While the idea of a government-created, or central bank-backed, cryptocurrency really flies in the face of what cryptocurrencies are meant to be, you cannot doubt that they are on the rise. First, there was Venezuela’s Petro, then Iran entered the waters; India is mulling things over, and China is stepping things up.
These government-created cryptocurrencies will be heavily slated in the realms of Bitcoin maximalism and other decentralized crypto fan arenas, but are they worth having a look at? Are the US sanctions so unfair as to force Iran to create an alternative? Does China need its coin to compete with Alipay and WeChat?
It is easy to scoff at the attempts of the centralized leaders of some nations to create a cryptocurrency they control, but on closer inspection, blockchain and cryptocurrencies can offer these nations solutions that are very much needed.
Just as Bitcoin can offer an individual financial freedom, so can Iran’s proposed coin offer them a chance to get out from under the heel of the US. Just like Ethereum can enact smart contracts and increase operational efficiency, so can China’s cryptocurrency lessen the third-party payment monopoly.
That being said, the intention of these central-bank cryptocurrencies also needs to match how they are used and implemented. The Petro, under Nicolas Maduro, was touted as a way for the country to escape US sanctions once again, and for it to tokenize a valuable commodity in barrels of oil. However, the general consensus is that this has not been appropriately implemented under the failing government.
Still, looking at what Iran is doing, their idea to implement a cryptocurrency for sanctions at least holds a little more weight – regardless of your political leaning. Iran is starting to embrace blockchain, cryptocurrency, and even mining, making that a legal industry.
The government there can at least see that the regulation of cryptocurrency can bring benefits to itself, and the technology can help in other ways as well. However, Iran, like Venezuela, is not so happy about citizens having full access to decentralized cryptocurrencies out of their control.
This seems to be a recurring theme with all nations involved in building their own cryptocurrency. China is very anti Bitcoin and the likes, as is India, yet they are heavily involved in bringing out their coins.
It appears that the authorities are not threatened by the power of the technology, rather the lack of control. And, perhaps this is the real concern with government-backed cryptocurrencies; they are a tool of the people, but in these instances, they are mostly being used to control the people.