Origins of the phenomenon
The first attempt to release a nation-wide cryptocurrency happened in Iceland. However, the state was not involved: the anonymous developer nicknamed Baldur Óðinsson, launched the Auroracoin currency and distributed half of the coins among all registered Icelandic citizens. However, only 10% of Icelanders took some advantage of the coin; the price declined sharply. The government of Iceland stated that Auroracoin is an illegitimate initiative, and even called the project to be a scam. Nevertheless, the precedent was created.
The vitality of the idea
In theory, the Auroracoin project has demonstrated that independent developers can create a currency that has every chance of being adopted by citizens, and the government can accept it consequently as well. But it also became clear that the right to issue the national cryptocurrency — as well as a fiat one, of course — would be claimed by the Central Bank of the country or similar authority. It is quite unlikely that any state would allow privately issued money to gain the "national" label and scale. In general, governments around the world estimate decentralized currencies which are not under their control negatively or consider them as a threat. Oddly enough, many of these countries would like to have national cryptocurrency, and each has their own motives and incentives.
It is worth noting that the national cryptocurrency is sometimes referred to as a fiat-backed stablecoin, as it was stated, for example, in Iran. However, this is quite optional: Petro was claimed to be backed by oil — it would be utterly pointless to tie it to bolivar which keeps falling. Moreover, Maduro announced that he was considering the option of pegging the bolivar rate to Petro — well, this is something new.
So, what are the aims of such financial instruments, after all?
Experts in the field of digital economics note that national cryptocurrencies can have four purposes:
The first group represents the notorious Venezuelan El Petro — an attempt to oppose sanctions and save a devastated economy. The effectiveness of this instrument is extremely difficult to assess right now: life does not get any better in Venezuela, and the political tension reached its peak in a live mode — and this news puts the future of El Petro to a big question.
Estonia, which claims to be a “digital state”, develops its Estcoin in order to strengthen the state infrastructure and thus succeed consequently strengthening its image. However, this token cannot be called the national cryptocurrency officially: Mario DRAGHI keeps an eye on all attempts to evade the control of the Central Bank.
Stay calm and watch national cryptocurrencies work
Image courtesy of Global Business Coalition