Would you use a national cryptocurrency if your government developed it? With government support, cryptocurrency in your country cannot be too far away.
The idea of state-supported or national cryptocurrencies appears from time to time. Some countries have already introduced national cryptocurrency. Others hesitate, wondering about the practical application and use of such technologies.
Here is a list of countries using state-supported cryptocurrency, and indicate whether your country will use it in the near future.
What is state-supported cryptocurrency?
A state-backed cryptocurrency is a cryptocurrency designed and managed by the government of a single nation. Traditionally, cryptocurrencies are stateless and decentralized, working across borders, the idea being that no single entity controls the development of a cryptocurrency.
Thus, the national cryptocurrency works somewhat against these ideals. For example, a central development team working closely with the government to achieve specific financial results is the opposite of Bitcoin.
The national cryptocurrency is not a replacement for the existing fiat currency system. At least for the time being - no country has switched to using only cryptography. However, it gives citizens the option to use cryptocurrency instead of a fiat currency, or pay for services using a government-backed digital currency.
There is another problem: the difference between digital currency and cryptocurrency. Digital currency is not a cryptocurrency. Cryptocurrency uses a decentralized system to ensure that no single entity controls the currency and underlying technology. Whereas, digital currency can function without decentralization using existing financial database technology. There are numerous reports of a country issuing state-backed crypto, only to find out it's a digital currency.
These are known as central bank digital currencies (CBDC). At the time of writing, more countries have implemented CBDCs than cryptocurrencies. Below is an overview of which countries are doing what.
3 countries considering or implementing national cryptocurrency
The number of countries already using cryptocurrency as an official state currency is very small. Other countries are considering introducing cryptocurrencies, but they are also not numerous.
1. Venezuela: Petro
Venezuelan cryptocurrency, Petro, is one of the most famous national cryptocurrencies. The introduction of Petro in 2017 was not just symbolic. It was supposed to be a real alternative to the Venezuelan bolivar, which continues to experience hyperinflation. In addition, the Venezuelan Petro will maintain huge reserves of oil, gold and diamonds in the country.
It's great states (Iran, Venezuela, China, Russia) are trying state-crypto currencies. It's an important step.
All theirs will fail and they'll realize only # Bitcoin gives them what they seek:
escape from $ USD. pic.twitter.com/rOZeuMTQoL
— Max Keiser, tweet poet. (@maxkeiser) January 29, 2019
Critics are skeptical of Petro. Petro's original technical paper lacked technical control and was modified several times after its release. Despite statements by the Venezuelan government that the price of the Petro token will be tied to oil prices, there is no mechanism in the cryptocurrency code for this to happen.
The country of Venezuela can advertise the national cryptocurrency. But it matters very little inside the country, and less important outside it. Or, as The Washington Post economics reporter Matt O'Brien sums it up: “Petro may be the most obviously terrible investment ever. . . Petro is creating something useless – so only foreigners can buy it, and only Venezuelans can spend it.”
This does not mean that Venezuelans do not know about cryptocurrencies. Venezuela is one of the world's largest users of Bitcoin, Bitcoin Cash and other cryptocurrencies. Since the national paper currency is horribly unstable and essentially useless, and the country is subject to intense international sanctions, Venezuelan citizens turn to bitcoins and other cryptocurrencies to continue life with some regularity.
2. Dubai, UAE: emCash
In 2017, Dubai announced a state-wide (or emirate-wide) cryptocurrency known as emCash. The Dubai Economic Development Department will work with blockchain payment provider (and blockchain smartphone developer), Pundi X and UK-based Object Tech Grp Ltd to create "an encrypted digital currency that people can use to pay various governments." and non-governmental services. ”
“Customers can choose between two payment options on the emPay platform - an existing payment in dirhams or emCash. While a dirham payment goes through normal settlement procedures, intermediaries and costs, emCash payments are settled directly between the user and the merchant,” said Muna Al Kassab, CEO of Emcredit Limited, who leads the emCash cryptocurrency project.
“In this way, emCash provides real-time value movement, and sellers can transfer profitability to emCash holder. It also reduces fraud and inflation as the currency is issued in real time based on actual demand. ”
Unfortunately, there is very little news on emCash. 2019 was a very quiet year for emCash, although Dubai authorities are keen to emphasize that the project is very much alive. Although the development of emCash cryptocurrency began with Object Tech Grp Ltd, the use of Pundi X's experience in the field of cryptocurrencyPoS is a positive step. Expect to hear more about emCash as Dubai positions itself as a state for blockchain innovation.
3. Marshall Islands: SOV
Although the Marshall Islands are tiny, they have a national cryptocurrency known as SOV or Sovereign. The population of the Marshall Islands is about 53. The islands have strong ties with the United States and have long used the US dollar as the official currency.
