Iranian authorities, together with four local banks and Ghoghnoos, have launched the PayMon cryptocurrency backed by gold reserves, aiming to bypass international sanctions. No other country has ever used gold reserves to back a cryptocurrency. PayMon is expected to be presented on the Iranian Fara Bourse OTC securities market.
Sputnik spoke to Hamid Reza Shaabani, a blockchain specialist and founder of Arz-e Digital, the leading analytical portal for Iran’s cryptocurrency industry, to find out about the features of the new and potentially revolutionary Iranian digital currency.
Sputnik: Why is it important for Iran to enter the cryptocurrency market? What benefits can it bring to the country?
Hamid Reza Shaabani: Digital currency is a rather new phenomenon; we can say that cryptocurrency is the future. Iran has the potential to be realised in this industry, as well as to turn it into one of the country’s main sectors. The country’s excellent geographical position, as well as the great interest of the people and the unique political conditions contribute to that. Bypassing economic sanctions is one of those cases that cannot be ignored.
Sputnik: Does this new cryptocurrency work in a way similar to Bitcoin and other cryptocurrencies, or does it have any special or unique features?
Hamid Reza Shaabani: Our network is based on the Stellar cryptocurrency network focusing on creating a secure and reliable connection between individuals and financial enterprises. It is too early to say that this cryptocurrency will get a large-scale implementation, since legislative control is needed.
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Sputnik: Earlier, Iranian financial institutions were reported to be selling gold via the Internet. However, it turned out later that this gold doesn’t physically exist, causing issues and raising concerns. Do you think there can be a similar scenario with a cryptocurrency that is backed by gold?
Hamid Reza Shaabani: There should be full transparency in this regard. Ghoghnoos has a number of provisions for cryptocurrency users for storing gold reserves to ensure transparency and eliminate any doubts.
Sputnik: Is it possible to sell bitcoins for cash at currency exchange bureaus? Is it possible to get gold in exchange for tokens?
Hamid Reza Shaabani: The contract with the company stipulates that token holders can receive gold, but the details are not clear yet.
Sputnik: Is the system likely to be hacked? What security measures are present?
Hamid Reza Shaabani: There should also be transparency in this regard. So far, our agreement with Ghoghnoos provides for the fight against money laundering and the KYC (Know your client) procedure, which is identification before a financial transaction takes place.
Sputnik: Who can use this currency? Will it be internationally available?
Hamid Reza Shaabani: Much of the PayMon currency will enter the market and will be traded in special exchange offices. Some of it will be used for the development of hosts; and some of it will go to the founders of Ghoghnoos. As for the world currency introduction, it all depends on foreign legislative bodies. It’s likely that currencies will be traded in major international currency exchange points.
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Sputnik: Have other countries experimented with or implemented a similar system?
Hamid Reza Shaabani: The idea of a gold standard for electronic tokens hasn’t been officially applied in any country, though it was discussed in 2017. There are several examples of gold-backed tokens, but, unlike PayMon, they operate independently of the banking system. The most important tasks are gaining trust and ensuring transparency.
The views and opinions expressed by the speaker do not necessarily reflect those of Sputnik.