by CoinDesk.

Firouzabadi added that a national cryptocurrency remains a “promising” tool to facilitate financial transactions with Iran’s trade partners, as the Trump administration has restricted the country’s access to U.S. dollars.

With regard to cryptocurrency trading activities, the official further said “a decision-making authority will declare the framework and final policies for trade and participation of startups and trade activists in the cryptocurrency sphere by September but no definitive decision has been taken yet.”

CoinDesk also reported in July that cryptocurrency investors in Iran then appeared to be facing restrictions from the state, with users being blocked from accessing accounts at exchanges such as Binance, even if using virtual private networks or VPNs.

Following the country’s recognition of crypto mining, reports indicate that the price of bitcoin on some local exchanges such as Exir peaked to over $24,000 – exceeding the global average all-time high of $20,000 seen in December – while prices elsewhere yesterday were around $7,000.

Data from CryptoCompare backs up the reports, indicating that OTC trading prices on LocalBitcoins briefly reached as high as $25,000.

Azadi Tower, Tehran, image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Crypto Mining Accepted as an Industry by Iranian Authorities

The Secretary of Iran‘s Supreme Cyberspace Council revealed that various ministries of the country’s government have accepted crypto mining as an industry, local news agency IBENA reports September 4.

According to the report, the Cyberspace Council’s secretary Abolhassan Firoozabadi stressed that the mining of cryptocurrencies such as Bitcoin (BTC) has been approved as an industry by major government authorities. However, official legislation forming a legal framework for the industry has yet to be introduced in the country.

Firoozabadi said that crypto mining has been accepted as an industry by Iran’s major authorities, including the Ministry of Information and Communications Technology, the Central Bank, the Ministry of Industry, Mine and Trade, the Ministry of Energy, as well as the Ministry of Economic Affairs and Finance.

Firoozabadi stated that the Iranian National Cyberspace Center is developing a platform for cryptocurrency mining regulation. He added that the government is also considering the launch of a national cryptocurrency in order to create a financial tool to cooperate with Iranian business partners amid economic pressure from U.S. sanctions.

The secretary reportedly claimed that the relevant authorities will introduce a regulatory framework for crypto-related startups and firms in late September.

In late August, Iran’s National Cyberspace Center revealed that the draft of the state-backed cryptocurrency project is ready, following instructions from President of Iran Hassan Rouhani. At that time, the deputy director in charge of drafting regulations for Iran’s Supreme Cyberspace Council claimed that the idea of launching a national cryptocurrency is being actively pursued.

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Hyperbitcoinization: How Currency Crises Are Driving Nations to Crypto

Venezuela, Turkey, Iran and Zimbabwe: these countries are all facing ongoing economic crises. They’re suffering from high levels of inflation, and as a result the people living within them are increasingly turning to crypto as a store of value and a means of exchange. Their recent troubles have heightened the distant possibility that, at some point in the future, hyperbitcoiniztion will take place, with Bitcoin (or some other coin) replacing the bolívar, the lira, the rial and other struggling national currencies, and perhaps even becoming the world’s dominant form of money, as predicted by the likes of Steve Wozniak and Jack Dorsey.

However, as encouraging as such developments are for Bitcoin’s reputation as a store of value, it’s unlikely that the moves of Turkish, Venezuelan and Zimbabwean citizens toward it and other cryptocurrencies are an immediate precursor to the kinds of blanket adoption processes outlined in the noted 2014 “Hyperbitcoinization” article by Daniel Krawisz.  Even though they’re conspicuously increasing, the BTC volumes traded in the affected countries above are not significant enough relative to global volumes, while the isolated nature of most of these nations means that adoption has little chance of spreading outward.

Added to this, for as long as such global reserve currencies as the U.S. dollar, the euro and the Japanese yen remain stable, crypto adoption won’t be boosted by high inflation in nations where the population has access to such currencies — and not to mention gold.

