Opportunities and threats for Iran to enter the blockchain technology market

NikZadSoheil Nikzad
Marketing Director at PersianGIG.com

Bitcoin and Blockchain technology at a glance

If we are asked how much we trust somebody, the answer would probably be a collection of sentences which expresses our mental estimations about his/her possible reactions in different situations. Now if the question is solely about financial issues, we would be able to determine a specific monetary amount so that his/her honesty and truth could be trustable in less amounts. Now picture an algorithm allowing us to put a part of your trust towards somebody in a pyx, lock it with a key without worrying about any leakage and deliver it to your trustee so he/she can trust on the first audience based on your trust. This way a considerable amount of existing trust among people in small and/or large social networking communities will stream as specified volumes of wealth, commodity, consensus or any other exchangeable valuable roles flow. Thus people can trade, measure, protect or transfer a part of valuable phenomena, which they trust their credibility, in deals. We may lose just a little bit of technical details if we say Bitcoin and its newborn virtual currency family are working like this.

Blockchain technology is a novel wise algorithm from the fin-tech family which allows value units to pack and stream between people so that their credibility goes beyond each one’s mutual trust and become a new economic transaction infrastructure by accepting basic rules of this algorithm between all users as public consensus.

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recognized by Federal Reserve as a commodity
recognized by the Central Bank of European Union as a prevalent international currency
recognized even recently as an international currency by Russia, the country had been ordained serious punishments for Bitcoin transactions before
Simple and inexpensive transactions
The feasibility of coexistence and numerous applications in social networks and big data
Controversies, thefts and dirty money transfer stories
Various non-monetary applications in security services market
And…
They all are familiar news about a technological and open movement in international information society and their shared keyword is “Bitcoin”.

Being aware of plentiful opportunities in this new inexpensive secure technology without needing to spend enormous resources emphasizes Bitcoin and other cryptocurrencies assessment in our beloved country, Iran, more and more.

If we only consider cryptocurrencies as money we will figure out that developers’ society has made a market cap more than $ 10 billion by spending less than $ 100 million in total to create whole apps and services till now.

Although the result of under constructing programs for newborn currencies in High Council of Cyberspace has not yet been approved or issued as a law but it’ll be attractive to discover value making fields for us according to potential scientific, economic, geopolitic and strategic position of our country in current and future global relations. Opportunities which must not be unaware of their risks and threats.

To study Iran’s facing opportunities and challenges in the international community to enter blockchain technology market will be the subject of following issues of this article series.

Bitcoin and Blockchain technology Implementation in Iranian PSPs

The internal transaction market is an important researchable use cases of blockchain technology implementation in any country’s cryptocurrency related case studies. ‌But at the current period Iran’s payment services market is involved to the serious challenges caused by internal and international changes. Meanwhile blockchain technology and cryptocurrencies implementation has special importance as an instance use case of Fin-Tech. Iran’s current state of payment service puzzle will be surveyed by focus on cryptocurrencies as following.

First of all PSPs has been created as outsourcing unite of the certain routine activities alongside the banks. E-commerce growth and payment channels variety made their products portfolio more rich and profitable.

After the abrupt growth of internet and social networks, virtual currencies became keeping and transferring value tool in form of tickets, credit tokens and various chips inside network and reached their own share of money and payment market which was not satisfied by PSPs.

Relying on the blockchain technology in past five years cryptocurrencies like bitcoin started to earning their even small but increasing share of money and transaction market which is kept so tight by special specs such as autonomy, cheapness, anonymity and micro transactions capability.

Competitors utilised this opportunity away from the traditional PSPs who were limited to the monetary and banking regulation and stroked their business seriously as yet.

The next competitors are from the information technology market due to their businesses has kept crowded loyal user bases in interaction such as Apple, Google, Facebook and Samsung. They were entered this market relaying on their customer bases by obtaining PSP permission symbolically and seems willing to earn considerable value added share of market in their pockets.

By continuing current trend some of reasonable consequences waiting for exclusive payment service market owners includes losing marketshare, being bought partially or totally by new competitors and bankruptcy.

Low internet quality and influence ratio to deliver online services, external sanctions and many continuous years if staggering inflation are the main Iranian PSPs’ paralysing reasons due their foreigner colleagues’ years of growth. These troubles in Iranian PSPs’ work field always led to lack of profitability in comparison to the international industry standards, lose of selection chance as an investment case and also lose of independence chance as an Independant business.

Iran’s recently inflation decrease led the banks return to their own business banking and payment services without any need to force them not to interfere in company management   field bearing on capital time value utilisation (such as trade and construction businesses)

international political openings for Iran, capability of international banking activities, possibility of foreign competitors entrance and losing efficiency of capital time value game for banks are the main reasons of Iranian PSPs’ challenge in the new business atmosphere.

the competition will be harder for Iranian PSPs affecting by outdated technologies, immature regulatory caused by internal monopoly and external sanctions, monetary service shadow market and finally non-banker companies’ interest to the payment service market.

