In early 2018, the South American country of Venezuela became the first country to declare a cryptocurrency as their primary currency (Japan acknowledges Bitcoin as a legal currency, but the Yen is still their primary). The former primary currency of Venezuela, the Bolivar, is under record-setting inflation, to the point that people were paying for things with trash bags full of money which are being valued by their weight, rather than the numbers that are on the currency – in other words, the money is being weighed out in bags. There are even people who are crafting handbags out of the worthless banknotes for a living, as this is a better use of the devalued currency. Starving, destitute citizens have turned to Bitcoin mining to make a living. At first, the government outlawed the practice, but as the grave situation worsened, they realized this might be the one thing to infuse money into their broken economy.
The government decided to launch an ICO, pre-mining the entire 2.7 billion coins itself, and then selling a large stake of it to private investors, many of which included foreign governments themselves. China is one of the 133 countries that have expressed their intention to invest in Petro, which has received 200,927 offers of purchase intention, for an initial amount of 5,025,181,787.54 US dollars.
The name “Petro” is significant. Each Petro coin is backed by Venezuela’s massive oil reserves, said to equal 5 billion barrels. Each coin is said to be worth the price of a barrel of oil, currently around $60 USD. The government itself is now preparing to set up 9,000 crypto mining machines.
On February 20th, 2018, the Venezuelan government released the first public offering for Petro coins. However, just 38.4 million coins were made available to the public to purchase. Furthermore, it is not found on any currency exchanges, but ones hosted within the country. The whitepaper for the ICO suggests that this is an ERC-20 token, but other reports say it is running on the NEM blockchain.
It remains a massive struggle for citizens in Venezuela, and it is not clear yet whether this move into the crypto world will be enough to rescue its failed economy. Amidst cries of “scam” and “worthless” from Western-based analysts and politicians throughout the world, there is still hope that not all is lost. In this bleak situation, mercy from other ends of the world (through private crypto investments and infusions into Venezuela, and into the Petro) may be the only act of grace left for this struggling nation to hope for.
The Petro is being hailed as a means of salvation to the Venezuelan economy and the citizens of Venezuela. However, this is not an isolated case of a country embracing cryptocurrency as a national working currency. There are several countries, both rich and poor, excited to participate in this revolution.
In 2015, which already seems like an eternity ago, Tunisia used blockchain technology to create the eDinar, a digital version of their current money. You can use this coin to pay bills and make money transfers. The blockchain also is used to manage identification documents.
The government of Senegal collaborated with local banks to produce its own coin, the CFA Franc. It is tied to the fiat currency of the nation, yet also compatible with neighboring currencies. This is a fantastic way of stabilizing purchasing power of not just a country, but an entire region.
The central bank of Sweden, Riksbank, is working on the creation of the eKrona. However, when the public was surveyed about the project, it received only 10% support from citizens. The majority of the people had heard of Bitcoin, but only 2% had used it.
Estonia is extremely blockchain friendly, using that technology in several levels of government, for example, their entire healthcare system is on blockchain. The release of Estcoin seems to be on the horizon, but as a member of the European Union, Estonia is legally obligated to use the Euro as its national currency, and needs to decide how to assign value to an Estcoin, if it decides to move forward.
China is exploring options to not just create a digital currency, but eliminate their paper currency altogether. This has been ongoing for several years, with no official plan yet in place. Though it may explain the ban on Bitcoin a little more clearly, as they do not want the market to decide the plan for them.
Russia has been considering a new national cryptocurrency called the CryptoRuble. It has been rumored since 2015, but it looks like it may actually come to life around 2019. Vladimir Putin has been quoted as saying it is a project that will help circumvent western sanctions and bring additional cash flow into the country.
J-Coin is scheduled to launch in 2020, valued 1:1 with the Yen. The project is spearheaded by a consortium of Japanese banks, rather than the government. Japan already recognizes Bitcoin as legal currency and many stores accept it.
Looking into possibility of launching its own digital currency, the digital shekel. It’s a project still being mulled over by both the government and The Bank of Israel. Until they figure out how to put the technology to use, no decision will be made to move forward. But it seems inevitable, as they believe it will help prevent tax evasion if every transaction is done on a mobile phone wallet. It appears to be just a question of when, not if.
EmCash is a government-backed blockchain-based currency being created by Emcredit and Object Tech, which will serve the residents of UAE. Object Tech has also been contracted to create blockchain-based digital passports for UAE citizens as well.
In Switzerland, the country is looking into state-backed “e-franc” had has commissioned reports on the risks and opportunities associated with launching such a cryptocurrency. Switzerland is one of the few European countries which don’t use the Euro and all transactions are still undertaken using the Swiss franc.
A plan for a currency backed by gold reserves, called GoldenRock, is under development. The government hopes to raise somewhere in the neighborhood of $40,000,000 USD from this token sale. The funds raised will be used for investment in agriculture.
Besides the country cryptocurrency projects mentioned above, there are also several other coins in existence which are tethered to just national pride, meaning more than official government issuance or recognition, such as the Maplecoin in Canada, and the IrishCoin in Ireland.
As always, do plenty of research and due diligence before you decide to invest in something, for instance, do not confuse PetroDollar for Petro.
Currency is a major form of economic control and stability. So while it may seem like an already saturated marketplace is only going to get worse, everyone will not agree to use Bitcoin as the worldwide currency any time soon.
As countries evolve their currencies, this may lead to future dialogues about backing standards, what digital currencies represent, and might eventually create a more stable global economy. There is no telling if the distribution of digital wealth will change ratios along with it, or how this will affect poverty. These are issues world leaders must face when deciding on what to do with this emerging technology.
So, stay tuned, things are just starting to get interesting!