What Does “Struggling for a Small Cake” Mean?
“Struggling for a small cake” is an economic and social term referring to competition over limited resources or opportunities. The term originates from the image of a small cake with a fixed size, where individuals or groups strive to obtain a larger share. In such a scenario, since the cake remains the same size, an increase in one group’s share directly reduces the share of others.
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This struggle fosters behaviors among stakeholders that prevent the cake from growing. In reality, the struggle for a small cake compels players to act in ways that ensure the cake never gets bigger, and even existing portions are not properly utilized by stakeholders.
Iran’s economy suffers from resource shortages, leading to numerous painful examples of the struggle for a small cake across the country. Sanctions, foreign currency shortages, an oversized government with an increasing current budget, water scarcity, generational gaps, excessive regulations, and the absence of a national perspective among policymakers all contribute to and result from this struggle.
Among all the struggles over the small cake, this article focuses on issues related to Iran’s digital economy, particularly blockchain, Web3, and crypto assets. I will illustrate how the mindset and behaviors driven by the struggle for a small cake have caused serious harm, where they originate, and how to break free from this futile battle.
The struggle for a small cake is not just an economic reality—it is also a psychological condition. Addressing and treating this mindset may have various approaches, but in this article, I will attempt to counter this mentality by outlining the future landscape.
The Future: Large Cakes That Go Unnoticed
According to future studies on the blockchain and crypto asset industry, in the next five years, this sector alone will add $1.76 trillion to global GDP. If Iran facilitates and supports this industry and captures just 2% of the global market share, it could increase its annual GDP by $35 billion, equivalent to a 7.5% growth.
The total value of tokenized assets worldwide is projected to reach $16–20 trillion in the next five years. This means that real-world assets (RWA) will experience significant growth within the crypto market. This expansion will unlock immense liquidity for asset owners who currently hold non-liquid assets. Real estate, industrial or precious metals, mines, and mega-projects are all prime candidates for tokenization. It is no secret that Iran’s economy desperately needs access to such fresh and liquid capital.
The total value locked (TVL) in the decentralized finance (DeFi) industry currently stands at approximately $45 billion. This figure is expected to grow to $800 billion in five years. In simple terms, an increase in TVL means more credit is available within the financial ecosystem. One of the biggest financial challenges in Iran, especially in lending, is a lack of credit. DeFi-generated credit is more secure, transparent, affordable, and faster compared to traditional credit systems, meaning it has the potential to revolutionize lending and credit markets permanently. Financing and investment, two key pillars of the financial industry, are poised for a major transformation using crypto assets and DeFi.
These are large cakes that demand attention. Yet, do you see any indication of awareness or interest from the government, central bank, stock exchange organization, Ministry of Industry, or other regulatory institutions regarding this major opportunity?
There are countless examples of how blockchain technology will impact the economy in the near future. However, the key question is: How much does the Iranian government recognize this shift, and how capable is it of leveraging this massive wealth explosion?
What Happened to Crypto in Iran: The Case of Mining
The story of Iran’s cryptocurrency mining industry serves as a clear and tangible example of the struggle for a small cake. Bitcoin mining could have generated billions of dollars in annual revenue for Iran for years. This revenue could have also propelled Iran’s energy sector forward. Moreover, mining revenue is immune to sanctions, highly liquid, and easily transferable globally. I choose mining as an example because it has been widely discussed, and many of its challenges are known to the public.
According to on-chain data (blockchain-derived information), in 2018 and 2019, Iran accounted for about 10% of the world’s Bitcoin mining. At that time, a strategic perspective should have led both the government and the private sector to recognize the importance of mining and plan for its expansion while addressing concerns about energy shortages. During that period, private sector proposals were put forward for energy production, energy efficiency improvements, and the utilization of wasted energy resources in the country. Many of these projects could have attracted investments in energy infrastructure, transforming Iran into the world’s top Bitcoin mining hub.
A country’s mining capability can be seen as a measure of technological development, similar to how major economic powers like China, the U.S., Russia, and Europe fiercely compete for a larger share in Bitcoin mining. This competition drives innovation in energy production and consumption. In reality, mining acts as a powerful incentive for energy sector advancements.
But What Happened in Iran? Due to small-cake thinking, conflicting interests, and a lack of a national and developmental perspective, Iran’s mining industry fell into chaos.
