There’s a lot of buzz around all things crypto these days and while many people have heard about Bitcoin and Ether, there is still a lot of misunderstanding. To add to the confusion, new forms of currency, usually referred to as tokens or coins, are added almost daily. While many of these are done by private parties or organizations, some federal governments are looking to get into the mix for a variety of reasons from privacy to efficiency.
Before digging into which countries are pursuing which types of projects, it’s important to understand the difference between digital and cryptocurrency.
When a person uses a debit or credit card, they are using digital currency. These days most businesses, organizations, and individuals have little to no problem accepting digital currency as this form of payment is now widespread and normalized. When credit cards first rolled out in wide scale, the reaction was similar to the current skepticism surrounding cryptocurrencies as people were accustomed to exchanging physical objects (money) for goods and services. After seeing how mainstream digital currencies have become, and the efficiencies they afford, some governments have taken to producing their own systems. Keep in mind that not all digital currencies are cryptocurrencies (but they could be), but all cryptocurrencies are digital currencies.
Cryptocurrencies are receiving a ton of attention now, but they are a bit more complex. Instead of having a centralized, well-known company, like Visa or Mastercard, handling the transaction and verification process. Instead, the verification (aka proof that a person has the money they’re trying to spend) is done through a complex web of connected computers called a blockchain.
Countries Exploring Cryptocurrencies
The Marshall Islands, a nation of volcanic islands situated in the Pacific Ocean between Hawaii and the Philippines, has done away with the U.S. dollar. A bill signed into law on March 1, 2018, changed the official currency of the nation from the USD to the “sovereign”, the country’s new, official cryptocurrency. By transitioning to digital currency as the sole form of national legal tender, the country and its population of more than 53,000, is creating an interesting scenario for banks and credit card companies who will have to use this system if they are interested in doing business in the country.
In early 2018, Venezuelan President Nicolas Maduro announced the release of the Petro, a new digital currency back by the country’s vast oil reserves. While Mr. Maduro touted this move as a workaround to existing U.S. sanctions, however shortly after the Petro was released, U.S. President Donald Trump signed an executive order barring any U.S.-based financial transactions involving the new currency. Residents of the struggling nation and interested parties throughout the world are skeptical as to what results of this new cryptocurrency deployment will yield given Venezuela’s current state of financial ruin.
Countries Exploring Digital Currencies
Ecuador became the first country to have a state-run electronic payments system back in 2015. The official currency of Ecuador is the U.S. dollar, but exchanging old bills for new costs the country more than $3 million each year. The new digital currency allows residents to pay for select public and private services using digital money, and while it hasn’t eliminated cash as a form of payment, it has reduced this burden and works in tandem with the previous monetary scheme.
Countries Using a Hybrid
In 2015, the north African country partnered with Monetas, a global contracting platform, to boost its newly-created eDinar digital currency using the blockchain. This allowed for more security and less corruption throughout the system.
Following Tunisia’s lead, Senegal launched it’s own digital currency to be used concurrently with the country’s CFA franc and can be stored in all mobile money and e-money wallets. The currency is base on the blockchain and has been designed to be compatible with other digital currencies used throughout the African continent.
Countries to Watch
While the country hasn’t announced any plans to develop its own cryptocurrency, the business-friendly and innovative country is embracing all things crypto. From January to October 2017, Switzerland was second only to the United States in terms of money raised in Initial Coin Offering (ICO) fundraising, a precursor to digital and cryptocurrency launches.
The small European nation has been publishing papers and giving indications that they’re open to the idea of being an ICO haven where the markets, not individual people, would be the ones to regulate the market. Nothing is official yet, but the country hopes to have its plans implemented in late 2018.
This island nation has long been a favorite of the extremely wealthy as an offshore holding site for some of their assets, but the country is looking to become a leader in ICO capital raising. Thanks to a legal definition of securities that is much narrower than in the US and a tax code that is very business friendly, Cayman Islands are definitely a country on the move.
The small island off Africa’s eastern coast has been allowing borrowers to use Bitcoin and Ethereum’s Ether as collateral for loans since 2018 due to a partnership with Secured Automated Lending Technology (SALT). This platform allows people with these currencies to utilize them without selling the assets, a very attractive option in the highly volatile crypto markets.
As digital and cryptocurrencies become more and more popular, more countries will begin to adopt and/or regulate these transactions more regularly. Currently, many countries have banned cryptocurrencies, while others are abstaining from releasing an official position as the technology continues to develop. One thing is certain, this technology has the potential to shape the way we transact and do business on a global scale. To learn more about getting involved with or investing in cryptocurrencies, check out this Blockgeek article.