News and opinions on national cryptocurrencies

Here is an all-in-one place to look at existing and near-future national cryptocurrencies as well as some we might see in the coming years (plus a few rumors).

There are various reasons for the creation of national cryptos. For some countries, the point seems to be the avoidance of sanctions or the attempt to control or at least monitor the flow of money (Venezuela and Russia, for example). Some digital currencies are established in order to rein in inflation (such as Ecuador's). In some cases, the plan is for the national cryptocurrency to replace cash while remaining anonymous and guarding against volatility and hacking. Other countries, like Sweden, are considering having a national crypto alongside the existing national hard currency. Generally, countries are hoping to regulate cryptocurrencies in order to reduce volatility. This "best of both worlds" approach, however, might require regulation that could disrupt trade and make the cryptos an ineffective replacement for cash (see the notes on the United Kingdom, for example).

In general, it seems that we are looking at a crypto future and that nations are simply trying to keep up with the Joneses, yet few countries are ready to fully commit to going cashless or even adopting a dual model.

This article is not meant to be read in full; it's definitely TL; DR for most of us. Use it instead as a guide to the most recent news on national cryptocurrencies.

EXISTING DIGITAL CURRENCIES...

1. ECUADOR -- first steps
   The world's first electronic national currency arrived early in 2015: Ecuador's Sistema de Dinero Electrónico (electronic money system). This is apparently not a blockchain currency and cannot be accessed by non-Ecuadoreans. As was the case in the past, this currency is tied to the US dollar, and inflation continues to remain low. In short, the roll-out seems to have gone well but gives us only some insight into how well a full-fledged national cryptocurrency would work.

2. TUNISIA -- first to use blockchain (sort of)
   Like Ecuador, Tunisia replaced its currency with cryptos in 2015. The intention of this national cryptocurrency is to bring banking to over two million unbanked people. According to a 2015 article in TheBlockchain [1]: "Today more than 3 million Tunisians are excluded from the financial system, but more than 600,000 are already using the official digital eDinar. With the La Poste Tunisienne app powered by Monetas, eDinar will be used to make instant mobile money transfers, pay for goods and services online and in person, send remittances, pay bills, manage official government identification documents, and more. Total transaction fees will be of negligible cost, even from amounts less than a fraction of a dinar, and in most cases fees are paid by merchants. The maximum fee paid on a transaction will be less that 1 dinar. La Poste Tunisienne will strictly control the issuance and circulation of the eDinar in order to prevent it from being used for illegal transactions".

3. SENEGAL, 2015, becomes the second country to use national cryptos (sort of)
   According to a 2015 article in AfricanBusinessMagazine.com [2], the eCFA was "developed by a Senegalese bank, Banque Régionale de Marchés (BRM), and eCurrency Mint. In a statement, the two partners said: 'The eCFA is a high-security digital instrument that can be held in all mobile money and e-money wallets. It will secure universal liquidity, enable interoperability, and provide transparency to the entire digital ecosystem in WAEMU.'"

However, commenter Joel Patenaude pointed out that "this is not a blockchain solution. It is unique technology, essentially a digital printing press located in a central bank's vault that creates digital objects with an associated quantum size that morph with each transaction. An algorithm confirms that only what was created is operating" [3].

NATIONAL CRYPTOS COMING SOON (?)
VENEZUELA and the oil-backed Petro
According to a Jan. 2, 2018 article from Bitcoin.com [4], Venezuela's president, Nicolás Madura, announced last month that the country will soon unveil the Petro, backed by 5.3bn barrels of crude oil worth $267bn. The government had initially planned the release for mid-December but later announced it for this month. It is important to note that Maduro has a checkered past, present, and probably future, as seen on his wikipedia page [5], which mentions that "... the United States sanctioned Maduro, freezing his US assets and prohibited him from entering the country, stating that he was a 'dictator."

