As consumers around the world have begun catching onto the cryptocurrency craze, the question remains as to whether or not countries should consider storing or creating a cryptocurrency for their citizens. But why should countries acquire their own cryptocurrency? Isn’t the whole point of cryptocurrencies is to be decentralized? Well, it depends on the currency and the structure. However, there is a tremendous amount of potential for the adoption of cryptocurrencies at a national level.

So what are the benefits a country can inherit by adopting a cryptocurrency? Well, there are quite a few. First, countries are able to offer their citizens a currency immune to inflation which is perfect for ensuring the stability of the country’s economy. Secondly, countries also stand to see a lower rate of financial crime because cryptocurrencies operate on blockchain. Operating on blockchain leads to users having all of their financial records being immutable and embedded into the blockchain itself. Furthermore, the ability to utilize smart contracts can prove extremely beneficial to governments as it requires everyone to make transparent agreements with other entities coded directly into the blockchain. Continuing on with financial crime, user records are protected by a cryptographic key; hence, the “crypto” in cryptocurrency. Below is a graphic that clearly illustrates the magnitude of financial crime in the United States alone.

The National Center for Victims of Crime

The secure aspects of cryptocurrencies allow users to feel insulated from the dangers of the financial world, from criminals and the manipulative economic atmosphere alike.

How do people generally exchange money? For me personally, I find that Apple Pay is the most efficient way to pay people. Others may say Google Pay, credit cards, or maybe just plain old cash. However, cryptocurrency actually offers one the most effective and efficient forms of payment. The problem with today’s climate is that not that many people are into using cryptocurrencies, but a federal government issuing their own cryptocurrency would certainly create an atmosphere hospitable to cryptocurrency payments. For example, Cryptomeria’s Lucid Coin operates at a speed 11,520 times faster than a credit card, with average transaction speeds of about 15 seconds for Lucid Coin. The lightning-fast speeds achieved by cryptocurrencies allow consumers to be more productive with their finances. Additionally, the cross-border transactional characteristics of cryptocurrency allow for users to be able to send money across the globe with no extra fees, no extra hassle, and no extra time. This is especially useful for developing countries as many developing countries’ economies can benefit from their citizens mobilizing to other countries, making money, and sending money back to their home country to help their friends or family, which in turn helps them put money into that developing nation’s economy. The use of federal cryptocurrency allows immigrants to more easily send money as they incur no extra cost in their transactions.

Lastly, another benefit that many nations can stand to reap from cryptocurrency integration or adoption is how they can use the appreciation of the coin as a potential source of debt reduction. Many nations around the world have a national debt, and below is a diagram depicting the enormous size of said debt.

Visual Capitalist

What cryptocurrency can do is engender a pathway leading towards the reduction of national debt for countries across the globe. When a federal government establishes its own cryptocurrency, that currency is going to appreciate in value. As the value appreciates, it paves the way for debt reduction.

Now, you’re probably wondering, “If cryptocurrencies are so beneficial and versatile, why aren’t countries utilizing them already?” Well, they are! Ecuador became the first country to test out a cryptocurrency on a national level, followed by a myriad of other countries. More examples are listed below:

• Estonia: Currently working on the cryptocurrency Estcoin.
• Tunisia: Deployed the cryptocurrency E-Dinar.
• Senegal: Launched a national virtual currency.
• Portugal: While not a federal currency, an organization has established CryptoEscudo, which aims to lower the national debt.

To sum it up, cryptocurrencies offer countries an opportunity to redefine their economies and offer their citizens an emerging, transformative technology to manage their finances. Citizens are able to participate in financial transactions in a way that is eons ahead of traditional currency in terms of security, efficiency, and allows for immunity for shifting economic tides.

Sources

Desjardins, J. (2021, January 25). $69 Trillion of World Debt in One Infographic. Visual Capitalist. https://www.visualcapitalist.com/69-trillion-of-world-debt-in-one-infographic.

Why a country might want to adopt its own national cryptocurrency. skalex.io. (2020, May 7). https://www.skalex.io/countries-making-move-crypto.