Venezuela

The textbook case of crisis-driven crypto adoption is Venezuela, with the first report on Venezuelans turning to Bitcoin arriving in October 2014. According to Reuters, Venezuelans were being driven to the cryptocurrency by the capital controls imposed by President Hugo Chavez in 2003, which made it excruciatingly hard for them to obtain U.S. dollars. Given that, even then, hyperinflation was in motion in Venezuela (at 68.5 percent), locals began purchasing — and mining — Bitcoin, which stood at $388.30 by the beginning of that October, despite having fallen by around 49 percent since the beginning of the year.

While data on the actual number of people using Bitcoin at this point isn’t available, the Reuters article states that Venezuela “already [had] at least several hundred Bitcoin enthusiasts.” Somewhat less vaguely, Coin Dance records that 625,573 Venezuelan bolívar (VEF) was traded for Bitcoin on the LocalBitcoins peer-to-peer (p2p) crypto-exchange in the week of Dec. 12, 2014, equivalent to about $99,403.55 at the conversion rate of the time. Similarly, CryptoCompare lists a high for 2014 (on Dec. 24) at VEF 553,633.30, which, at around $87,972.33, underlines how the volumes being traded weren’t massive — particularly for a nation with a gross domestic product (GDP) of $482 billion — even if they were growing as a result of economic pressures.

Volume of VEF & BTC Market

Since 2014, things have picked up gradually. In the week ending on Dec. 17, 2016, there were Bitcoin trades worth a total of VEF 527,945,763, which, due to inflation of around 275 percent in 2015, translated to $105,589.15 at then-current conversion rates. That year, individuals involved in the Venezuelan crypto-economy had begun speaking in favor of Bitcoin and other cryptos as genuine alternatives to the bolívar and even the U.S. dollar, with the founder of Bitcoin Venezuela, Randy Brito, telling Cointelegraph in January 2016 that BTC could be “a genuine savior of the Venezuelan economy.”

“The Bitcoin market in Venezuela is indeed big and growing at a fast rate. The absence of exchanges have seemingly gone unnoticed as most Bitcoin miners within the country trade informally with people they can trust — basically for reasons of privacy, as they seek to conceal their source of wealth from the public.”

Coupled with the ability Bitcoin grants Venezuelans for resisting a government that has effectively robbed people of wealth by presiding over an inflationary regime, its growing value over the course of 2015 and 2016 gained it increasing popularity. Indeed, the local Surbitcoin exchange told the Washington Post in March 2017 that the number of Bitcoin users expanded from around 450 in 2014 to 85,000 in 2016.

Once again, such numbers aren’t massive for a country with a population of approximately 31.5 million, but the deteriorating situation in Venezuela has meant that they only increased further in 2017 and 2018. For the week ending on June 24, 2017, the VEF/BTC market on LocalBitcoins alone had reached a volume of VEF 9,210,450,540, according to Coin Dance. This equated to around $1,151,306.32 at the time, while the week of Dec. 30, 2017 saw a trade volume of VEF 281,525,042,307 on LocalBitcoins — or $2,815,250.42, according to then-current black market exchange rates.

This year, even with the advent of the state-controlled and oil-backed Petro cryptocurrency, Bitcoin and cryptocurrencies more generally have continued to enjoy a strong increase in usage. In fact, Reuters has recently reported that no crypto-exchanges are trading the Petro and that no Venezuelan shops currently accept it, while the likes of Bitcoin have continued to see growth. Assuming the same crude volume-to-users ration that was evident at the end of 2016 (i.e., Bitcoins worth $105,589.15 traded by around 85,000 users), there were around 926,500 Bitcoin users in the week of Aug. 18, 2018, when 673 Bitcoin was traded against 27.28 trillion Venezuelan bolívars on LocalBitcoins. At the black market exchange rate (i.e., 1 VEF = $5,921,486.23) that applied prior to the Venezuelan government officially devaluing the bolívar by 95 percent, this equalled around $4.6 million.

