Why are governments creating their own cryptocurrencies?
Cryptocurrencies have started to gain more attention than ever, with the rise of Bitcoin and Ethereum, the world has begun to take cryptocurrencies seriously. Big institutions and companies are slowly starting to realise the power of the underlying technology behind cryptos; blockchain technology, and have begun to look for ways to apply them into their systems. However, big institutions are not the only ones with their eyes on this technology, several governments all over the world are looking to get in on the action too. Countries such as Ecuador, China, Senegal, Singapore and Tunisia have already launched their own cryptocurrencies and they will soon be joined by Estonia, Japan, Palestine, Russia, Sweden and Venezuela.
To cryptocurrency enthusiasts one of the most attractive traits of cryptos is that they are decentralized. Cryptos are traditionally fully decentralized, with no government body or bank controlling them, so why would a government made digital currency be attractive to investors and users? Why would a government decide to create its own cryptocurrency?
Benefits to a Government
- Impossible to counterfeit - Cryptocurrencies are cryptographically secured and cannot be copied.
- In-built tax code - They could be made with an in-built taxing algorithm which would be convenient for both government bodies and citizens.
- Developing countries would be able to trade more easily that with conventional fiat currency
Venezuela for example are planning on creating their own cryptocurrency to get around the trade sanctions placed on them by the US, many banks refuse to do business with Venezuela. With their own digital currency they’d be able to bypass the banks and trade overseas. President Nicolas Maduro of Venezuela has stated that the Venezuelan cryptocurrency will be backed by reserves of gold, oil, gas, and diamonds solidifying its legitimacy as a currency.
I’m sure the motives are different for each of the nations who want to get involved in cryptocurrencies, but all of this further reinforces the crypto world and is a key indicator that cryptocurrencies are here to stay.
