With the price of bitcoin reaching over $10,000, digital currencies are gaining more and more traction every day.
And whilst many are concerned that the price of bitcoin is over-hyped, the technology behind the currency, the blockchain, is being used by countries and initiatives to spin off their own digital currencies.
Timeline for Crypto
- August 14, 2019
Here are the countries which have launched, or are going to be launching digital currencies.
Ecuador was the first government to have a state-run electronic payment system, according to CNBC, back in 2015. The country uses US dollars as currency and designed its Sistema de Dinero Electronico to support its monetary system.
Diego Martinez, a delegate of the President of the Republic to the Board of Regulation and Monetary and Financial Policy, said:
Electronic money is designed to operate and support the monetary scheme of dollarization.
In addition, the scheme was designed to stop the government spending more than $3m a year in exchanging old notes for new dollars as instead of paper money, the e-currency is stored in mobile wallets.
This allows Ecuadorian residents to pay for public services like taxes as well as select services like taking taxis.
In 2015, Tunisia made the decision to boost its eDinar digital currency using the blockchain, with the help of universal contracting platform, Monetas.
According to an interview with Monetas’s chief executive, Johann Gevers, the eDinar can be used to make money transfers, pay for goods and services like bills, and manage official government identification documents.
We are delighted to be working in partnership with the Tunisian government, National Post and DigitUS to increase financial inclusion with an open mobile money platform that is able to operate across mobile networks. This is an important first step towards a freer and more prosperous world.
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Earlier this year, Senegal decided to follow Tunisia’s example and launch its version of a national digital currency. It has the same value as the country’s currency, the CFA franc and can be stored in all mobile money and e-money wallets.
The Senegalese bank, Banque Regionale de Marches (BRM) and eCurrency Mint are the two institutions behind the currency.
A statement from BRM and eCurrency Mint said:
The eCFA is a high-security digital instrument that can be held in all mobile money and e-money wallets. It will secure universal liquidity, enable interoperability, and provide transparency to the entire digital ecosystem in WAEMU (West African Economy and Money Union).
The currency is based on the blockchain and has been designed to be compatible with other digital currencies in Africa.
Sweden’s central bank, Riksbank, is reportedly looking into introducing a digital currency to the country, called the eKrona. It makes sense as Sweden is projected to be one of the first countries in the world to go completely cashless after seeing dramatic falls in the usage of cash.
However, if it does decide to introduce the e-currency, it won’t be until at least 2018. It appears that the central bank still has a lot it needs to work out.
Cecilia Skingsley, deputy governor at Riksbank, told the Financial Times:
This is as revolutionary as the paper note 300 years ago. What does it mean for monetary policy and financial stability? How do we design this: a rechargeable card, an app or another way?
The Estonian government has positioned itself as one of the most tech-friendly countries in the world. It was one of the first governments to store its data on the blockchain, as part of its e-Residency programme.
Thanks to the success of this, it is looking to launch its own digital currency, named Estcoins.
According to a blog post by the managing director at e-Residency, Kaspar Korjus:
No other country has come close to developing both the technology and the legal frameworks that would enable them to introduce and securely manage tradable cypto assets globally.
Korjus also said that the ethereum founder, Vitalik Buterin, another blockchain-esque technology that supports the ether cryptocurrency, has been supporting the Estonian government with its plans.
The country is inviting its citizens and e-residents to give it feedback on how they think a digital currency could work in Estonia.
The People’s Bank of China has been doing trial runs of its own cryptocurrency, says Bloomberg.
Like Sweden, China’s citizens are big proponents of mobile payments, using apps and mobile wallets like WeChat and Alipapy.
The bank said it was exploring the possibility of the digital currency, and that it would be introduced ‘soon’, back in 2016. It would use the blockchain to allow the bank to trace transactions and collect data on how the country’s money supply is growing.
However, unlike other countries which want to use the digital currency alongside their existing currencies, it is thought that China’s version could replace paper tender in the country. This would be similar to the demonetisation project that India’s prime minister, Narendra Modi, introduced last year.
Earlier this year, it was revealed that Russia was investigating the possibility of digital currencies in the country.
Deputy chairwoman of the Central Bank of Russia, Olga Skorobogatova, said:
Regulators of all countries agree that it’s time to develop national cryptocurrencies, this is the future. Every country will decide on specific time frames. After our pilot projects, we will understand what system we could use in our case for our national currency.
With Moscow attempting to ban bitcoin in the past, it would be interesting to see how a Russia digital currency could change the government’s view on crypto currencies.
The Financial Times has reported that Japanese banks are planning to introduce a digital currency for the 2020 Tokyo Olympics. The J Coin will be used to pay for goods and transfer money uisng smartphones.
The new currency will be convertible into yen on a one-to-one basis in the app and using QR codes to be scanned in stores. Banks will offer the service for free, and be paid in the data they will collect on consumer spending patterns.
As well, the new digital currency is a way to ward off the threat from the Chinese tech company Alibaba, which has recently launched its mobile-payments service in Japan. Japanese banks have warned the country’s government that data on Japanese consumers will instead be sent to China.
Venezuela is currently in the midst of an economic crisis, facing chronic food shortages and high inflation. To combat this, president Nicolas Maduro has decided to create a new digital currency, the Petro.
At the announcement of the currency, Maduro said the Petro would allow Venezuela to: “advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”
The new currency would be backed by Venezuela’s oil, gas, gold and diamond wealth.
However, opposition MPs are skeptical. The MP and economist, Angel Alvarado, told Reuters:
“It’s Maduro being a clown. This has no credibility.”
At the end of 2017, a source at the central bank of Israel said it was considering its own digital currency. This would have two purposes: reduce the amount of cash in the economy and create a faster payments system.
The new digital curreny is likely to be centralised and abide by money laundering rules, unlike the likes of bitcoin.
It’ll be interesting to see if it happens. The source told Reuters that the government may introduce the issue in its 2019 budget and economic package if the bank gives it the green light. All eyes on the Bank of Israel.