Not surprisingly, comments on the bitcoin.com site were mostly negative about the Petro, with commenters pointing out that such a coin (a) could serve as a great way for the government to circumvent sanctions (see Russia, below), (b) would probably be weakly guarded, allowing for hackers or manipulation, and (c) could lose value if the government suddenly floods the market with Petros. Only one commenter thought that Maduro was on the right track and that these cryptocoins could actually strengthen the existing fiat currency (bolivares) of the country.

RUSSIA plans to regulate cryptoroubles
Speaking of sanctions, Russian president Putin was pretty up front about the benefit of a potential crypto-rouble. According to today's Coindesk article [6], which quotes the Financial Times, "Sergei Glazev, an economic adviser to the president, told a government meeting that the cryptocurrency would serve as a 'useful tool' to evade western economic sanctions. Glazev explained: 'This instrument suits us very well for sensitive activity on behalf of the state. We can settle accounts with our counterparties all over the world with no regard for sanctions.'" The article further quoted Glazev as saying that the government would track the use of this potential crypto currency, which to my mind means that it's not 'crypto' at all; in fact, people might actually be safer making purchases in cash rather than having Big Brother Putin looking over their bank accounts. In fact, several months ago, "Putin further mandated new regulations around cryptocurrencies, including the registration of miners and the application of securities laws to initial coin offerings (ICOs)", according to the same article, which also noted that Putin met with ethereum founder Vitalik Buterin last summer.

UK stands for Under Konsideration: UK may unveil a national cryptocurrency, too
Today's Coindesk news feed also quoted an article [7] in last week's Telegraph describing a bank-backed cryptocurrency that could be unveiled some time in 2018. There was a test run this past summer, but the Bank of England does not appear to be rushing things (or perhaps they are just keeping a stiff upper lip as usual). According to the article, "If approved, the central bank-issued cryptocurrency would allow British users to keep their digital money with the central bank itself, eliminating the need for retail banks. The system would also enable large transactions to be carried out almost instantaneously, the report says".

This is old news, however. In a CoinTelegraph article from March 16, 2016 [8], Neer Varshney writes that as of at least one year ago, the BoE had made plans to roll out the RSCoin, which "also function on Blockchain, the distributed ledger system on which Bitcoin and other cryptocurrencies are built." However, this crypto would mark a shift from Bitcoin in that "the Bank of England would be the singular controller for the Blockchain and the encryption key that allows the subtraction or addition of the cryptocurrency from the Blockchain". According to Matthew Commons, the CEO of Cambridge Blockchain LLC, "'RSCoin is perhaps best described as a "hybrid" approach between the distributed model of bitcoin and conventional centralized fiat currency. In the hybrid model, a central bank delegates the authority of validating transactions to a number of other institutions that are called "mintettes"; they are known and can be held legally accountable for their actions. This test should help provide validation as to whether such an approach is sustainable and scalable'". However, Varshney quotes Bas Wisselink of Nxt Foundation as stating that RSCoin would suffer from inefficiency: "'It’s not surprising that banks are trying this, but in the end they will most probably need to accept the fact that their approach represents a dead end. A permissioned blockchain means constant work is needed to maintain security, which is exactly what is being outsourced and incentivised by permissionless blockchains. They are effectively throwing out the efficiency mechanism'".

CHINA
And in other old news [9], China has been planning to roll out its own cryptocurrency linked to the People's Bank of China (PBoC). This announcement came a week or so after the country banned Bitcoin exchanges, back in early September of 2017. According to a Straits Times article, written by Bank of China CEO Suwatchai Songwanich, "...China has been researching digital currencies for the past two years. Recently it established the Digital Money Research Institute, headed by Yao Qian, a former researcher at the Bank of China and a leading authority on this complex subject".

