Developing Sovereign Digital Currencies Successfully and Cost-Efficiently
Although difficult to fathom, many nations today still exist without the production or ownership of their own currency, particularly those with economic struggles such as Pacific Islands- including the Marshall Islands and countries such as Ecuador. The management and printing associated with producing a nation-based currency remains too costly to be sustained.
However, with the introduction of sovereign digital currencies, these nations now have the opportunity to reinstate independence from other nations, and become part of a much larger sophisticated crypto economy. This notion has grown to become a realistic goal of which many governments aim to achieve.
Crypto and Blockchain
This drive and economic shift to implement digital currencies on the blockchain has also been noted across even the most economically stable of nations including Australia, China, the UK, and Netherlands among many more.
In fact, Ecuador’s plan has seen success when achieving a government-backed cryptocurrency, the first nation to do so. This electronic currency system established the very first state-run digital payment platform globally.
Ecuador’s plan to economically shift started in the year 2000 during a time when they faced the first currency shift, switching to the USD and rendering their own currency obsolete. Cryptocurrency offered a direct solution to gaining back their economy.
As countries race to create digital currencies of their own it is important to note the following five elements that help make a currency successful on an economic and global scale.
What Makes a Society
What helps boost and sustain any economy are the individual members and institutions of a society working together as a whole, utilizing and circulating a particular currency be it fiat or crypto. These institutions include financial entities, government, educational systems, hospitals, businesses, and of course the citizens themselves. Together they create a well rounded society relying on and facilitating an economy for themselves.
Therefore, when attempting to introduce a sovereign digital currency, the requirements and demands of these major entities need to be taken into account in order to successfully transition the society and maintain a valuable currency. In addition, a currency will only thrive and continue to circulate if the country’s citizens are able to utilize it for everyday purchases including bills, fees, and personal shopping. Satisfying and implementing these systems with cryptocurrency will essentially guarantee its success.
How a Currency Functions
When it comes to fiat currencies, financial institutions and governments are consistently spending a great deal of money on the management, printing, and regulation of paper currency. With the introduction of digital currency as a stable verified national currency, much of these additional administrative spendings will soon be eradicated. Although the process of replacing an entire system of paper currency is in no way an easy feat, it does offer many potential benefits to the nation overall.
The planning necessary to implement a successful roll out will need much time and collaboration between core players in the society, including assigning who issues the currency, how it will be structure and regulated, where it will be stored and of course how to implement the actual circulation of a brand new currency. Here is where blockchain related technology can offer solutions to aid governments in this complex transition.
How Identity is Managed
The single most important document a citizen or business requires is a form of identification. Traditional forms of personal identification can easily be integrated into the blockchain system providing a more secure and manageable way of processing this type of information. Using a customizable identity API for example can help make this process easy for governments to make the switch.
For distribution processes such as government welfare, the blockchain system offers an improved method of the distribution of funds based on the need and value offered to each individual. In addition, this setup can be applied to B2B transactions to insure companies are fully aware of who they do business with.
Storing and Managing Documentation
As with all governments, the responsibility of managing and storing important records falls entirely in their power. Examples of record sorting includes that such as birth or marriage records, as well as certificates of registration including land or home ownership, let alone the various financial records of each citizen.
However, blockchain platforms offer an efficient and secure way to manage and store information. Entire systems can be implemented with the purpose of creating, verifying, storing, or distributing this type of documentation. Initiating and developing an entirely new way of interacting with each individual’s documentation is an achievable goal, with the use of a blockchain software development kit.
Upgrading Today’s Technology and Processing Systems
Today’s society relies heavily on a variety of devices and technologically advanced systems to help daily transactions run smoothly. Such devices such as barcode readers, Applications, scanners, IT systems and more help process the trading of goods and services as simple as purchasing groceries. This type of technology can and should be progressed to include a blockchain-based system through the use of smart contracts and APIs. This will result in the full implementation of cryptocurrency in day to day activity as well as allow for efficient and speedy interactions for both businesses and consumers.
When it comes to a national economic shift from fiat currencies into the world of sovereign digital assets, these key elements must be taken into consideration both independently of each other and as a whole. For true success, governments should aim to create an economy that is open sourced and based on existing blockchains in order to remain scalable.