Tech News, Magazine & Review WordPress Theme 2017
  • FEATURES
    • News
    • Bitcoin
    • Ethereum
    • Ripple and XRP
    • Altcoins
    • Trading
    • Blockchain
    • Futuremash
    • Regulators
    • Scams
    • Crypto 101
  • HODLX
    • Latest Stories
    • FAQ
    • Submit Your Guest Blog
  • CRYPTO LIVEWIRE
    • Latest
    • Press Releases
    • Sponsored Posts
    • Submit Your Content
  • BEGINNERS
    • What Is Bitcoin?
    • What Is Blockchain?
    • What Does Hodl Mean?
    • How to Pay Your Bills with Bitcoin
    • Best Bitcoin FAQs
    • Example of Bitcoin’s Purpose
    • Cryptocurrency Has Multiple Meanings
    • Authenticator Alert – Securing Your Crypto
  • SUBMIT
    • Guest Blog
    • Press release
    • Sponsored post
  • EXPLORE
    • eToro
No Result
View All Result
  • FEATURES
    • News
    • Bitcoin
    • Ethereum
    • Ripple and XRP
    • Altcoins
    • Trading
    • Blockchain
    • Futuremash
    • Regulators
    • Scams
    • Crypto 101
  • HODLX
    • Latest Stories
    • FAQ
    • Submit Your Guest Blog
  • CRYPTO LIVEWIRE
    • Latest
    • Press Releases
    • Sponsored Posts
    • Submit Your Content
  • BEGINNERS
    • What Is Bitcoin?
    • What Is Blockchain?
    • What Does Hodl Mean?
    • How to Pay Your Bills with Bitcoin
    • Best Bitcoin FAQs
    • Example of Bitcoin’s Purpose
    • Cryptocurrency Has Multiple Meanings
    • Authenticator Alert – Securing Your Crypto
  • SUBMIT
    • Guest Blog
    • Press release
    • Sponsored post
  • EXPLORE
    • eToro
No Result
View All Result
The Daily Hodl
No Result
View All Result

Sovereign Digital Currencies Will Create a New Financial Ecosystem

by Jalak Jobanputra
September 17, 2019
in HodlX
‏‏‎ ‏‏‎ ‏‏‎ ‏‏‎
HodlX Guest Post  Submit Your Post
 

If you stepped off the plane on the Marshall Islands today, you’d be engulfed in the economy of the future. A group of small islands nestled in the Pacific Ocean, the country has embraced digital assets as its currency of choice, ditching the US dollar. In its decision to launch an independently monitored cryptocurrency system for cross-country use, the country became the first to explore a sovereign digital currency that could serve as an adequate replacement to traditional fiats. 

The Marshall Islands is not alone – the rally behind sovereign digital currencies as a viable alternative to traditional fiat has been growing over the past 18 months. Facebook’s Libra, China’s central bank digital currency (CBDC), and most recently Binance’s Venus platform are all examples of this escalating trend. As more infrastructure is established to support digital currencies, we’ll see more and more countries, and organizations, participating. 

We can trace the roots of this back to 2008, with the writing of the Bitcoin white paper. However, Libra and sovereign digital currencies are distinctly different from true cryptocurrencies, although the latter may have inspired and/or spur the adoption of the former. Although still in its infancy, this movement will have a broad impact on the current financial system, more so than most think. 

Sovereign digital currencies are not cryptocurrencies. This distinction is important. A digital currency is simply a currency issued by a bank in digital form. In the case of sovereign digital currencies, that bank is a central bank. Cryptocurrencies, on the other hand, are not issued by a central authority and rely on a network of mining, with no central control. 

Countries’ proclivity towards digital currencies is fueled by two factors. First, they provide central banks with more control and the ability to closely track the currency. Second, they can sever reliance on dominant currencies like the US dollar, a practice that now engulfs the foreign exchange market. Alternatives are especially attractive to emerging and developing countries.

In a piece penned by the Marshall Islands’ Minister In-Assistance to the President and Environment, three factors are cited for the country’s transition to digital currencies: the convenience and ease provided by blockchain technology, the ability to provide a fixed money supply with fixed growth to combat the unstable nature of fiat currencies, and international use. 

It’s not just smaller economies that find these solutions attractive. The deputy director of the People’s Bank of China cited its motivation for launching a digital currency ”to protect our monetary sovereignty…” It won’t be long until other countries follow suit. While China has been contemplating a digital currency for a while, the accelerated timeline is likely a direct result of Facebook’s recent Libra announcement. 

The introduction of Facebook’s Libra took the concept of a “sovereign” digital currency mainstream. Although slightly varied from a central bank-issued digital currency, Libra is well-positioned to become an alternative to traditional fiat, perhaps more so than cryptocurrencies such as Bitcoin. Facebook has for many years attempted to enter the payments space. By corralling its current properties (including WhatsApp and Instagram) and billions of global users, as well as its announced consortium partners, Facebook may be able to reach scale in payments and create new revenue streams without officially becoming a bank.

China’s currency mirrors Libra in a few ways. By partnering with homegrown platforms such as Alipay and WeChat, China would create a large market for its currency, one that could rival Facebook’s scale. Where they could be different is that the government would solely control the issuance of the currency; early communication from Facebook is that a consortium of 100 members would participate in the governance, issuance and management of Libra.