Songwanich notes several immense challenges facing the PBoC; for example, local banks are necessary for individuals to establish credit. Therefore, the aforementioned researcher, Yao Qian, "floated the concept of having a hybrid system whereby digital-currency wallets and traditional bank accounts could exist side-by-side and a national cryptocurrency and yuan could co-exist". Songwanich feels that "the potential benefits of a digital currency for China are significant. It would decrease the cost of transactions, make financial services more accessible, reduce fraud and counterfeiting, make it easier to collect tax, and support international trade."

According to a recent article in Verdict.co [10], "Like Sweden, China’s citizens are big proponents of mobile payments, using apps and mobile wallets like WeChat and Alipapy... [The national bank of China] would use the blockchain to allow the bank to trace transactions and collect data on how the country’s money supply is growing. However, unlike other countries which want to use the digital currency alongside their existing currencies, it is thought that China’s version could replace paper tender in the country. This would be similar to the demonetisation project that India’s prime minister, Narendra Modi, introduced last year".

THAILAND prepares
In his article on China, Songwanich also notes that Thailand has been making moves to adopt a cryptocurrency: "While the idea of a national cryptocurrency has not yet been openly discussed in Thailand, we can see that the Bank of Thailand is preparing us for the future. Its moves to encourage electronic payments such as PromptPay, the development of e-wallets, standardised QR Codes and the regulatory sandbox are all important building blocks that would enable us to make a smooth transition when the time comes."

KAZAKHSTAN ruminates cryptocurrency
According to CNBC back in August of 2016 [11], Kazakhstan is considering a "fiat-backed digital asset" now that the "...government-supported Astana International Finance Center (AIFC) said Tuesday it had signed a deal of cooperation with Maltese firm Exante. In a press release, Exante, which calls itself a 'next generation investment company,' said it would work with the AIFC to develop the ex-Soviet nation's untapped cryptocurrency market.... Astana's leading financial regulators have already commenced their work and are laying the foundation for Kazakhstan's fintech-ecosystem".

... while ESTONIA was the victim of rumors
There was plenty of talk a few months ago about 'estcoins', but according to Business Insider [12], "the news turned out to be 'fake' - or at the least, grossly misunderstood. As the Financial Times reported last month, the "estcoin" had turned from a private person's speculative idea to something that was perceived as an official government initiative: Kaspar Korjus, a prominent Estonian entrepreneur who manages the country's e-residency programme, had originated the idea online". However, Estonia has announced no current plans to mint 'estcoins'.

JAPAN gears up with a 2020 view
Also considering a digital currency is Japan, with the possible introduction of the J-Coin. According to a CNBC article [12], the Mizuho Financial Group as well as "a consortium of banks including Japan Post Bank was involved and ... the J-Coin would launch in time for the Tokyo Olympics in 2020. ... However, the spokesperson told CNBC that there hasn't been any approval from regulators yet and provided more details on the plans for the digital currency". According to Japan Post Bank, this currency "will be pegged with Japanese Yen, and hopefully used to make payments and transfers through a mobile phone app". The article noted that earlier in 2017, "Mizuho completed a trade finance transaction via a blockchain. This involved sending information from Japan to Australia with key documents such as the letter of credit, all being completed on a digital platform backed by blockchain technology". The article concludes: "Japan's government has also been open to the idea of digital currencies. Earlier this year, bitcoin was legalized as a legal payment method in Japan and large retailers began accepting the cryptocurrency. But cash is still heavily used in Japan. The J-Coin could be a way to wean Japanese society off of cash".

The Japanese government obviously wants to remain strong financially and will use the Olympics to showcase its business acumen. I imagine that this proposed coin will be well-maintained and a safe investment but probably not one that is going to make too many millionaires.

ISRAEL
According to a Mashable from late December of 2017 [13], "If the central bank gives the project a green light, the country's government is ready to include it in its 2019 budget. This national cryptocurrency would be very different from Bitcoin, however. Reuters' source claims it would be centralized, safe and in accordance with Israel's money laundering rules. Bitcoin, in contrast, is decentralized and anonymous". According to the article, Israel is looking to ban cryptocurrencies from trading on the Tel Aviv Stock Exchange.

