It is a testament to the growing acceptance of digital currencies that countries around the planet are adopting the use of this technology. And some are actually considering investing in existing cryptos.
In an earlier article, I noted that Russian President, Vladimir Putin, had ordered the creation of a national crypto currency, dubbed the cryptoruble.
Putin’s intention has now become public and clear: it is to use the crypto ruble as a tool to “circumvent crippling international sanctions.”
As reported in the Financial Times, Putin economic advisor, Sergei Glazev, is quoted as saying, “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 planned Russian crypto currency will be issued by their central bank and will not be able to be mined (created by others). The centralized nature of the government issued digital currency will thus operate in direct contravention of decentralized currencies like Bitcoin and the other blockchain cryptos that dominate the news.
But Russia is not alone. It is also reported that the pinstriped mandarins of the Bank of England – the Godfather of central banks – may approve the creation of a state-sponsored crypto currency this year.
No less a person than the Governor of the Bank of England, Mark Carney, proposed the creation of a central bank backed crypto currency to England’s Treasury Select Committee.
Using block chain technology, he said, “You don’t end up with those financial stability risks; you get financial stability benefits. And you save huge amounts of computational energy intensity.”
Carney went on to say that he had been in discussions with other major central banks about the use of cryptocurrencies and in fact said that the Bank of England had successfully conducted a transaction with another central-bank using blockchain technology.
“If trials are successful enough for actual adoption, a crypto currency banking option could pave the way for near instantaneous payments for cars, land, houses, and other key assets,” he said.
England’s potential adoption of a state-sponsored crypto currency is another in a growing list of nation-states going the digital route.
Recently, Israel announced its own plans for the digital shekel, and some months ago, Venezuelan President, Nicholas Maduro, unveiled the petro, a national crypto currency backed by Venezuelan oil reserves.
While operations by Russia, England and Israel will all be centralized applications, there is also interest in governments getting involved in Bitcoin itself. Investor and Director of Ghana’s Groupe Ndoum, Chiefy Nduom, has called on the Central Bank of Ghana to invest up to 1% of the country’s reserves in Bitcoin.
Ndoum said, “Everybody agrees with that now… IMF and the rest, they all said blockchain is potentially disruptive technology. Some people think it will get rid of banks. So as a central bank you got to pay attention.”
You have here a display of the two channels of digital currency. One, the decentralized (no central authority) digital currencies of which Bitcoin is the leading example. And, two, the emergence of centralized (controlled by a central authority) digital currencies as evidenced by the examples of Russia, the Bank of England and Israel. And more will be coming soon.
It is important for people to understand that cash is going away. In time, there will be no cash. These are the two parallel tracks of digital currencies (centralized and decentralized). They will continue to expand from here on out. Will there be a digital currency war?