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The Marshall Islands have decided to issue their cryptocurrency. Formerly, the pacific Nation had used the US Dollar solely as currency. This time, they have decided to issue their own based on its own blockchain.
With a population of just under 60,000 people, the need to use a cryptocurrency might sound a little weird to many but it does solve a lot of practical problems which their Nation faces. The assistant minister-in-assistance to the President and Environment, Honorable David Paul sent in an essay to Coindesk and clarified many issues on the matter.
For all practical reasons, the cryptocurrency will run off its blockchain without the need to piggyback on an external one. This will allow the growth and maintenance of the blockchain itself to be closely monitored and supervised by the government.
It will also allow for the security of the National currency. We live in a world where forgery of fiat money has become the norm. Cryptocurrencies eliminate that risk.
Following the rules of money issuance where the increased supply of money always increases inflation, the cryptocurrency will have a fixed amount of tokens to ever be issued. This is extremely important for a society that doesn’t do much business with the outside world.
The rate of inflation will not be dependent on the money supply but rather based on the local economy’s ability to produce goods and services.
The honorable minister made a practical reference to the expensive nature of fiat money systems in his essay he said:
“The advent of blockchain technology has opened up a world of opportunity for small nations like ours. Relying on traditional fiat currency, the Marshall Islands has only fragile links to the wider world of international finance, and compliance is extremely resource-intensive.
Many of our citizens send or receive money using remittance services, paying fees of up to 10% per transaction. Even simple things like acquiring and installing ATMs become complicated when you’re in the middle of the Pacific Ocean!”
Cryptocurrencies, on the other hand, have a low cost of development and maintenance. Fiat money systems have the problems of maintenance, theft, forgeries, inflation to name a few. The use of Central banking systems can also cause problems for tiny Nations who don’t have that many resources.
As long as there is some form of adoption by users, cryptocurrency systems generally have some form of value. The higher the adoption, the higher the stability of the cryptocurrency. We have situations where fiat money systems of whole nations destroyed the economy. From Zimbabwe to Venezuela and even supposedly “stable” economies such as Argentina, we can see the failures that have wreaked havoc in the lives of people. The Marshall Islands doesn’t want to toe that line.
Other Nations are Considering Implementing National Cryptocurrencies
It appears that cryptocurrencies are fast gaining ground and are looked at as a way to keep a balance on things. The People’s Bank of China in a bid to stave off the effects of the current Trade War is also considering having its cryptocurrency.
While it will be tied to the renminbi, it will also help lessen the effects of international monetary politics as well besides the ongoing trade war.