It’s not clear to what extent traded volumes will continue to grow now that the government has devalued the bolívar, yet the economic pressures faced by Venezuela have caused its population to adopt Bitcoin more speedily than other nations with comparable GDP. For instance, in New Zealand and Romania — two countries the International Monetary Fund (IMFputs next to Venezuela in terms of GDP — the LocalBitcoins BTC market has grown by 875 percent and 2400 percent respective since 2013. By contrast, the LocalBitcoins BTC/VEF market has grown by a staggering 67,300 percent since 2013, with 536 Bitcoin being traded in the week ending on Aug. 25. If nothing else, this underlines the kind of boost hyperinflation can give to cryptocurrency adoption. And seeing as how the IMF has predicted that inflation could reach 1,000,000 percent by the end of 2018, the boost is likely to be even bigger in the coming months.

It’s not only Bitcoin that has enjoyed the fruits of Venezuela’s economic disaster, as other cryptocurrencies have also made inroads into the South American nation. Since at least September 2016, Venezuelans have also been avid users of Dash, whose faster confirmation times and lower transaction fees generally make it more convenient as a means of payment. Buoyed by active moves on Dash’s part to promote their coin among Venezuelans as an alternative to the bolívar — and to Bitcoin — it’s reportedly the most popular cryptocurrency among local merchants — at least, according to Dash themselves — with upward of 540 merchants in the country now accepting it as a means of payment.

Iran

Iran is another country that has been on the wrong end of U.S.-led sanctions in recent years, and like Venezuela, its national currency — the rial (IRR) — is suffering from high inflation, although its current rate of 18 percent doesn’t quite match the 82,766 percent currently seen in Venezuela.

As recently as this April, the rial’s rate of inflation was only 7.9 percent, yet this jumped to 9.7 percent, 13.7 percent and then 18 percent in May, June and July. Much like Venezuela, the Iranian government responded to this precipitous increase by announcing plans in late July for a state-run cryptocurrency, while the Iranian population had by that point already traded crypto worth $2.5 billion, according to a May report from Forbes. This was despite the government having introduced an April ban on banks dealing in cryptocurrencies.

And since April and May, there has been a noticeable uptick in the IRR/BTC market on LocalBitcoins. For instance, between July 7 and July 28, the volume of this market increased by 109.1 percent, from IRR 9.467 billion to IRR 19.796 billion (i.e., to roughly $176,758.31, according to black market conversion rates).

Volume of IRR & BTC Market

By contrast, a country with a similarly sized GDP — Thailand — witnessed only a 27.6 percent increase over the same two-week period, from 12.2 million Thai baht (THB) to THB 15.6 million. That said, this latter figure equals $476.410, meaning that the BTC market is bigger in Thailand in absolute terms. More importantly, it also means that an inflation crisis alone isn’t enough to bring about widespread crypto adoption overnight, since it’s clear that the Iranian market for crypto is not only small, but is hampered by legislation that makes it illegal. It has also been undermined by the enduring popularity of gold, which rose by 300 percent against IRR in the three months leading up to June and which has reportedly replaced the U.S. dollar in local Iranian markets, according to the Iran Gold & Jewelry Association.

Zimbabwe

Another nation that has its own economic woes is Zimbabwe. In 2009, it abandoned its own national currency (the Zimbabwean dollar), doing so after a trillion-dollar note was introduced and after the currency had braved 10 years of hyperinflation — the rate of which reaching as high as 231,000,000 percent in July 2008.

Since then, the government has permitted the use of a variety of currencies — including the U.S. dollar, South African rand, and the euro — yet, this drastic measure introduces problems of its own, such as acute shortages of foreign cash. To combat this, the Zimbabwean government has been imposing capital controls, setting the latest this May, when the central bank limited the amount of USD people can withdraw from ATMs and send out of the country to $1,000.