PSPs’ possible scenarios seems to be:

To keep current monopolised service quality level according to the regulator’s limitation for new technology implementation and foreign competitor entrance
Transfer marketshare to colleagues and not colleagues competitors and shadow market
Bankruptcy and leaving market for foreign colleagues competitors
Partnership or acquisition by foreign PSPs
New technology implementation and service quality level and efficiency improvement
First of all High Council of Cyberspace is responsible for cryptocurrencies and blockchain technology activity regulation in Iran which didn’t approved and announced any result as legal procedure until writing this article despite having an understudy plan declaration. Different news from positive to negative prediction spectrum has been notified as yet.

The second step to implement cryptocurrencies as money and blockchain technology is based on financial regulatory organisation’s opinion namely Central Bank based on Iran’s constitution.

According to lack of subject determination in High Council of Cyberspace and also Central Bank’s very strict and conservative instructions about the other financial technologies such as USSD at least in probability space legal admission is so far and impossible for blockchain technology.

There aren’t any known business accepting bitcoin or any other cryptocurrencies as money or utilising blockchain technology as financial transaction recording infrastructure in Iran at the moment. Also non of Iranian PSPs has declared to have an executive compiled program in this field.

As conclusion just we can say “Not Determined Yet!” such as an intact fruit losing its verdancy slowly. Maybe it’s true to say bitcoin state in Iranian PSPs is zero in an spectrum from negative to positive.

 

Online transactions in Iran

Online Transactions in Iran Based on statistics provided by the Central Bank of Iran Spring 2016

Introduction

This report provides statistics, facts and market data related to e-commerce in Iran. The data has been provided by ECM (E-Commerce Monitor) with statistics conducted by the Central Bank of Iran in the spring of 2016. The following report is exclusively distributed through TechRasa.com. TechRasa’s task is to expose the activities of Iran’s startup ecosystem with the vision of empowering and inspiring Iranian entrepreneurs. TechRasa aims to give startups the international exposure they need and to help promote Iranian entrepreneurs to become global stakeholders. The months and the years in this report are all associated with the Iranian calendar‌ since the data from the Central Bank of Iran was suited for the domestic use. The months in this reports start from spring as the Persian year usually starts on March 21st. To find out more about the Persian calendar please refer to this article. – Note that the financial figures in this report are in USD, converted from Iranian Rial. The exchange rate used is 34,500 IRR for 1 USD. Definition of “internet payment gateways with transaction” in page 4: Any gateway that makes online payments possible without the need of a physical card. These gateways had at least one transaction during the period of study.

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Iran Online Transactions Status 17.5Billion Dollars online transactions in the year 1394 190.8 25% TehranIlam The province with the largest amount of online transactions 16% Growth in the amount of online transactions in 1394 compared to 1393 The province with the least amount of online transactions Million online transactions in the year 1394 Growth in the number of online transactions in 1394 compared to 1393 Note: Bill payment and Simcard recharge is not included in this report. 1 Data Source: Central Bank of Iran E-Commerce Monitor Online Market Research.

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17.515.1Billion Dollars Growth 1393 1394 Billion Dollars Amount of Online Transactions in Iran Monthly amount of Online transactions Growth rate in the amount of online transactions in the years 1393 and 1394 Unit: Billion Dollars 16% Year 2 Data Source: Central Bank of Iran 1393 1394Year 1st Month 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 1.75 2.02 1.6 1.311.32 1.39 1.7 1.371.35 1.42 1.29 1.02 1.36 1.73 1.44 1.25 1.34 1.22 1.54 1.1 1.14 1.27 1.22 0.48 E-Commerce Monitor Online Market Research

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190.8152.6 Million Times 1st Month 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 16.96 20.14 17.81 17.2 14.9715.25 16.88 14.514.3 15.3815.04 12.33 13.21 16.58 14.7 13.77 13.17 12.36 14.07 11.2210.88 12.42 11.05 9.17 Monthly number of Online transactions Number of Online Transactions in Iran Unit: One Million Times Growth rate in the number of online transactions in the years 1393 and 1394 Growth 25% Million Times 3 Data Source: Central Bank of Iran 1393 1394Year 1393 1394Year E-Commerce Monitor Online Market Research

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Internet Payment Gateways with Transactions 1st Month 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 17,01316,767 16,02315,97716,03315,93215,949 15,39315,31815,40915,378 14,418 15,28414,999 14,363 13,726 13,26713,15712,870 12,49212,68812,64112,677 11,730 1580113325 Monthly number of IPGs with transactions IPG Growth 18% Unit: One IPG Average growth rate in the number of IPGs in the years 1393 and 1394 4 Data Source: Central Bank of Iran IPG 1393 1394Year 1393 1394Year IPG : Internet Payment Gateway E-Commerce Monitor Online Market Research

