Does Iran have a camel driving problem? No, Iran has plenty of camels.
Does Iran have a scooter problem? No, with 11 million scooters in the country, two-wheeled transportation is abundant.
Does Iran have a car problem. Yes. Yes. A thousand times yes. And if Iran can’t solve this car problem with the creative accumulation of bitcoins, the ayatollahs could find themselves out of a job.
Welcome to the Iranian revolution 2.0. This is truly scary stuff for the gangs running Iran. This earth-shattering news just snuck up on everyone.
Give Me a Car or Give Me Death
It began after an Iranian newspaper published an article that reported that Dr. Gholam Hossein Mozaffari, CEO of the Kish Free Zone Organization, was seeking permission from Iran’s central bank to start cranking out digital wealth.
This is a big deal for Iranians who desperately want dependable, fun cars
Kish, a 35 square-mile island off the coast of Iran, situated in the Persian Gulf, is a relatively free-wheeling fun resort designed to provide a Persian Disneyland to Iranians and world travelers.
Let’s back up a couple of steps and focus briefly on Iran’s car market. In a couple of words, Iran’s car market sucks – big time. And many Iranians want to drive cars, not camels or scooters.
These car drivers can’t buy cars they want because the gang running Iran has ruined the country’s currency – the rial. The rial is suffering hyperinflation. Quite simply, foreign car manufacturers don’t want to sell their cars for Iran’s rial. This situation has many Iranians hopping mad.
This state of affairs doesn’t quite rise to a level where Iranians are in the streets shouting: Give me a car or give me death. But it’s getting close.
Nasty Uncle Raids Piggybank
Here are two factors contributing to the car problem.
One, Iran produces crappy vehicles. Iranians don’t want to buy these cars.
Two, some large portion of Iran’s wealth goes to feed and support the country’s Revolutionary Guard Corps, which has a strength of nearly 200,000 individuals.
Think of these functionaries as a nasty uncle who stops in for Thanksgiving turkey and steals all the quarters out of your piggybank while everyone eats. Then he hits you over the head with the drumstick because you complained.
Poor economic planning and manufacturing malfeasance has sent Iran’s currency, the rial, into hyperinflation orbit.
Iran doesn’t have much leeway for error. Iran is near the top of surveys of countries you don’t want to live in.
Hold on to Your Bladder
Iran, like North Korea, is not a fun place to live or recreate. For example, drinking alcoholic beverages is forbidden; you can’t legally buy even a can of beer anywhere in Iran.
In addition, western credit cards don’t work. Urinals don’t exist. Adultery may earn you 100 lashes. You could also get stoned to death. Really.
Photographing certain buildings may get you arrested for espionage. YouTube is blocked. Possession of drugs can carry the death penalty. And Iran’s nasty uncle guard throws gay people off 10-story buildings.
Enter the Magical Kingdom of Kish
After a fun day of hangings, whippings, flying off 10-story buildings and holding the bladder, visitors may enter the magical kingdom of Kish.
Many Persians consider the island as a kind of consumer’s paradise and Persian Disneyland. As a designated free trade zone, visitors are given a 14 day travel permit to explore the island. In Southwest Asia, only golden Dubai draws more tourists than Kish.
Through an agreement with the United Nations, Kish is a member of the World Trade Organization. That gives tiny Kish some small measure of autonomy and subsequent economic freedom.
Kish has the ability to engage in liberal economic development, set up commodity markets, establish world trade markets and launch industrial projects. The island has about one million visitors annually.
Nasty uncle guard is somewhat muted here. Islamic laws are less strict. Banking and monetary services are more flexible. Foreign ownership is allowed. Water sports are encouraged. Visitors can even tour the Dolphin Park.
Embracing Digital Cash
The development of Kish makes it the perfect location to solve Iran’s bad car problem.
Due to Iran’s recalcitrance to play well with the world, the country is subject to a web of sanctions. The sanctions have added to severe currency inflation. Widespread corruption has also contributed to inflation. All this economic chaos makes car manufacturers across the world reluctant to sell their vehicles in exchange for the ever-inflating Iran rial.
One of the ways out of this mess is to embrace digital money.
So back in May, Iranian President Hassan Rouhani ordered the prune-face government to start exploring the crypto industry.
Then in July, the government issued 14 crypto-mining permits and cut the price of electricity so mining rigs could operate more efficiently cost-wise.
The Crypto Silver Bullet to Kill the Rial Problem
Let’s briefly explore the Iranian car market to better understand this mess and tie in the cryptocurrency silver bullet.
Buying a car in Iran is not cheap for the average Iranian. A cheap car can run $3,000US. And prices are jumping monthly. The two key features in the Iranian car market are high cost and low quality. Many cars are gas guzzlers. Various models have ended production.
For example, the economy car called the SAIPA Pride sells for $3,300 to $3,700.
The more sporty model called the Peugeot 206 costs around $6,770. Dealers will typically add after-market accessories to make the 206 a bit more appealing. That doesn’t, however, satisfy what Iranians want in a car.
All the dealers report that finding parts is difficult. That’s because foreign suppliers and dealers just don’t want to deal with Iran’s currency, the rial. The rial has lost 70% of its value.
To make matters worse, Renault, the French automaker, pulled out of Iranian market in 2018. Peugeot, which had a 34% share of the Iran market, stopped operations right after Renault. Daimler, the German automaker, also suspended sales.
About all that’s left to buy for the typical Iranian is the cheap Kia Pride 111. Produced in Iran, it’s known as a death trap due to its horrible safety record.
So, here’s what the typical Iranian faces when looking for a car to buy.
The price of cars has shot up about 80% in the past seven months. Most of the cars available are knock-offs of old French and South Korean models. The prices for these vehicles are not only high but the vehicles themselves are of poor quality. Imported cars seem to be out of reach for Iranians due to high cost.
It gets worse.
Camels Will Roam Without Drivers
Iran Khodro and SAIPA are the two largest car manufacturers in Iran. Both companies, though, have suffered from internal corruption. Some company officials are in prison and others are awaiting trial. The two companies owe banks and parts manufacturers more than $16 billion.
Iranians are simply rejecting the cars made in Iran. The reasons why are high prices and poor quality. Surveys show that Iranians want imported cars, especially those made in Japan.
A consumer survey of Iranians reported that more than half of respondents wanted to buy a foreign car or motorbike. However, foreign automakers are not keen on accepting the Iranian rial as payment because the rial is losing value.
All these facts bring this story back to the island of Kish. An effort is building to make the island the focal point to jump into the cryptocurrency market in order to fund the purchase of car imports.
Mozaffari has suggested that the free zones in Kish be used to produce digital currency. This effort would remove the problem of paying for imported cars using the inflated rial. Additionally, nascent bitcoin mining operations have started in Kish.
Mozaffari is also calling for Iran’s private sector to start up a cryptocurrency exchange. If Iran’s central bank approves the scheme, cars could be imported into the Kish free zones and paid for with cryptocurrency.
Should the cryptocurrency effort bear fruit on Kish, unhappy Iranians would be wearing smiles as they buy Toyotas and KIAs with digital coins. Iran’s bad uncle guards would stay employed.
And countless camels would continue to roam the country’s Great Salt Desert without drivers. It’s the best of all worlds for the Iranians.