By CCN: The Marshall Islands has announced that it will be launching an independently monitored cryptocurrency system for use across the country. The fiat-based cryptocurrency will be governed by consensus as well as a board of seven people, three of whom will be elected by the other four who are chosen.
According to a press release, the SOV Development Fund will establish this new fiat cryptocurrency.
“The Fund’s mandate is to support the government in the establishment, maintenance and implementation of the SOV, the Marshall Islands’ digital legal tender.”
The way society lives today, the implementation of a fiat token from the central bank could eliminate the need for cash in a matter of months. It would have a net negative effect on the banking industry. People could reliably store their fiat tokens on their person.
Instead of carrying $70, someone might now take around $700 or $7000. Any cryptocurrency reduces the urge to use a banking solution. If the government issued one, this impact would be magnified.
Many banks could probably survive. They would move to the new system, too, after all. For some customers, banks would take on a new meaning, being the only place to move money in the strange new system reliably.
Such a system wouldn’t be overtly alien, though. The main difference is how much we would use our phones for everything. You open your fiatCOIN wallet app and send a payment. You swipe your phone to receive your paycheck. And so forth.
The island nation has just over 50,000 people at present. Its size makes it an ideal candidate for an experiment like this. If the country’s whole currency is digitized, how will this affect tourism?
People showing up will be expected to buy crypto-fiat tokens to spend them in the local economy. This is one way the token’s value will be floated, presumably.
The necessary or otherwise elimination of the banking system remains a subject of hot debate in Bitcoin circles. Plenty of people believe the cryptocurrency can thrive whether or not it replaces banking and achieves mass adoption.
There’s always been an existential threat in the form of governments simply launching their own cryptocurrency. Such an offering means that people have the ideal situation – secure money that is easy to store on their own as well as the “backing” of their government.
Of course, crypto enthusiasts would counter that the “backing” of a government is only as good as the government itself. Governments can back out of projects, and they can change their mind.
The small country is not the first to launch a cryptocurrency, but it’s the first to do it without nefarious purposes. Both Venezuela and Iran have launched crypto versions of their fiat currency in the hopes of staving off international sanctions. In the case of the Marshall Islands, the decision seems more based on the idea of staying ahead.
This article was edited by Samburaj Das.