In 2009, when the Bitcoin whitepaper came out, the idea was obvious: there was a need to make a decentralized money system that would spare the’masses’ in the firm grasp of banks and other financial institutions.
Bitcoin was born, becoming the money of the people, effectively creating fiat the currency of authorities. Nearly a decade after, Bitcoin has surged in global popularity, and it has given birth over 1,500 other choice blockchain-based coins.
In the first decade of cryptocurrency was around adoption and regulation, then the tendency of the coming decade promises to be approximately national cryptocurrencies.
As with other cryptos, national cryptocurrencies are based on the distributable ledger technology (blockchain), however, they’re issued and endorsed by federal governments.
The sole issue with national currencies is decentralization since naturally, governments are reluctant to eliminate control of the monetary system.
Venezuela and Cryptocurrencies
In appreciation of the terrific benefits and potential of this blockchain technology, some central banks are on the brink of releasing their national cryptocurrencies, while others have set definitive deadlines for their projects.
Venezuela though was the very first to take action, releasing the Petro Crypto at February 2018.
The Petro was designed to be backed by Venezuela’s abundant reserves of natural sources, such as oil, gas, diamonds and gold.
The Petro received a federal financing in May 2018 when the nation’s President announced that a childhood bank could be established which will be exclusively funded utilizing the federal cryptocurrency.
Iran and Cryptocurrencies
Another nation that’s been inspired by Venezuela is Iran, which coincidentally, also faces sanctions from the US that threaten to cripple its resource-dependent market.
The Central Bank of Iran declared two months ago that it was finalising plans to establish its own cryptocurrency endorsed by Iranian rials.
The US sanctions will mean that Iran is cut from global payment methods, but the cryptocurrency, which utilises the blockchain technology, will assist the country ease the transfer of funds across the world.
Other countries which are in advanced stages of launching their own cryptocurrencies comprise Japan, Sweden, Russia, Israel, Tunisia, Senegal and Estonia.
The Future of Cryptocurrencies
But this includes some pros and cons. Concerning currency supply, cryptocurrency is secure and easier to spread than conventional cash.
National cryptocurrencies will also allow for the quicker settlement of payments and potentially, even much more economical transactional costs. Still, a blockchain established digital currency carries with it some disadvantages.
To launch a national cryptocurrency would require significant investment, which might not be a justifiable use of taxpayer money. Another drawback could be slow payment authorisation, something that’s always being innovated upon in the crypto world; however, there might be no such time liberty with a federal cryptocurrency which will be used extensively. The wasteful use of electricity for smaller payments is an additional factor to consider.
Finally, central banks are mandated to ensure monetary stability by the economic utilization of their monetary policy. National cryptocurrencies just make it easier for central banks to attain this because monetary policy will directly be transmitted to companies and families.
As the blockchain technologies continue to improve, it only suggests that federal cryptocurrencies will continue to solve the current constraints of the traditional monetary system.