Cryptocurrencies have been exploding in popularity in recent years all over the world. Individuals, as well as enterprises, are profiting from the increase in the cryptocurrency prices. Up till now, governments have been watching from the sidelines, watching what becomes of this new phenomenon.
But during 2017, we have heard different news about national cryptocurrencies. Several states around the world are planning to launch their cryptocurrencies. At the moment, the United Kingdom, Russia, Venezuela, Estonia, Denmark, Cambodia, China, Iran, Canada, Liberland and many others have expressed an interest in creating their own cryptocurrencies.
Behind every single state deciding to launch their cryptocurrencies there are different motivations or reasons. Some of them want to completely control the cryptocurrency market in their countries, while others are trying to avoid international sanctions. Let’s see what some of these countries are doing with these virtual currencies.
This South American country, with the highest inflation in the world, and important oil reserves under its soil, has decided to launch its own national cryptocurrency. But how is it possible that one of the worst performing countries on earth, with almost 90% of poverty is launching a national cryptocurrency?
Venezuela’s President Maduro, Image from AlaJazeera.
Well, the reasons behind this decision are merely political / economical. Since the regime has increased its violent rhetoric in the international stage, a group of countries leaded by the United States and the European Union, have decided to impose economic sanctions to the socialist government. This has reduced the financial aid to the country and the influx of money to sustain the political project.
The main intention of this cryptocurrency known as “Petro,” is to avoid these financial and international sanctions. The government gains the possibility to easily access international funds avoiding the sanctions imposed by other countries.
But some countries have already expressed their negative views towards this cryptocurrency. For example, the Argentinian Finance Minister, Nicolás Dujovne, explained during a meeting in Madrid:
“Argentina has adopted a strong and firm position, we are one of the first countries that warned that Venezuela is not a democracy and that human rights are not respected and that it has several political prisoners. The Argentinian government does not perform transactions with cryptocurrencies and much less it would do it with the Petro.”
Similar comments have been given by the Polish government after rumors that the European country could accept the Petro for medicines and food.
The cryptocurrency is now being deployed in the country. The government has pressed oil stations and governmental offices to accept the national virtual currency.
El Petro será canjeable por dinero fiduciario y otros criptoactivos a través de casas de cambio digitales. El Estado aceptará el pago de impuestos, obligaciones, tasas, contribuciones y servicios públicos nacionales en Petro. #AlFuturoConElPetro pic.twitter.com/80puSYsmbb
— SENIAT (@SENIAT_Oficial) February 21, 2018
Venezuela’s President, Nicolas Maduro, launched the cryptocurrency on December the 3rd while speaking through the National TV Channel VTV.
Mr Maduro Said:
“Venezuela announced the creation of its own cryptocurrency. It will be called “Petro” […] This will let us move towards new ways of international financing in order to allow the social and economic development of the country.”
The Russian government has several times backed the idea of a national cryptocurrency. Indeed, Russian president, Vladimir Putin, has himself asked for the creation of the CryptoRuble.
Vladimir Putin, Image from CNN
Nikolay Nikiforov, Russian Minister of Communication and Mass Media, explained to the local newspaper AIF, that Mr Putin ordered the creation of the CryptoRuble.
Behind the CryptoRuble we find another logic. The Eurasian country is not trying to avoid international sanctions with this cryptocurrency, but instead, it wants to aid international commerce between Eurasian countries.
The Eurasian Economic Union (EEU), that includes Belarus, Kazakhstan, Kyrgyzstan, Russia and Armenia, has an important commercial relationship. With the new CryptoRuble, these countries will be able to reduce transaction costs and increase the speed of cross-border payments.
Russia’s intentions with the CryptoRuble seem to be international. The Slavic country has also shown interest for an international cryptocurrency that would work among the BRICS (Brazil, Russia, India, China and South Africa) and extended to other countries like Israel or Armenia.
The CryptoRuble may be just one of the first steps before introducing an international cryptocurrency. For example, trying the CryptoRuble among the EEU countries as a pilot project, and later propose it as a successful case and present it to the BRICS.
But what is Russia doing in order to educate people about Cryptocurrencies? First of all, the Russian citizens by themselves are very interested in cryptocurrencies. Several Russian individuals take part in different Initial Coin Offerings (ICOs) and Blockchain projects all over the world.
Russia has been working with Vitalik Buterin, Ethereum’s founder, in order to promote blockchain knowledge and implement different blockchain projects in the government. For example, Moscow has a voting system that is based on the Ethereum’s blockchain. This voting system is known as Active Citizen, and Moscow residents can vote for different proposals to make the city more live-able.
In addition to it, the country hosts two cryptocurrency agencies in Vladivostok and a blockchain school that is advised by Buterin.
This is another country that is thinking about issuing a national cryptocurrency. The country is known as the “digital republic” because of the promotion of new technologies. Estonia is the first country in the world to offer its citizens a virtual e-residency.
In its intention to keep the path towards digitalization, the Managing Director at e-Residency, Kaspar Korjus, has written in a blog that Estonia could offer “estcoins” to e-residents. Estcoin is the planned Estonian cryptocurrency that would be launched through an Initial Coin Offering.
Estcoin, Image from Kaspar Korjus
Of course, the blog post already explains that this is not the official launching of Estonia’s national cryptocurrency but just a policy idea to move towards the digital paradise that Estonia wants to become.
“Just a reminder – this is not national policy yet, but it is an idea worth considering, which has the potential to become reality.”
Unfortunately for Estonia and the policy idea, the European Central Bank (ECB) and Mario Draghi, ECB president, expressed their position on the matter rejecting any attempt to create a national currency virtual or not.
Clearly, Estonia is part of the European Union and the Eurozone. The country uses the Euro for daily transactions, and without a central bank or monetary authority (the power has been given to the ECB), Estonia cannot create a parallel currency to the Euro.
During a press conference held at Frankfurt am Main on September the 7th, 2017 Mario Draghi answered a question about Estonia and its intention to create its national virtual currency.
Mario Draghi stated without leaving open doors for opinions:
“No member state can introduce its own currency; the currency of the Eurozone is the euro.”
Different countries, different situations and locations. But all of them have something in common, and that’s the will to have a national cryptocurrency. Venezuela has already done it, but the Petro needs more time in the market in order for us to express an opinion about it.
Russia is moving towards its cryptocurrency. Its implementation may take a little bit longer, but in the next months we could see important news regarding the CryptoRuble.
Estonia may seem far away from having its own cryptocurrency. The European Central Bank has a very strict policy towards other means of payments parallel to the Euro. Clearly, the ECB must keep the Euro operating normally without competitors in the Eurozone. What if a cryptocurrency becomes legal tender and more used than the Euro? That would be a serious problem.
At the same time, other countries like Iran, Canada, and even the micronation of Liberland are thinking about their own cryptocurrencies. Time will tell whether all these countries have succeeded or not in their business to create virtual currencies for their economies.