World’s First National Digital Currency Trials in Ecuador

Evander Smart @EvanderSmart
October 12, 2014 01:00 UTC

In what should be the first of many over the coming years, Ecuador will soon begin trials with the world’s first national digital currency.  They are the first nation to agree officially to implement it’s own digital currency as a state-supported national system of finance. The Central Bank of Ecuador has set up a trial version to begin later this month, and continue through mid-November 15th.

Also read: Ecuador’s Centralized National Digital Currency

Ecuador Trials the World’s First National Digital Currency

This is an evolving story CryptoCoinsNews has been watching for months, as Ecuador has intimated that they have an interest in going digital with currency, at least in addition to their currency fiat currency systems. It is seen as a supplement to their fiat currency system, not a replacement, at this time.  Due to persistent economic turmoil with their own fiat currency, they’ve adopted the U.S. Dollar as a national currency since 2000.  Ecuador does issue their own coin currency, known as Ecuadorian centavos. Mexico may be the next country to jump on the bandwagon as they have also let it be known that they are looking at digital currency as the way of the future. In contrast to these centralized efforts, the Philippines might actually use Blockchain technology for a new E-Peso.

The Central Bank of Ecuador has created an Electronic Currency Division, lead by Fausto Valencia. This is what he said about the trial period for this new currency:

“We are visualizing how society will respond to this tool (the digital currency) and to be able to correct eventual problems we detect in a controlled way to then launch it in a definitive way.”

The downside of this world first national digital currency announcement is that Ecuador has banned Bitcoin in favor of going on their own with their own national digital currency.  Considering the fact that the Bitcoin Blockchain has been vetted over more than five years of transactions worldwide, accounting for billions of dollars of investment, numerous hacking attempts, all successfully thwarted, and the brightest minds in digital technology all investing their resources in it’s development, it is still very questionable whether Ecuador is ready, willing, and able to run any sort of digital currency from scratch, successfully, without any experience in the field.

​“Ecuadorians (sic) will be incorporated in the financial circuit and make payments in an easy and simple way,” said general manager of the Central Bank, Mateo Villalba on the government’s hopes for the digital currency.

2.8 million Ecuadorans are expected to be assisted by this new currency. 40% of the country’s adult population are currently without any banking relationships, mirroring the financial issues of many countries throughout the 3rd world.  The digital currency will only require “the use of any type of phone” for transactions and should be ready for full activation in December. Ecuador’s centralized national digital currency is looking to copy the success of Bitcoin but without acknowledging Bitcoin, or integrating Bitcoin’s years of experience.  Again, Bitcoin is now banned in Ecuador, in favor of this new unnamed currency.

This is a legendary gamble, and Bitcoin may end up paying the price if Ecuador rushes this implementation. If it runs aground, Ecuador may very quickly and easily refuse to take responsibility for their lack of experience or understanding of this emerging technological advancement, and scapegoat Bitcoin as a way of passing the buck. If problems arise, and this is highly probable, it will be very interesting to see who takes responsibility in Ecuador, if anyone.

Does Ecuador have what it takes to make their digital currency successful for the nation’s consumption, without integrating Bitcoin at all?  And what will they say if they fall short of Bitcoin’s international success as a secure system, and run into issues with hacking, fraud, or internal corruption that they are not prepared for?

Images from Shutterstock.

 

Last modified: October 12, 2014 04:19 UTC