Marshall Islands’ minister David Paul shared the information of planning to release a new cryptocurrency for its people.This is a visionary decision on the part of the country to use cryptocurrency as the main transaction medium.
The Marshall Islands had recently gained independence in 1979. They have only used US dollars for their currency. In 2018, the country passed a sovereign currency law to create its own currency. The new currency called as Marshallese (SOV) will be built based on blockchain technology.
The implementation of the currency will be done in a phased manner. The country is not planning to discard dollar immediately as the economy is still new. It is expected that the change to cryptocurrency will improve the country’s economy. The main USP of this currency is that it makes use of blockchain technology.
How did the Marshall Islands come up with the idea of issuing their own cryptocurrency?
David Paul said, “Many of our citizens send or receive money using remittance services, paying fees of up to 10% per transaction. Even simple things like acquiring and installing ATMs become complicated when you’re in the middle of the Pacific Ocean!”
David Paul, told that cryptocurrency is a big leveler for small nations opening up a number of opportunities. The country’s analysts have finalized on three mandatory features of the currency.
- It should be used with blockchain technology
- The money supply will be predecided, and there will be no scope for tampering
- Include privacy in the transaction
It’s been expected that the new currency will improve the finances of the country’s population. Cryptocurrency will reduce the complications of banking transactions. This new currency will be accepted internationally in other countries. The Marshall Islands is presenting this currency in the Invest Asia 2019 event.
An important detail is that this currency will have a total supply of 4% every year. This is based on the economic theory of Milton Friedman, who was a prominent economist from the Chicago school.
Critics have noted that while the privacy aspect of SOV is good, there is another side to the coin. They point out the fact that people need to register at banks and exchanges to get the cryptocurrency. The government says that it is necessary to combat terrorism and money laundering. Therefore privacy is not that much valued in this cryptocurrency introduction.
Paul explained that blockchain transactions are fast, simple, and cheap. Blockchain transactions are secure, because they’re replicated throughout a decentralized network. Most importantly, and despite its mathematical and technical complexity, blockchain is practically very simple.
The only infrastructure needed for a blockchain-based digital currency is the network itself. He added, “We do not need to create a central bank and manage the printing and processing of paper money.”
He additionally clarified that despite the fact that the SOV will be the decentralized currency, the nation won’t find that an issue.
Other countries that have launched cryptocurrencies include Venezuela with its Petro cryptocurrency. This currency has been backed by the country’s natural resource oil. But it has not been so successful in adoption by the people. Government has allowed people to use any cryptocurrency for any purposes, including paying taxes.
In 2019, there are rumors that both Russia and China will launch their cryptocurrency. Russian one will be backed by its oil. Chinese cryptocurrency will be managed by the Country’s central bank. This trend shows that there will be several state-backed cryptocurrencies in the future along with existing cryptocurrencies such as Bitcoin, Ethereum, etc.