Last week news got out that Dominica will be the first nation in the world to use Bitcoin as an official currency. Even though Dominica can hardly be called a big country, it still is a big step for cryptocurrencies in general. For all we know, children will be learning about this small country in future history and economics lessons as the nation that helped pave the way for worldwide Bitcoin adoption. Whatever the future may hold, it's worth to take a look at some other places that could benefit from Bitcoin as well.
The 'Let the Bit Drop' event (that's what the Dominicans are calling it) will take place on March 14, 2015, at 9:26am. Clever people will notice that this is the number Pi, encoded in time. At this particular moment in time, 70,000 Dominican citizens will receive bitcoins in a nationwide drop. Bitcoin wallet company Coinapult will be responsible for getting the coins in the wallets of every Dominican. The exact amount is still to be determined as this depends on how many coins can be gathered through a fundraiser between now and March 2015.
Other Countries That Might Consider Bitcoin?
With an inflation rate of 3.41 percent, it is clear why Dominica believes in Bitcoin. The cryptocurrency could bring increased stability to the country's inflationary rate. Taking that into account, there are other countries who could benefit even more from Bitcoin adoption. According to global inflation numbers, there are 14 other countries out there that have an even higher inflation rate: Argentina (10.9 percent), Brazil (6.5 percent), Chile (4.5 percent), Egypt (10.6 percent), Hong Kong (4 percent), India (7.96 percent), Indonesia (4.53 percent), Iran (14.6 percent), Mexico (4.07) percent), Nigeria (8.3 percent), Pakistan (7.88 percent), Philippines (4.9 percent), Russian (7.5 percent), South Africa (6.3 percent), Turkey (9.32 percent), and Venezuela (60.9 percent).
We know there are several nations who would do well adopting Bitcoin as an official currency. But is that all that is needed to get the people to use the cryptocurrency? We all remember the Auroracoin drop in Iceland earlier this year. Though not exactly the same as what is set to happen in Dominica (Auroracoin was not backed by the Icelandic government, which undeniably had a negative impact on the coin's credibility), it was the first drop of its kind. The drop was not received with the most of enthusiasm and Auroracoin seems to have no future. The coin lost half its value since March, and the Icelandic people have shown that they see no added value to this cryptocurrency. This shows us that there are more factors to adopting a cryptocurrency as an official currency.
Recipe for a Successful Cryptocurrency Adoption
You have to get the people's support for it and, even though us 'believers' don't like to hear this, there are still more people who don't support our case than those who do. This leads us to believe that marketing is very important. People need to be aware of cryptocurrencies and, even more important, feel safe using it. The amount of bad news that was spread over the past few months should be countered with an extensive campaign that highlights the advantages of Bitcoin. This campaign could be international, but maybe regional campaigns are even better. Every country is different, and the importance of some advantages could differ in various countries. All in all, people should be aware that Bitcoin is something to be excited about.
Bitcoin or Another Altcoin
Imagine if a total ignorant person starts learning about cryptocurrencies. He or she starts off with Bitcoin and quickly notices that there are 5 million altcoins out there (okay, that's an exaggeration but still), what's the consequence of that? This person has no idea what is happening on his screen and turns back to his old, trusty Dollar/Euro/... At least that's just one coin he or she needs to be aware of. This may sound far-fetched, but it is true for a lot of people. Economics is hard enough to understand if one is not educated in it, people do not want to deal with multiple coins. They want to work with a currency they know, something they heard of before. This could have been one of the reasons why Auroracoin did not succeed. The mainstream cryptocurrency is Bitcoin, so it's best to stick to that when we try to involve new people. A large part of Dominicans will already have heard about Bitcoin, this makes it easier to accept and get excited about the upcoming event. People love what they know; they often don't like to embrace things they have never heard of.
Dominica has a population of 70,000 citizens. This makes it a lot easier to get the coins spread among the entire population. If a country like Russia (with twice the inflation rate) wants to do the same, it will be way more difficult. It's close to impossible to organize a similar 'Bitcoin drop' in a bigger country, even though they might benefit from it even more. This is just one important part of local demographics. There are several more factors that could warrant cryptocurrency introduction. The demographic situation should be investigated thoroughly first before even considering organizing such an event.
We all hope there are more initiatives like this to come, but countries need to think this through before proceeding. Just to be clear, the Dominica initiative is something we definitely root for. It puts Bitcoin in the spotlights in a whole different manner. That is both great but dangerous. If this drop fails in the long-term, people's faith in Bitcoin could start to decline, and some governments could use this to spread bad news about Bitcoin again. CCN will keep an eye on the Dominican event.
These are just a few points that should be investigated before introducing Bitcoin as an official currency in a country. Got any more ideas that are important to consider? Let us know in the comment section below.
Featured image by Shutterstock.
Last modified (UTC): August 30, 2014 5:50 PM