In the face of such restrictions, Bitcoin witnessed price increases above the global average on the Zimbabwean Golix exchange at the end of 2017, with the price even doubling in November as locals sought to obtain currency that wasn’t controlled or restricted by the government. It was also in November that Golix celebrated a quadrupling of its monthly transactions, around the time when the country had been destabilized by fresh dollar shortages, 50 percent inflation — affecting the new bond notes the government introduced in November 2016 — and a military coup. Consequently, Golix saw its monthly trade volume increase to $1 million, which was an impressive feat considering that, over the entire course of 2016, it handled a grand total of $100,000.

Turkey

A similar picture has emerged from more recent Turkish history, with inflation issues provoking a comparable — if not quite as dramatic — swing toward crypto. These issues first became acute when the inflation rate of the Turkish lira (TRY) climbed to 11.9 percent in October 2017, as the nation’s banks took on risky levels of private debt, as foreign investors moved out of the country, and as President Recep Tayyip Erdoğan refused to increase interest rates in response.

Following this, Turkish people began looking toward crypto, although the volumes at the time weren’t significantly larger than those for nations with similar GDP levels. For instance, in the week ending on Nov. 4, 2017, 41 Bitcoin was traded for Turkish lira via the LocalBitcoins exchange, while in Mexico — which has a similar GDP, but an inflation rate of around 4.5 percent — 38 Bitcoin was traded for Mexican pesos. In other words, relatively high inflation can give a slight boost to crypto adoption, but without hyperinflation, it doesn’t result in a dramatic increase (e.g., 303 Bitcoin was traded for Venezuelan bolívars on the week that ended on Nov. 4).

However, this year there has at least been the threat of hyperinflation, as Turkey entered a nascent crisis, which saw inflation rise to 15.39 percent, at the beginning of July. As a result, there was a 131.9 percent increase in volume on the LocalBitcoins exchange between the beginning of July and the beginning of August, with the BTC trade volume in Turkish lira rising from 327,295 to 759,026 between the week ending on July 7 and that ending Aug. 11.

Volume of TRY & BTC Market

Between these two dates, the price of BTC actually sank from $6,670 to $6,145 (-7.87 percent), meaning that this rise can’t be accounted for by a strong bull market in Turkey. Similarly, figures from CryptoCompare, culled from the BTCTurk and LocalBitcoins exchanges, reveal that there were trades in Bitcoin worth TRY 31,592,628 on Aug. 10, representing a 424.3 percent increase when compared to the 24-hour volume for July 10, which was TRY 6,026,033.

Speaking of the Turkish inflationary crisis and its positive effects on demand for crypto, ShapeShift CEO Erik Voorhees noted on Twitter that Bitcoin’s recent resilience in the face of crypto-market turbulence had raised its stock as a store of value and made it a viable alternative to the Turkish lira.

It would seem that an increasing number of Turkish people agree with him, given that a June survey from ING Bank revealed that Turkey has the highest rate of cryptocurrency ownership in the world — or rather, out of 15 countries, including the U.S., Australia, the U.K., France, Germany, and the Netherlands. 18 percent of Turkish people own some cryptocurrency, compared to 12 percent for the next highest — Romania, which also happens to have the highest rate of inflation among the 14 other nations — and eight percent for the United States.

Cryptocurrency Ownership

However, an inflation rate of around 15 percent isn’t enough on its own to drive widespread adoption of cryptocurrencies, nor is it sufficient to trigger the process of hyperbitcoinization. For one, even if the TRY/BTC market has enjoyed increases in volume in recent weeks and months, absolute numbers are still comparatively low, with the market currently being the 16th largest for Bitcoin at the time of writing, according to CryptoCompare. This equals a 24-hour volume of BTC 226.09, which is only 0.08 percent of the total amount traded in a day, and only 0.48 percent and 0.68 percent of the volume traded against the U.S. dollar and Japanese yen respectively.

Also, if you look at the TRY/BTC charts for LocalBitcoins, the recent inflation-driven increase over July-August isn’t that large and is actually dwarfed by the trading volumes in Turkish lira as witnessed in April and early June and particularly during the end-of-2017 rush. And in fact, if you compared the TRY/BTC figures for the week ending on Aug. 11 against those for the week ending on Aug. 18 — during which the crisis reached its peak, with lira falling by as much as 10 percent — there is a drop rather than an increase. TRY 759,026 was traded for the week ending on Aug. 11, while only TRY 573,626 was traded for the seven days leading up to Aug. 18.