On a related note, CoinTelegraph [14] mentioned that Israel's digital shekel would correspond in value to physical shekels, which seems to be the way most national cryptos will work, at least initially.

CoinTelegraph reports that "According to the sources close to the Finance Ministry, Israel’s black market is approximately 22 percent of the country’s gross domestic product. A digital currency, registered with the government of Israel, would make black market transactions less possible. Additionally, per the news source, the government is considering legislation that would substantially reduce the amount of physical cash in the economy. For example, one suggestion would be a law against paying wages in cash. The process for the creation of the digital shekel is just getting underway, however. The government has offered the ‘Economic Arrangements Bill,’ which, if passed would create a separate panel for the Bank of Israel to consider creating the digital shekel. The addition of the physical cash laws is the result of a failure by the Knesset to pass legislation of the same ilk two years ago. The pressure for digital currency adoption is high, as recent comments from the Israeli Prime Minister indicate. Colu, an Israel-based Blockchain wallet application, has been part of the conversation with the Israeli government in pursuing a digital currency".

SINGAPORE
According to a CNBC article from October of 2017 [15], Singapore is about to conclude "Project Ubin," an exploration of blockchain technology and is considering "its own digital currency next year before deciding whether to commercialize the trial". The article goes on to describe a five-phase project: "The first, which looked at establishing a proof-of-concept design to conduct inter-bank payments using blockchain technology, was completed earlier this year. The second phase, which finished earlier this month, saw the development of three different models for inter-bank payments using blockchain. Now, the MAS trial is looking at delivering securities, cross border payments and, finally, using a digital version of the Singapore dollar to carry out real transactions and buy assets". The article notes that several major banks have been involved including Bank of America Merrill Lynch, Citi, and Credit Suisse. "The MAS fintech chief did not say how the experiment could affect regulation around digital currencies, or whether it would end up in a commercial product. Instead, the hope is to show other regulators that experimenting with new technology is positive."

THE UNITED STATES
Quoted in last month's article on the FoxBusiness site [16], Fireapps CEO Wolfgang Koester posits that the US will go crypto in under 12 months: “I absolutely predict that the United States within 2018 will issue their own digital dollar, as I would call it”. Speaking less hyperbolically, William Dudley, president and CEO of the Federal Reserve Bank of New York, said at a conference in November of 2017 "that the Fed is exploring the idea of its own digital currency, according to reports from Dow Jones" [17]. This CNBC article went quoted Dudley as saying that "Any product likely would be well off in the future, he said, adding that it would be 'very premature' to estimate when the Fed would come up with its own offering, according to Bloomberg.

SWEDEN
Sweden is among the countries considering a national cryptocurrency called the eKrona, according to Investopedia [18]. The government has found that only about 15% of retail transactions in Sweden involve cash, so an e-currency makes sense. It appears that the country will not go cashless before 2019, however, and in fact, it looks like the eKrona is not intended to fully replace paper currency, at least not at first. Instead, the eKrona will initially be floated alongside paper currency, which will likely hasten the eventual disappearance of paper money in that country.

INDIA
A Wall Street Journal article of September 18, 2017 [19] briefly notes that "India’s central bank, the Reserve Bank of India, is considering issuing its own digital currency and is looking for ways to use blockchain technology in the financial sector, according to a person familiar with the matter".

DUBAI
A CoinTelegraph article of October 1, 2017 [20], notes that Dubai launched its own cryptocurrency, emCash: "According to Ali Ibrahim, Deputy Director General of Dubai Economy, the token will be considered legal tender 'for various government and non-government services, from their daily coffee and children’s school fee to utility charges and money transfers.' The article further notes that "The government is strongly pro-Blockchain and sees it as the next major wave of paradigm changing technologies, and wants to be forward-thinking in adoption. According to Ibrahim: the system "'will harness Blockchain technology to make financial transactions cheaper, faster and more secure while demonstrating the huge advantages of embracing this technology for governments, business and customers alike' and notes that... Dubai is seeking to become a fintech hub for the eastern world".