Post-2008, many countries, including Switzerland, have expressed the challenges that increased US compliance, coupled with the dollar being used as the global reserve currency, has presented to the banking industry. If countries were to issue digital currencies, they could theoretically settle transactions directly without another (intermediary) currency involved. Another country I am watching closely is India which has banned banks from banking crypto-related companies but has been public about exploring a digital rupee.   

Just last month Binance, one of the largest cryptocurrency exchanges by volume, announced a stablecoin called Venus that will offer stablecoins pegged to fiat currencies. As their announcement states,

“Binance welcomes additional government partners, companies and organizations with a strong interest and influence on a global scale to collaborate with us to build a new open alliance and sustainable community.” 

This infrastructure could help smaller countries issue their own digital currencies, tradeable on the Binance exchange (with access to a global market) without having to create a system from scratch. 

It’s clear that there is a growing appetite for these digital currencies, and as the operational infrastructure to support this idea grows, so too will the number of sovereign digital currencies on the market. These digital currencies, and eventually all cryptocurrencies, will take mindshare from today’s traditional fiat currencies, completely remaking the financial system as we know it today.

Such a change is vital to GDP growth, and, as such, all nations should cooperate in the challenge ahead: creating alternatives to the banks, stock exchanges and other institutions built in previous centuries when intermediaries were necessary. We’ve seen Netflix disrupt the movie industry, and Amazon the e-commerce and content distribution markets. Our international monetary institutions could be next.


Jalak Jobanputra is founding partner at Future\Perfect Ventures.

 
Check Latest Headlines on HodlX


Follow Us on Twitter Facebook Telegram

Check out the Latest Industry Announcements
 

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Submit a Press Release

Crypto Livewire – Press Releases

  • Unifi Farms Beta Launches on Unifi Protocol to Pioneer No-Stake Farming
    February 26, 2021
  • Bang Bang: Critical Factors Fueling Rise of the Retail Investor
    February 25, 2021
  • How Traders Make Money in Both Bull and Bear Markets on BigoMex
    February 25, 2021
  • Student Coin Found New Ways to Use Crypto
    February 24, 2021
  • Everest Receives Crypto Custodian Approval
    February 23, 2021
Submit a Guest Post
ADVERTISEMENT
Bitcoin
$44,958.00
$44,958.00
5.92%
Ethereum
$1,362.34
$1,362.34
8.42%
Binance Coin
$212.93
$212.93
7.82%
Polkadot
$31.34
$31.34
11.24%
Cardano
$1.25
$1.25
10.49%
XRP
$0.415668
$0.415668
6.75%
ADVERTISEMENT

Spotlight

  • US Treasury Secretary Has Several Concerns About Bitcoin, Addresses Need for Digital Dollar
    February 24, 2021
  • ‘Big Short’ Investor Michael Burry Issues Warning on Future of Bitcoin and Gold
    February 22, 2021
  • Altcoin Daily Names Top 8 Altcoins Poised To Erupt in March
    February 26, 2021
  • SpaceX Is Exploring Benefits of Placing Bitcoin on Its Balance Sheet, According to MicroStrategy’s Michael Saylor
    February 23, 2021

DON’T MISS A BEAT

Crypto headlines delivered daily
to your inbox
BTC, ETH, XRP news alert options

By joining The Daily Hodl news list you agree to our
Terms and Conditions and Privacy Policy.

Check your inbox for confirmation email.

Cryptocurrency news and analysis, covering Bitcoin, Ethereum, Ripple, XRP, altcoins and blockchain technology

Categories

Bitcoin • Ethereum • Trading •
Ripple and XRP • Altcoins •
Blockchain • Regulators •
Scams • Crypto101 • HodlX • Explore • Futuremash •
Crypto Livewire

ABOUT US | EDITORIAL POLICY | PRIVACY POLICY
TERMS AND CONDITIONS | CONTACT

JOIN US ON TELEGRAM

JOIN US ON TWITTER

JOIN US ON FACEBOOK

COPYRIGHT © 2017-2021 THE DAILY HODL

No Result
View All Result
  • FEATURES
    • News
    • Bitcoin
    • Ethereum
    • Ripple and XRP
    • Altcoins
    • Trading
    • Blockchain
    • Futuremash
    • Regulators
    • Scams
    • Crypto 101
  • HODLX
    • Latest Stories
    • FAQ
    • Submit Your Guest Blog
  • CRYPTO LIVEWIRE
    • Latest
    • Press Releases
    • Sponsored Posts
    • Submit Your Content
  • BEGINNERS
    • What Is Bitcoin?
    • What Is Blockchain?
    • What Does Hodl Mean?
    • How to Pay Your Bills with Bitcoin
    • Best Bitcoin FAQs
    • Example of Bitcoin’s Purpose
    • Cryptocurrency Has Multiple Meanings
    • Authenticator Alert – Securing Your Crypto
  • SUBMIT
    • Guest Blog
    • Press release
    • Sponsored post
  • EXPLORE
    • eToro

© 2020 The Daily Hodl

×
We use cookies to give you the best online experience possible. Continue browsing if you are happy with that, or see how to manage cookies.