Ah Bitcoin! From the day of its advent, all those years ago, it is still looked at with hostility and doubt. Its investors are judged and imposed with heavy taxes. For mathematicians and economists, this virtual currency is simple and practical. They see behind it, an algorithm that works on an ecosystem called the Blockchain.
Similar in protocol to the good old Gold Standard, every cryptocurrency and its subsequent Blockchain needs to be backed by an asset. For decentralized currencies like Tron or Ripple, it is the proof of work or proof of Stake that helps determine its value. Additionally, the upcoming tie-ups and partnerships helps increase their value.
So, when a third world country, whose own fiat currency has lost all value, claims to launch their own state owned, legalized cryptocurrency, one can be allowed to accept this news with a dash of skepticism.
Venezuela shook the world when it announced ‘El Petro’. For a country that has a collapsed economy and has massive debt to repay and a civil crisis at hand, it was quite unexpected. Many naysayers believed that, in order to evade restriction of sanctions, the Venezuelan president was trying to trick the world bank and its citizens with talk of decentralization. With claims of backing the Petro with reserves of Gold, Oil, Gasoline and Diamonds, the picture painted was too good to be true. Afterall, the Bolivar’s value is still in shambles.
So, where does this leave those citizens of Venezuela who can’t afford daily bread on the wages they make? After all, they get their remittance in Bolivar.
The reality of the matter is that things are so bad as far as the value of their fiat currency is concerned, that it is not even worth the paper it is being printed on. People are using the same to make hats and purses and sell to tourists! Yes, fiat currency Bolivar is being stitched together to create items for sale.
To deal in cryptocurrencies, Venezuelans are being promised tall tales of crypto mining farms in every district within the country. But what purpose does it serve if this centralized cryptocurrency won’t accept their own Bolivar for trading but, except to be bought with US Dollars or other such dependable currencies?
So what help or change did the Petro bring about in its wake for its own citizens?
East bound To Iran
Following in the wake of Venezuela, comes the country of Iran. The Iranian Rial faced an all-time slump in its value a fortnight ago. After the collapse in sanctions surrounding the nuclear deal, Iranians are leaving no stone unturned to get their money out of the country. With the low values of Rial looming ahead in the near future, news leaked that Iranians have outsourced US $ 2.5 Billion to invest in cryptocurrencies and use them later when things stabilize.
With oil reserves giving strict competition to Saudi Arabia, Iran too can go the smoke and illusion way of claiming that their state issued cryptocurrency is backed by oil reserves.
The primary question that needs to be asked here is that if they aren’t allowed trade sanctions, how will they infiltrate the crypto circle? If they don’t, then their cryptocurrency is nothing more than another centralized fiat in a virtual form. JUST LIKE PETRO!
A Juggling Act That Puts Centralization Ahead Of Decentralization
For any country to follow in the footsteps of Venezuela or Iran, (by claiming to decentralize) only to clear their global debts shall spell disaster for the country on a whole.
One needs to look at the way Japan and China and even Russia have gone about in accepting cryptocurrency to realize where the others are going wrong. After all, with fair trade, business and tourism shall only improve and increase revenue.
Or one can focus their attention towards Marshall Island. In this Pacific country, the US Dollar works as an official currency. With a name that is unfortunately being associated with money laundering and hedge funds, this open, virtual currency is the perfect chance for it to step up as an independent economy. With fishery being its prime trade, Blockchain and cryptocurrency shall only help it grow from strength to strength. Their crypto has been named, ‘SOV’ and has the full backing of its government.
It does not matter the reason why, governments are now finding solace in cryptocurrencies, and we can hope that, over time, they shall open ventures that allow fair trading for all. Keep your fingers crossed and your eyes open for this one!