Tehran, Iran – Reza Abdollahi isn’t just a fan of cryptocurrencies. He’s among the fledgling ranks of business owners in Iran who accept them as a form of payment.
For the past six months, customers at his Mashhad restaurant, 1001 Nights Cinema Pizza, have been able to cover their tabs in bitcoin and other cryptocurrencies. They even get a 50 percent discount if they choose these forms of payment over other types of legal tender.
“We have up to 200 people paying with crypto each month, mostly consisting of large groups who throw parties at the restaurant to use the discount,” Abdollahi told Al Jazeera.
Abdollahi says that 90 percent of crypto payments at his restaurant are made using Ethereum. But on Wednesday, it’s the granddaddy of cryptocurrencies – bitcoin – that he and fleets of crypto enthusiasts around the world are celebrating.
Known globally as “Bitcoin Pizza Day”, this event marks a milestone in the legitimisation of cryptocurrencies.
On May 22, 2010, a Florida computer programmer named Laszlo Hanyecz confirmed that he had successfully traded 10,000 bitcoins to buy two Papa John’s pizzas.
At the time, those coins were worth about $35. Today, 10,000 bitcoins are worth about $80m.
Missed opportunities aside, Hanyecz’s pizza purchase is thought to be the first real-world transaction using bitcoin.
In the years since, investing in cryptocurrencies has proven to be a highly speculative undertaking.
The price of a bitcoin reached a stratospheric high of about $19,000 by December 2017, only to come crashing down to around $3,000 by the end of 2018.
The price has since recovered to around $8,000.
One of bitcoin’s main draws is that it is not controlled by any state or central authority and offers anonymity for those conducting peer-to-peer transactions. This is because it is based on a distributed ledger technology called blockchain.
While transactions with fiat – or government-backed currencies – need to be verified by a third party such as a bank, bitcoin and other cryptocurrency transactions are verified by a decentralised network of computers spread across the globe.
In exchange for verifying “blocks” of transactions and grouping them in a secure “blockchain”, the computers’ operators are rewarded with new bitcoins that they “mine”.
But for many crypto enthusiasts, the real promise is the underlying technology’s ability to drive down transaction costs by cutting out the middleman.
“For me, Bitcoin Pizza Day is essentially a celebration of the wish that bitcoin can be widely used to clear micro payments,” Tehran-based blockchain payment solutions developer Kaveh Moshtagh told Al Jazeera.
Others believe that as the extreme price swings start to ebb, crypto will find more converts in Iran.
“I think it would be great for people active in this field to celebrate bitcoin on multiple occasions each year, both to retell its stories and to attract more people to this new technology,” said Tina Kheiri, a Tehran-based blockchain and cryptocurrency educator with the Blockchain Academy.
“This day is very valuable to me because 10,000 bitcoins was only pizza money at the time, and is now worth millions of dollars,” she told Al Jazeera.
A hedge in a faltering economy
For Iranians, cryptocurrencies also hold attraction as a potential hedge against rampant inflation.
Last summer, the Iranian rial lost nearly 70 percent of its value after United States President Donald Trump announced he would unilaterally withdraw from the Iran nuclear deal and reimpose harsh economic sanctions.
Since then, the economic crisis has deepened. For Kheiri, cryptocurrencies have served as a cushion during trying times.
Iran’s basic goods prices double as fall of rial continues
“I feel like I own something valuable when I buy bitcoin and only liquidate a small part whenever I need money,” she said.
Meanwhile, Abdollahi says he’s seen more and more people flock to crypto as sanctions bite harder.
“There is a whole world under Mashhad’s skin,” he said. “Scores of people are mining cryptocurrencies and some businesspeople are using parts of their factories as mining farms, which I think is great under sanctions.”
Beyond hedging, crypto technology could also one day serve as the backbone of an alternative global payments system beyond the reach of any state or political actor, including the US.
In early February, Sepehr Mohammadi, head of the nonprofit Iran Blockchain Community, said unofficial estimates showed more than $10m worth of cryptocurrency transactions are conducted in Iran on a daily basis.
But enthusiasts hope that’s just a starting point.
Developer and researcher Moshtagh – who helped build Iran’s first-ever bitcoin ATM, unveiled in Tehran earlier this month – hopes the country will move towards a future where cryptocurrencies are accepted at most businesses.
“I’d very much like to be able to use bitcoin across the country to make purchases,” he said.
Blockhain Academy’s Kheiri also said she would “love to make all my payments with bitcoin”.
But Iran’s regulatory stance on cryptocurrencies may end up disappointing them.
Currently, the only regulation in effect is a blanket ban that prohibits all financial institutions from touching cryptocurrencies. But more rules are pending.
In late January, the Central Bank of Iran published a draft cryptocurrency regulatory framework that included banning bitcoin and other cryptocurrencies as methods of payment.
The central bank argued that giving free rein to cryptocurrencies, in a country with such high inflation, risks running the fiat currency – the rial – into the ground.
But the burgeoning Iranian cryptocurrency community doesn’t see that as a foregone conclusion.
In early March, more than three dozen crypto enthusiasts sent a joint document to the central bank that identified 51 problems in the regulator’s 13-page draft framework.
The document said that there are ways to both maintain the value of the Iranian rial and propagate the safe use of cryptocurrencies.
They propose that businesses set up cryptocurrency payment gateways for customers and link these to central bank-approved exchanges. The exchanges could then convert cryptocurrencies into rials, which would then be wired to the bank accounts of business owners.
They argue that this system would also give the central bank a more accurate gauge of cryptocurrency transactions in Iran.
But while regulators consider their next move, converts like Abdollahi are marking Bitcoin Pizza Day and waiting for the rest of the country – and the world – to catch up.
“I think blockchain and cryptocurrencies are the biggest inventions since the internet,” he said. “Not only Iran – but the whole world – should move toward them.”