In contrast to the growth of crypto visible in Venezuela and Zimbabwe, what this lack of a pronounced upswing points to is access to the U.S. dollar, among other fiat currencies and stores of value. In contrast to Venezuela and Zimbabwe, the Turkish government has opted not to set any capital controls, thereby enabling people to buy and sell as much foreign currency as they like. As a result, Turkish investors and the Turkish people have begun buying U.S. dollars and gold, as indicated by how both have risen markedly against the lira. And in turn, neither Bitcoin nor any other cryptocurrency has seen a big jump in trading volumes recently, even though the longer-term weakness of the lira has played a role in giving Turkey one of the highest rates of crypto ownership in the developed world.

Argentina and reserve currencies

Much the same story can be gleaned from Argentina. At 31.2 percent, Argentina currently has the highest inflation rate of any moderately sized economy — which the IMF ranks as 21st in terms of GDP — and as could be inferred from such a statistic, cryptocurrencies should be enjoying a strong following in the South American nation.

However, despite the early expectation that Argentina was ripe for Bitcoin adoption, it would seem that the population doesn’t currently trade cryptocurrency in impressive numbers. On the LocalBitcoins exchange, the highest number of Bitcoin bought in 2018 using Argentine pesos in a single week was 31, during the week ending on July 7. And for the sake of comparison, Sweden has the 23rd largest GDP according to the IMF, yet during the week ending on July 7 many more Bitcoin — 112, to be precise — were traded for Swedish krona.

Volume of ARS & BTC Market

According to CryptoCompare, Argentina is only the 45th biggest market in the world for Bitcoin (Sweden is the 31st), despite having the sixth highest rate of inflation in the world. And as with Turkey, a big part of the explanation for this is that Argentina hasn’t had strict capital controls since 2015, when incoming president Mauricio Macri lifted the controls imposed by his predecessor, Cristina Fernandez de Kirchner, in 2011.

Because of this, Argentines have access to U.S. dollars and other currencies, something which circumvents the need for cryptocurrencies as a store of value.

Still, even without any recent jump in crypto trading or ownership, Bitcoin still has a noticeable presence in Argentina. Not only has an Argentine bank recently begun using Bitcoin for cross-border payments instead of the SWIFT network, but the country was also one of the earliest adopters of Bitcoin during the period between 2011 and 2015 — even though capital controls were in place. As reported by Tom Jeffreys in early 2016, Bitcoin was already accepted by 145 merchants in Buenos Aires alone (it’s now accepted by 194), implying that the cryptocurrency wasn’t simply a store of value but also a method of payment:

“For many, the practical, everyday uses of Bitcoin in a country like Argentina are the early lab tests of radical financial overhaul that could have wider implications for the global economy.”

Grim scenarios

The lesson provided by all of the above examples is the following: Cryptocurrencies have a huge potential as alternative methods of payment and stores of value during financial crises. However, as long as world reserve currencies — such as the U.S. dollar and euro — remain stable, and for as long as people of an unstable nation have access to such reserves, no cryptocurrency is likely to gain widespread adoption and use in that country — at least not as a result of inflation. More simply, there will be no hyperbitcoinization as long as the U.S. dollar remains strong.

As illustrated by Coin Dance’s numbers for markets on LocalBitcoins, trading volumes are highest — and rise the fastest — in nations where there’s very poor access to a reliable fiat currency. Consequently, what’s needed to drive the mass adoption of crypto in any one nation isn’t simply inflation, but also a shortage of US dollars and other stale foreign currencies.

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Iran: State-Backed Crypto Draft is Ready, Central Bank to Soon Announce Stance on Crypto

Iran’s National Cyberspace Center has revealed that the draft of the state-backed cryptocurrency project is ready, local news outlet Financial Tribune reports August 25.

