The Marshall Islands, officially the Republic of the Marshall Islands, are an island group and since 1986 an independent state in the Pacific. Minister David Paul has officially announced that the country is issuing its own sovereign currency in digital form, using blockchain technology.
He told this during Invest: Asia 2019, a meeting about Asian cryptomarkets and global investors.
Cryptocurrency next to the US dollar
Since the Republic of the Marshall Islands acquired the status of an independent democratic nation, the country has been using the US dollar as their official currency for paying all kinds of payments, taxes, debts and duties.
Only last year did the government, together with the Sovereign Currency Act, issue a new currency, the Marshallese sovereign (SOV). The intention is to use the SOV in addition to the US dollar.
What are the advantages?
But why your own currency? The island group necessarily wanted a cryptocurrency on their own blockchain. They want to use a decentralized network that is faster, easier, cheaper and more secure.
They also want to protect their own markets. For the time being, the Marshall Islands are completely dependent on a traditional, foreign fiat currency: the US dollar. The country judges that this way they are only more vulnerable to unrest on international finances. In addition, citizens send and receive many foreign transactions. You pay a fee of no less than ten percent through the various transfer services. And then there is another practical point: it is almost impossible to install ATMs on each of the thousand islands.
Blockchain as a basis
A blockchain-based currency paves the way for a simpler system, despite all the mathematical and technical complexities that it requires. In a decentralized system, it is not necessary for a central bank to manage the printing and processing of paper-based money, you only need a functioning network.
Minister Paul:
It is crucial that the privacy of individual users is guaranteed. They must be able to choose for themselves when they release information, what they share and with whom.
The idea is that a predetermined stock of coins will be issued. The annual growth is set at four percent.
We have chosen to create a fixed amount of money with steady growth because fiat currencies can be remarkably unstable. The policy of large central banks is not reassuring, as the gold and bitcoin prices confirm. We governments must take a more sustainable approach to money and not consider it an unlimited source.
Crypto is for all citizens
In addition, the minister also emphasized the fact that the SOV is much safer compared to fiat currency. It makes it easier to enforce the law and to combat terrorist financing and money laundering.
And do these rules not work? Then the algorithms can be modified. In addition, everyone who qualifies for the SOV automatically receives the coin. A kind of airdrop will also take place. Ten percent of the primary supply is distributed to all residents of the Marshall Islands.
It is a test on a relatively small scale, but a good use case for the rest of the world.
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