If a sovereign nation, not under sanctions, part of the UN has a legal tender in their country, the banks must support it. Here are some docs showing that Marshall Islands meets all criteria and has signed a bill in parliament creating the world's first sovereign crypto currency pic.twitter.com/Cf4eaJuODT
— Ran NeuNer (@cryptomanran) May 22, 2018
However, in 2018, the Marshall Islands decided to introduce SOV as the official national (crypto) currency. Merchants still accept paper notes in US dollars as payment, but SOV cryptocurrency is now the official legal tender in the country.
SOV supply will exceed 24 million tokens to protect against future inflation, while the Marshall Islands government is working with Neema, an Israeli startup to develop SOV.
3 countries considering or implementing CBDC
1. Tunisia: electronic dinar
In 2015, rumors spread across the cryptosphere that the Tunisian government would inevitably introduce a central bank digital currency known as the e-dinar. Messages from that time likely confused the existing electronic payment system, also known as e-Dinar, with a blockchain solution.
For some time, rumors of a state-sponsored Tunisian cryptocurrency subsided. Then, at the end of 2019, another message appeared about the Tunisian CBDC, implying that the blockchain-based e-Dinar was alive. Again, the Tunisian government has denied the data, but took steps to clarify the confusion.
“As part of its reflection on the digitalization of the economy and payment methods, BCT is currently at the stage of exploring all existing alternatives, including CBDC. However, this alternative is still in the phase of reflection. ”
The existing e-Dinar platform continues to provide digital payment services to Tunisian citizens, but is currently not on the blockchain.
2. Senegal: eCFA
Before the singer Akon returned to Senegal with his dream of creating a “crypto city” that uses its AKoin cryptocurrency, Senegal led the CBDC. The Senegalese eCFA is associated with the Senate Federal Currency, CFA Franc, and is a fully centralized digital currency.
You can also find eCFAs in use throughout West Africa. The West African Economic and Monetary Union (WAEMU) plans to launch eCFAs in Benin, Mali, Burkina Faso, Niger, Togo, Guinea-Bissau and Côte d'Ivoire. In addition, eCFA will work alongside existing digital money platforms such as MPesa, a Kenyan digital currency widely used from northwest Africa to South Africa.
ECFA uses distributed ledger technology to track digital transactions in various banking regions. It is not a blockchain and is not fully decentralized. For example, you cannot download the eCFA transaction history. But the introduction of another easy-to-use digital currency is groundbreaking for millions of unbanked West African citizens.
3. China: Digital Yuan
China has a very good relationship with cryptocurrency. Home to many of the world's largest cryptocurrency mining pools, one of the largest holders of bitcoins and other cryptocurrencies, as well as with a huge population, the national cryptocurrency will succeed with ease.
However, the Chinese government does not want to implement a decentralized cryptocurrency that uses blockchain technology. Instead, China will introduce a CBDC linking to the renminbi. Decentralization does not match the current operating model of the Chinese government, while a centralized digital currency is easier to track, maintain and control.
However, the Chinese government has not been frozen over by crypto as it has been in the past. President Xi Jinping has previously called for increased development of Chinese blockchain, while blockchain-related news from China never ends. There are some great Chinese startups and many companies that are exploring how to integrate blockchain into their products. There is even a blockchain development pilot zone based at Hainan Resort Software Community to promote blockchain development and collaboration.
“More efforts are needed to strengthen basic research and build innovation capacity to help China gain an advantage in the theoretical, innovative and industrial aspects of this new area.”
But as for the national currency, the version of the yuan, organized by the central bank, will appear before a decentralized offer of cryptocurrency.
Your currency - but on the blockchain
Awareness of blockchain technology and cryptocurrencies is constantly growing. Introducing cryptocurrency at the national level, linking to any existing fiat currency, and interchangeably using the two are not easy. In addition, there are credit card issuing companies, insurance brokers and all other financial institutions that should also start accepting cryptocurrencies.
BREAKING: A national crypto Rupee has been proposed in an Indian Draft Blockchain Strategy,
a week after the RBI confirms legal status for crypto.@coinkit_ mon 5 25 doge- Bloqport (@bloqport) January 29, 2020
There are many more countries considering a national cryptocurrency, or at least the digital currency of a central bank. Officials in Uruguay, Estonia, Japan, Ecuador, Iran, South Korea, Singapore, India, Germany, Thailand, Israel, Canada, Palestine, Norway, Sweden, Hong Kong, Switzerland, Russia and the United Kingdom made statements about national cryptocurrencies or CBDC, and also large trading blocks, such as the European Union.