Cryptocurrencies have taken the idea of a modern economy to a whole new level. Back in 2009, Satoshi Nakamoto started a financial revolution that has changed the face of how we view money. Fintech is evolving at a rapid pace and cryptocurrencies are playing a vital role.
The basic concept behind Satoshi’s Bitcoin was decentralization. Even though this idea was revolutionary, the governments all across the globe viewed this as a breach of their traditional monetary policies. The authorities have always tried to block the development of private cryptocurrencies and have often called it out as a “scam” or “Ponzi.
However, this technological change is inevitable, and more and more governments are starting to realise that. Last month, Blockstream CSO Samson Mow warned that the regulatory constraints placed on Bitcoin (BTC) could be damaging for the regulators themselves. Mow said:
“They might be hostile to it. But the thing is hostility to Bitcoin is a double-edged sword like if you are in power and you ban Bitcoin, and you fall out of power, then you’re screwed. […] People need to be careful when they are enforcing regulation and creating all this policy because you could be on the other side of the sword, down the road if you fall out of favor.”
Even though private cryptocurrencies are still a big no for most of the nations, state-backed national cryptocurrencies are slowly on the rise. More and more nations are considering launching their own state-backed cryptocurrencies to fight the use of unregulated digital currencies and to bypass the various shortcomings of fiat currency.
Venezuela is a fine example of nation turning towards cryptocurrencies to free itself from the hands of hyperinflation and to bypass U.S sanctions that were hampering with their economic condition for years. The authorities are slowly adopting cryptocurrencies without even thinking about it.
Recently, Sweden Central Bank Governor Stefan Ingves, cited a few pointers as to how a Swedish national cryptocurrency should function and what properties would it hold. According to him, it is important for the Central Bank to work out all the pointers on the checklist before launching such as currency. The outlined points were:
24/7 payments anywhere – meaning the digital currency must useable at any time.
Cross currency & borders – the currency should work as an international payment method.
Update legal tender laws – the current monetary laws must be upgraded before the use of a national cryptocurrency.
Issued directly from the bank – the currencies will only be issued by banks under the supervision of Swedish Central Bank.
Digital IDs – the currency will be accompanied by a Digital ID to be compliant with anti-money laundering policies.
Physical cash incase it fails – fiat will still be a part of the national economy as a backup in case the new system fails.
Sweden is just another one of the nations added to the list of many others eyeing their own national cryptocurrency. China is currently the closest to launching their national cryptocurrency dubbed the Digital Currency/ Electronic Payments System (DCEP) while curbing the use of privately launched cryptocurrencies. Also on the list of nations developing their own cryptocurrency are Turkey, the European Union, and Iran.