On the one hand, a license for mining was established; on the other hand, the price of electricity allocated to miners even surpassed the price of electricity exported to Iraq. Additionally, various tariffs and taxes were imposed on mining and the import of mining devices. Furthermore, the currency obtained from mining was calculated in a strict manner, similar to export currency, at the central bank. The result of all these competing claims over the small pie at the Ministry of Industry, Mine and Trade, Customs, the Ministry of Energy, and the Central Bank was that legal mining in the country no longer had economic justification. In contrast, no investment was made to develop the energy industry, the energy imbalance in the country worsened day by day, the country was deprived of substantial foreign currency income, and, worst of all, mining turned into a smuggling and criminal industry.
Mining is, in fact, a significant, well-documented, and clearly observable example of the struggle for a small cake.
At the end of the mining story, it is important to remember that mining constitutes only a very small part of the crypto asset value chain. Mining is a very simple industrial operation, and when government institutions have failed to utilize and expand this small cake, it raises concerns about what failures and setbacks we will face in leveraging the larger and more complex cakes of other sectors in the crypto asset industry.
According to studies, by 2030, mining will account for only about 1–2% of the entire blockchain economy, and yet we have failed to act wisely even in this small segment of the economy.
Exchange and Another Small Cake
The blockchain and crypto asset industry cannot exist without exchange and the processes carried out in centralized and decentralized exchanges. Fundamentally, markets are the prerequisite for development, and development begins with markets. Crypto exchanges play a central role in market formation and accessibility.
Another crucial role of exchanges in blockchain technology development is that they consolidate two essential elements: capital and technical knowledge, which are necessary for research, development, and technological growth.
The reality is that, given the global nature of crypto assets, exchanges are financial platforms that compete internationally with very powerful foreign rivals. For this reason, crypto asset exchanges in Iran should be supported, strengthened, and regulated, as these domestic platforms are among the few Iranian financial institutions operating internationally outside the sanctions framework. They have strongly resisted foreign competitors and, consequently, are highly vulnerable.
But What Has Happened in Practice?
Governmental stakeholders in the exchange sector initially ignored and restricted the industry for years. In other words, developing the exchange industry could have had multiple benefits:
- Localization and development of blockchain technology;
- Value growth through public investment in a global market with the highest ROI compared to other asset classes;
- Defining and implementing financial services on decentralized platforms (DeFi);
- Ensuring the security of Iranian users’ assets and data in a world full of risks and sanctions;
- Counteracting excessive liquidity and mitigating inflationary effects;
- Providing a gateway to the global economy and asset exchange outside the sanctions regime.
Despite all these potential benefits, government agencies have not only ignored the broader vision necessary to achieve these advantages but have also hindered the development of the crypto asset industry in Iran by refusing to establish regulatory frameworks, oversight responsibilities, and, most importantly, a strategic roadmap for industry growth. Instead, they have resorted to empty slogans such as “avoiding the formalization of this sector in legislation”.
After years of pressure from crypto activists, platforms, media, and even regulatory and judicial institutions to establish laws and bring visibility to this sector, no constructive action has been taken.
In Summary, the Government Has Taken Three Steps in This Sector:
One: Drafting the Ministry of Economy’s Document According to Iran’s General Cyberspace Policies: This document, recently reviewed and approved by the Supreme Regulatory Committee of the National Cyberspace Center, remains silent on global crypto asset exchanges in its final text.
Two: The Crypto Asset Regulation Bill: This bill was drafted under the late President Seyed Ebrahim Raisi but, as reported, never reached the Parliament due to obstruction from certain government officials, effectively rendering it archived.
Three: The Central Bank’s Crypto Asset Document: This anti-development document presents an illegal definition of cryptocurrencies and includes baseless and meaningless terms such as “transactional token.” It effectively blocks tokenization efforts in the country. Fortunately, due to various legal and technical flaws, implementing this document seems impossible, though it still reflects a lack of sound decision-making.
All this is happening while exchange-related activities are expected to account for over 20% of the blockchain industry’s total value creation by 2030. Additionally, ensuring the security of users’ assets in this field is an undeniable national priority.
The two examples of exchange and mining clearly illustrate how government players are incapable of reaching consensus on broader issues, envisioning larger goals, defining national development strategies, and avoiding fragmented, isolated decision-making. Under these circumstances, the future of crypto asset development in Iran appears bleak and discouraging. A country like Iran should view cryptocurrencies as a golden opportunity to address its economic and diplomatic challenges. Unfortunately, this has not been the case, and there seems to be no hope for a shift away from this misguided path. We are left with nothing but the struggle over small cakes.