According to the article, the national digital currency project was developed on instructions from President of Iran Hassan Rouhani.

Saeed Mahdiyoun, the deputy director in charge of drafting regulations for Iran’s Supreme Cyberspace Council, has reportedly revealed to local news agency IBENA that the idea of introducing a national cryptocurrency is being actively pursued by Iran’s cyberspace authority.

Mahdiyoun also stated that the state authorities will soon remove the existing uncertainty around cryptocurrencies, since the Central Bank of Iran is set to introduce its official stance on the issue at the end of September.

At the moment, cryptocurrencies operations are banned by Iranian banks and credit institutions, following the money laundering concerns that were first raised in December 2017.

As previously reported by Cointelegraph, Iran has confirmed it will create its own state-issued token to avoid the upcoming U.S. sanctions, as well as to “facilitate the transfer of money” to and from “anywhere in the world.”

Mimicking the practice of Venezuela, whose government introduced the first national cryptocurrency Petro in February this year, Iran authorities are looking at blockchain technology to circumvent challenges within the country, including a complete ban on acquiring U.S. dollars that was enacted in early August.

On August 7, Cointelegraph reported that Iran’s crypto ransomware threat is on the rise and will grow further in the current geopolitical environment. According to the report by global management consulting firm Accenture, the detected ransomware “could have been created by government-backed actors or Iranian criminals.”

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Iranian Crypto Ransomware Threat Will Rise in Today’s Geopolitical Climate, Report Predicts

Iran-based malware that demands a digital ransom in cryptocurrencies is on the rise and will further escalate in the present geopolitical climate, according to a report published by global management consulting firm Accenture on August 7.

After two years of analysis, Accenture Security iDefense predicts that emerging trends in the Iranian cyber threat landscape will intensify as the country is forced into a defensive and economically straitened position in the wake of the U.S. exit from the Obama-era Iran nuclear accord this spring.

With the US set to imminently to reimpose tough economic sanctions, Accenture has warned that the ransomware it has found “could have been created by government-backed actors or Iranian criminals, or both,” as the Wall Street Journal (WSJ) further reports.

Accenture has tracked five new types of ransomware — some of which demand “staggering” crypto ransoms — that its analysis has traced back to hackers in Iran based on samples that contain messages in Farsi as well as other clues pointing to Iranian computer systems.

“WannaSmile” —- a zCrypt variant that Accenture discovered in November 2017 — asks for a 20 Bitcoin (BTC) payment in a Farsi ransom note and also advertises local Iran-based payment processors and exchanges through which victims can acquire the cryptocurrency.

Another sample, “Black Ruby,” has been programmed to spare computers with an Iranian IP address, but otherwise encrypts and scrambles the target’s files, as well as infects the machine with a resource-hungry Monero (XML) miner. The ransom for so-called Black Ruby, which Accenture discovered in February 2018, is $650 in BTC.

The report says that the increase in ransomware activity suggests that Iran-based actors are “financially motivated to target global organizations by using ransomware and cryptocurrency miners for financial gain,” although it notes that

“Based on current Iranian policy, the feud may not lead to any disruptive or destructive cyberattack against the United States or European counterparts in the near future.”

Accenture’s report adds that the Iranian government might instead target its neighbors — like Saudi Arabia, the United Arab Emirates, Bahrain, and Israel —as they supported the U.S. decision to pull out of the nuclear agreement.

Jim Guinn, head of Accenture’s industrial cybersecurity business, told the WSJ that stealth crypto-mining attacks — also known as cryptojacking — have already caused “significant issues in some oil and gas facilities in the Middle East,” estimating that “millions of dollars of compute cycles have been hijacked over the past 12 months and continue to be hijacked every day.”

Amid the geopolitical fallout, economic turmoil in Iran has seen some citizens turn to crypto in an attempt to protect their funds. As of May, Iranians were estimated to have siphoned $2.5 billion out of the country in crypto, notwithstanding the central bank’s move to ban local financial institutions from dealing in crypto earlier this spring.