The Evolution of Bitcoin: Countries launching national cryptocurrencies
Ubcoin Market (ICO is live!) team has prepared an overview and a short analysis of countries launching national cryptocurrencies. Interestingly, the strong demand for national cryptocurrencies is coming from either emerging countries strongly dependent on the American dollar (South America, Africa, some Asian countries), or countries in long-lasting economic or political distress with strict limits on taking cash abroad (Greece, Portugal, Tunisia, Cyprus, Palestine). These countries usually have relatively less stable local currencies (except euro-counties), spiraling inflation and greater exposure to financial downturns that makes an alternative system like cryptocurrencies increasingly appealing.
Bitcoin was the first decentralized cryptocurrency. It came into existence as an experiment during the global financial crisis after Satoshi Nakamoto mined the first block ever on the chain in January 2009. Since then there has been tremendous development in the cryptocurrency sphere. Nevertheless, skepticism and doubt also surfaced along with the tremendous interest as the transactions are made with no intermediary (meaning, no banks!).
Undeniably, the past year has been an incredible year for virtual currencies. There has been extraordinary growth in value and popularity that no longer can be shrugged off as just a passing trend. All around the world, the conversation about cryptocurrencies, smart contracts, blockchain and ICOs is quite prevalent.
Since the creation of blockchain technology, Ethereum based coins were heralded for its potential to disrupt the traditional financial model, and were positioned as the disruptive means to a burgeoning new tech era.
Various governments around the globe have started to grasp the fact that bitcoin and other cryptoassets will continue to be at the forefront of the modern day technological advancement and are most likely not going anywhere. Thus, some countries are taking a long hard look at blockchain technology and several of them have already begun taking steps towards further regulation.
Different countries have different governmental attitudes toward cryptocurrencies. Some, such as China and Bolivia, worrying about capital flight, tax evasion and money laundering, banned the cryptocurrencies to protect their respective national fiat currency. Bangladesh, for instance, has passed a law 4 years ago stating that anybody caught using the digital altcoins could be jailed.
On the other side of the spectrum, more forward-thinking nations such as, Canada, Australia, Chile, Russia, and Sweden have already acknowledged the potential of bitcoin. Furthermore, several countries including Palestine, Ecuador, Iceland and Singapore have chose to launch their own digital currencies rather soon.
Japan, for instance, became a notable industry disrupter and global cryptocurrency advocate. In early 2017 it passed a law which accepts Bitcoin as legal tender with the elimination of consumption tax on bitcoin trading. J-Coin ICO has almost started, with a consortium of Japanese banks getting ready to launch a national digital currency to wean Japanese society off the paper yen. For now, the Bank of Japan and Japan Post Bank are supporting the project with one of the major financial conglomerates, Mizuho Financial Group, are spearheading the move.
Japanese legislators are persuaded by increasing state regulation around bitcoin. Meaning that cryptoassets are looking like an attractive investment for investors who previously shied away from cryptoassets given their volatile and speculative nature.
Russian officials have stated that they will be considering issuing new laws to authorize Bitcoin and to create their own “CryptoRubles” during 2018. Vladimir Putin would like to tackle money laundering problem which certainly incentivizes further cryptocurrency regulation.
The regulation of cryptocurrencies has been on the table for quite a while now all around the globe. However, that’s not the only issue on the table today, as running a national cryptocurrency is not only applicable to one specific country, it is a global phenomenon and it comes with a lot of challenges. Ultimately, many national cryptocurrency endeavors that were launched by governments failed.
The national cryptocurrency of Israel, specifically, Isracoin, began public mining operations in 2014. Isracoin was launched with the objective to disrupt Israeli’s stagnant banking sector, and to change the high levels of centralization of assets and distribute more equally its wealth to Israeli citizens. With zero news around Isracoin since 2015, this project seems to have collapsed. The same goes for Maplecoin (Canada), Pesetacoin (Spain) and many more.
There was some success however in the developing world with Dinero Electrónico, digital tokens which were approved by Ecuador’s Congress as a digital currency for use alongside the U.S. dollar, the official national currency. The goal of using virtual money to pay government contractors is to keep the dollar reserves in the country. However, the analysts are persuaded that this digital currency may urge President Rafael Correa to encourage government spending even further and sabotage the nation’s ability to repay state debt.
Another South American country, Venezuela, has created own virtual currency. In this case bitcoin provided a way to circumvent the government’s tightening controls on access to U.S. dollars and helped to slow down constant inflation that slashes the value of local currency. Venezuela’s bolivar is on the verge of collapse but its president Nicolas Maduro hopes that new national cryptocurrency ‘El petro’ will claw back cash to the country and grant its nation a bit of respite.
Interestingly, the strong demand for national cryptocurrencies is coming from either emerging countries strongly dependent on the American dollar (South America, Africa, some Asian countries), or countries in long-lasting economic or political distress with strict limits on taking cash abroad (Greece, Portugal, Tunisia, Cyprus, Palestine). These countries usually have relatively less stable local currencies (except euro-counties), spiraling inflation and greater exposure to financial downturns that makes an alternative system like cryptocurrencies increasingly appealing, thus forcing emerging-market central banks to quickly deal with the rise of virtual currencies.
Whatever the individual case is for a country to utilize cryptocurrency, a cashless world is just around the corner without a doubt. And with time cryptocurrencies may become the perfect fiat currency replacement. Tremendous global growth and governmental application over the last decade has undeniably shown that there is strong momentum and popularity around blockchain technology.