The Pros and Cons of Countries Adopting National Cryptocurrencies
Is crypto the new version of the dollar bill? With the increase in cryptocurrency’s popularity, several countries are adopting crypto as their national currency. Crypto serves as a profitable decentralized alternative to fiat money, but like most financial systems, it can cause a few problems for central institutions.
Here are some countries that use have adopted crypto as their national currency:
● The Bahamas
The Bahamas paved the way for cryptocurrencies around the world by launching their digital currency called the Sand Dollar in 2020. It was created to reduce the use of checks in the country and give customers a better alternative of payment.
Nigeria released its digital currency called e-Naira in October 2021. The currency took years to develop and was only available to bank account holders at first. Currently, an international fintech company started working on a project to make the currency available to those who do not hold a bank account.
● The Caribbean Islands
The Eastern Caribbean Central Bank made up of Antigua, Barbuda, Grenada, Saint Kitts, Nevis, Saint Lucia, Dominica, and Montserrat launched a digital currency called DCash in March 2021. The currency can be used by all individuals even if they do not have a bank account.
The list goes on with countries such as the US, the UK, Estonia, Dubai, Sweden, Japan, Canada and Israel. India is adopting (or currently working on adopting) its own national cryptocurrencies.
Pros and cons of countries adopting national cryptocurrencies
You might be wondering what the advantages and disadvantages are of this new trend.
● Decentralized currencies are outside of the control of banking and government agencies. With people investing in digital money, they lose out on profit. Providing a digital currency allows them to keep their clients and customers.
● Cryptocurrencies are an environmentally friendly alternative to printing paper money.
● Digital currencies save institutions cost on expensive accounting systems, labor, and printing.
● By introducing a digital currency that does not need bank accounts, governments give individuals the ability to buy and receive money more freely. It will help individuals who cannot afford banking fees, or the travel costs involved to get to a central bank.
● National cryptocurrencies can help the government evade sanctions and reduce costs for the nations.
● Not all national cryptocurrencies are available for all users, and some still require a bank account. Some governments are working on making their currency free for use for all.
● Some individuals struggle with the concept of digital technology and currencies (especially older individuals) which can lead to them avoiding it altogether. Governments can provide programs or video tutorials to help educate people on cryptocurrency.
● There’s some risk of crypto disrupting the current financial system that governments have in place. Without the need to trade with a bank, the role of banks is diminished. Individuals no longer need to visit or download banking apps and people in institutions will lose their jobs. However, by bringing both worlds together, banks and crypto can find a common ground.
Should all countries adopt national cryptocurrencies?
National cryptocurrencies are being welcomed across the world. With the increasing number of countries adopting crypto forms of currencies and making crypto a legal tender, it is no doubt that crypto can become a legal way for all nations to trade worldwide. There are many advantages for governments and countries that choose to adopt national cryptocurrencies. It can create more equality, an environmentally friendly way to transact and reduce the need for complicated financial systems.
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