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Amount of Online Transactions in the Provinces of Iran Rank Province Amount of Transaction 1 Tehran 10825 2 Razavi Khorasan 985 3 Isfahan 514 4 Fars 481 5 East Azerbaijan 373 6 Kerman 326 7 Mazandaran 317 8 Khuzestan 307 9 Gilan 302 10 Alborz 296 11 Sistan and Baluchestan 286 12 West Azerbaijan 250 13 Hormozgan 227 14 Yazd 200 15 Qazvin 173 16 Hamdan 161 17 North Khorasan 157 18 Kermanshah 157 19 Qom 156 20 Kordestan 142 21 Bushehr 138 22 Lorestan 138 23 Golestan 134 24 Markazi 127 25 Zanjan 115 26 Ardebil 92 27 Semnan 76 28 Chaharmahal and Bakhtiari 68 29 Kohgiluyeh and Boyer-Ahmad 55 30 South Khorasan 53 31 Ilam 35 Unit: Million Dollars 5 Data Source: Central Bank of Iran E-Commerce Monitor Online Market Research

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Iran Mobile Transactions (USSD) Statistics

USSD is the popular channel for mobile payment and mobile banking in Iran. but central bank of Iran will change the user experience of this channel from 22 September 2016. this report can give you some perspective about popular channel until September!

Iran Mobile Transactions (USSD) Statistics Based on statistics provided by the Central Bank of Iran Spring 2016.

Introduction

This report provides statistics, facts and market data related to e-commerce in Iran. The data has been provided by ECM (E-Commerce Monitor) with statistics conducted by the Central Bank of Iran in the spring of 2016. The following report is exclusively distributed through TechRasa.com. TechRasa’s task is to expose the activities of Iran’s startup ecosystem with the vision of empowering and inspiring Iranian entrepreneurs. TechRasa aims to give startups the international exposure they need and to help promote Iranian entrepreneurs to become global stakeholders. The months and the years in this report are all associated with the Iranian calendar‌ since the data from the Central Bank of Iran was suited for the domestic use. The months in this reports start from spring as the Persian year usually starts on March 21st. To find out more about the Persian calendar please refer to this article. Note that the amounts in this report were converted from Iranian Rial to USD. The exchange rate considered in this report is 34,500 IRR for 1 USD. Definition of “mobile payment gateways with transaction” in page 4: Any gateway that makes mobile payments possible without the need of a physical card. These gateways had at least one transaction during the period of study. ii Introduction

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Iran Mobile Transactions Status

Iran Mobile Transactions Status E-Commerce Monitor Online Market Research 9.7Million dollars mobile transactions in the year 1394 4.2 18% TehranSemnan The province with the largest amount of mobile transactions 98% Growth in the amount of mobile transactions in 1394 compared to 1393 The province with the least amount of mobile transactions Million mobile transactions in the year 1394 Growth in the number of mobile transactions in 1394 compared to 1393 Note: Bill payment and SIM card recharge are not included in this report. 1 Data Source: Central Bank of Iran

iran-mobile-transactions-ussd-statistics-5-6389.74.9 Million Dollars Growth 1393 1394 Million Dollars Amount of Mobile Transactions in Iran Monthly Amount of Mobile Transactions Growth Rate in the Amount of Mobile Transactions in the Years 1393 and 1394 Unit: Million Dollars 98% Year 2 1393 1394Year 1st Month 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 00000 1 2.1 1.3 1.6 1.3 1.4 1 0.87 0.67 0.3 0.250.210.18 0.79 1.16 0.120.130.120.09 E-Commerce Monitor Online Market ResearchData Source: Central Bank of Iran *Bill payments & SIM card recharge not included

iran-mobile-transactions-ussd-statistics-6-6384.23.5 Million Times 1st Month 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 00000 274 543 291 1448 636 587 406 267 212 84998674 947 1507 66506488 Monthly Number of Mobile Transactions Number of Mobile Transactions in Iran Unit: One Thousand Times Growth Rate in the Number of Mobile Transactions in the Years 1393 and 1394 Growth 18% Million Times 1393 1394Year 1393 1394Year 3 Data Source: Central Bank of Iran E-Commerce Monitor Online Market Research *Bill payments & SIM card recharge not included

iran-mobile-transactions-ussd-statistics-7-638Mobile Payment Gateways with Transactions 1st Month 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th 1,355 1,700 1,005 818 724 2,400 2,944 2,708 2,452 2,1662,124 1,984 2,121 1,837 1,715 1,650 769770756 569546519523 447 18651019 Monthly Number of MPG with Transactions MPG Growth 83% Unit: One MPG Average Growth Rate in the Number of MPG in the years 1393 and 1394 4 MPG 1393 1394Year 1393 1394Year E-Commerce Monitor Online Market ResearchData Source: Central Bank of Iran *MPG: Mobile Payment Gateway

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