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Countries rolling out their own cryptocurrencies
With the price of bitcoin hitting the highs of $19,000 before the end of 2017and altcoins gaining steam quite fast, cryptocurrencies are gaining traction rather quickly. Whether the prices of cryptocurrencies are driven by hype rather than fundamentals is a question with significant subjectivity. Nonetheless given the popularity of cryptocurrencies and the blockchain technology governments can no longer sideline them. For this reason, some countries are using the blockchain technology to develop their own digital currencies. Some countries such as those discussed below have already developed their own cryptocurrencies.
Amidst economic crisis including acute food shortage and high rate of inflation, the president of Venezuela, Nicolas Maduro believes that a national digital currency will help solve this crisis. The digital currency is coined, Petro. During the announcement of the cryptocurrency, Maduro stated that the currency would improve monetary sovereignty and help Venezuelans overcome the financial blockade. Notably, Petro is set to be backed by the country’s gas, oil, diamond, and gold. The Venezuelan opposition, however, remains skeptical about the credibility and viability of Petro.
Japanese banks are planning to introduce a digital currency for the Tokyo Olympics in 2020. The digital coin dubbed JCoin will be used to settle payments and make money transfers through the smartphones. Using QR codes, users will be able to convert the JCoins into Yen through a peer-to-peer app. The service will be offered by the banks for free. However, their reward will be generated through the data collected on consumer spending patterns.
Israel is one of the technologically advanced countries in the world and it does not intend to be left behind by the crypto bandwagon. Just before the close of 2017, the central bank of Israel hinted that it was considering launching its own digital currency. The digital currency would serve two main purposes namely reducing the amount of cash in circulation and speed up the payment processes. Unlike bitcoin, however, the Israel digital currency would be centralized. If the banks concede on this development, the government could table the issue in its 2019 budget and economic package.
According to CNBC, Ecuador is the first government to have a fully functional state-run electronic payment system. The country developed its ‘Sistema de Dinero Electronico’ to support its monetary system. Notably, the country uses US dollars as its currency.
According to Diego Martinez, a presidential delegate of the republic to the board of regulation and monetary-financial policy, ‘Electronic money is designed to operate and support the monetary scheme of dollarization.’
Besides improving efficiency in the transactions, the electronic system was created to help the government save $3 million annually initially used to exchange old notes for new ones. The e-currency is stored in mobile wallets.
In early 2017, Senegal launched its version of national digital currency which has the same value and the country’s fiat currency CFA Franc. The digital currency can be stored in any e-money wallets. The development of the Senegalese digital currency is credited to the Senegalese bank (Banque Regionale de Marches (BRM) and eCurrency Mint.
According to this two institutions, ‘The eCFA is a high-security digital instrument that can be held in all mobile money and e-money wallets. It will secure universal liquidity, enable interoperability, and provide transparency to the entire digital ecosystem in WAEMU (West African Economy and Money Union).’
Tunisia is probably one of the first countries to harness blockchain for a national digital currency. In 2015, the country decided to boost its digital currency eDinar using the blockchain technology. This they through the help of a universal contracting platform called Monetas. The eDinar can be used to make money transfers, manage government identification documents and pay for goods and services.
These are some of the countries that have braved the cryptocurrency world despite the FUD surrounding it. Moving forward, we might see more countries pick up the trend.