Business 6 July 2018Erik Gibbs
Marshall Islands moves from fiat to crypto, but misses boat on its digital currency solution
A couple of months ago, the Marshall Islands took the intelligent step of moving away from fiat in exchange for cryptocurrency. In doing so, it became the first nation to rely solely on the power of crypto for its economy, renouncing the U.S. dollar as the basis of trade. As smart as the move was, the decision to introduce its own cryptocurrency, the sovereign (SOV), over selecting an established cryptocurrency designed for commerce may not have been the best choice.
The nation signed the bill on March 1, making the sovereign legal tender for the 53,066 inhabitants of the islands. U.S. dollars are still accepted, but they are now second place to the digital currency. The sovereign was issued through an initial coin offering (ICO) with a supply cap set initially at 24 million tokens. The Marshall Islands decided to create the SOV, instead of using an existing cryptocurrency, over concerns that the existing coins were not defined as “currency.”
With recent advances in regulations around the world, better definitions are now being applied to virtually cryptocurrencies. Some, such as NEO and Monero, have been considered by the U.S. Securities and Exchange Commission (SEC) to fall under the classification of securities, which would make them unrealistic options as currency. On the other hand, several cryptocurrencies, including Bitcoin Cash (BCH) and BTC coin, have been recognized as NOT being securities, meaning that they could be considered as legitimate currency.
So, why choose one or the other? BTC may have its purpose, but serving as a usable currency in commerce isn’t one. Even the most staunch BTC supporters will tell you that it isn’t being developed as a currency. To that end, retailers have not been pushing for greater access to BTC as a payment option.
BCH was designed for commerce. The entire premise of offering BCH was so that it would become the world’s most accepted retail digital currency. So far, it is on track to meet that goal, as well over 1 million merchants around the world now being able to accept BCH. As the push continues to offer zero-confirmation transactions—something not being pursued by BTC—BCH will continue to move forward as the leading commerce alternative.
Even Satoshi Nakamoto himself said that the purpose of cryptocurrency was to be used as currency. If currency isn’t spent, it has no real value to a community. Novel laureate and economist Paul Krugman, in spite of his disdain for crypto, unwittingly backed BCH in a recent Twitter post when he said, “If a digital currency isn’t actually used for any transactions, is it, you know, actually a currency?”
When the Marshall Islands introduced the SOV, the government actually created more problems for it than was necessary. If they had chosen to use BCH instead, for example, they would have seamlessly given access to a payment platform already in existence, already tested and already proven. Now, for anyone visiting the islands, it will be necessary to go through the same currency exchange process as was required previously. This creates an obstacle for smooth operations and doesn’t create a level playing field for the country.
It’s still not too late. The government could still switch to BCH and show that it understands the value of the only crypto designed specifically as a usable digital currency. It would also reduce overhead on the islands by eliminating the need of exchanges. With the number of advances that have been seen on the BCH platform in recent months, it would be the smart alternative.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.
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