BRAZIL's Nióbio coin
A Dowbit article of December, 2017 [21] notes that Brazil is closing in on its own crypto, the Nióbio, named for Brazil's export, niobium: "The project is not a token on another blockchain, but rather a completely new cryptocurrency. Nióbio has a maximum supply of 336 million coins and an average block time of 2 minutes. In addition, the coin follows the deflationary proposition of many coins, meaning that its value will increase until all the coins are mined.... The Nióbio Cash project aims to use half of all the profits from the cryptocurrency mining pools to help research and develop technologies for Niobium research.

Something is going on in BELARUS
On December 31, 2017, UAWire.org published this: "The Belarussian publication of Interfax reports that Belarus has developed the first national cryptocurrency, called the thaler. The creators of the Belarusian crypto currency plan to launch it on the international exchanges in January. 'We will enter the first international exchanges in January', said one of the creators of the thaler, Sergey Lavrinenko. In addition, according to Lavrinenko, the thaler is planned to launch on the Belarusian stock exchange... According to another creator of thaler, Denis Lavnikevich, total capitalization of already-denominated thalers currently totals over $1 million.... At the same time, the creators of the Belarusian crypto currency emphasized that this is not a commercial project. According to Lavnikevich, the main goal is 'to give the country a financial instrument that will allow it to remain in line with current trends', to create a community of enthusiasts, and to verify and confirm its own competencies in the field of blockchain".

[1] [http://www.the-blockchain.com/2015/12/28/tunisia-to-replace-its-national-digital-currency-edinar-with-blockchain-driven-monetas-currency/]
[2] [http://africanbusinessmagazine.com/african-banker/senegal-creates-digital-currency-history/]
[3] https://vc4a.com/members/joel/]
[4] https://news.bitcoin.com/venezuela-mining-trading-launch-details-national-cryptocurrency/
[5] https://en.wikipedia.org/wiki/Nicol%C3%A1s_Maduro
[6] https://www.coindesk.com/putin-investigating-cryptorouble-as-way-to-avoid-western-sanctions/
[7] https://www.coindesk.com/uk-central-bank-mulls-cryptocurrency-linked-to-pounds-sterling/
[8] https://cointelegraph.com/news/bank-of-england-to-launch-its-own-cryptocurrency
[9] http://www.straitstimes.com/asia/east-asia/china-leads-drive-to-build-national-cryptocurrency-the-nation-columnist
[10] https://www.verdict.co.uk/bitcoin-countries-digital-currency/
[11] https://www.cnbc.com/2017/10/17/kazakhstan-plans-to-launch-its-own-cryptocurrency.html
[12] https://www.cnbc.com/2017/09/27/japanese-banks-cryptocurrency-j-coin.html
[13] http://mashable.com/2017/12/27/israel-cryptocurrency/#6vgZNHlWaOq2
[14] https://cointelegraph.com/news/israel-government-considering-national-cryptocurrency
[15] https://www.cnbc.com/2017/10/26/singapore-cryptocurrency-blockchain-trial.html
[16] http://www.foxbusiness.com/markets/2017/12/07/could-us-issue-its-own-cryptocurrency-in-2018.html
[17] https://www.cnbc.com/2017/11/29/federal-reserve-starting-to-think-about-its-own-digital-currency-dudley-says.html
[18] https://www.investopedia.com/news/more-governments-test-out-cryptocurrencies/?
[19] https://www.wsj.com/articles/biting-back-on-bitcoin-central-banks-chew-over-introducing-cryptocurrencies-1505729052
[20] https://cointelegraph.com/news/dubai-will-issue-first-ever-state-cryptocurrency
[21] https://dowbit.com/niobio-cash-brazilian-national-cryptocurrency/
[22] https://uawire.org/national-cryptocurrency-appears-in-belarus