The world of digital currency has gained massive popularity in the past couple of years.
Bitcoin has moved over $19,000, whereas, Ethereum is increasing in value every day and its price has crossed over $700. The continuing boom of cryptocurrencies might eventually lead to the next big step, i.e., the end of cash currencies.
Yes, you heard it right. Even the director and founder of Bitt, Gabriel Abed, is of the opinion that cash has been in the market for too long, and all the currencies will eventually be digitized.
Rise of the New Economic Age
All the cryptocurrencies, including Ether and Bitcoin, are basically issued by private organizations, groups, and individuals, they mine it through cryptographic protocols and more and more countries are gradually heading in that direction.
- Russia has recently announced its plans for a national digital currency called Crypto-Ruble.
- China and Kyrgyzstan are following the lead.
- In Japan, over 200,000 stores have been accepting bitcoin as a legal tender and some of the big banks are planning to create their own version of these cryptocurrencies.
In a highly innovative environment, efforts are being made to circulate digital currency in various economies. The Federal Reserve in the United States however, has no such plans of nationalizing the cryptocurrency.
Crypto-Ruble – A New Start for Better Russian Economy?
Putin is very strict about following law and order and despite the advantages of having a national digital currency, it has gray areas when it comes to its legal status. This is why he is a little skeptical about cryptocurrencies. Therefore, the aim of Russian official crypto-policy is to eliminate the chances of illegal transactions such as, human-trafficking, terrorism financing, and money laundering, while at the same time using this technology to modernize the internal capital management of Russia. This is the main strategy behind crypto-ruble.
The crypto-ruble will serve as a connection between the real world and the crypto-world, which would enable the efficient tracking of capital flow in the Russian economy. Those who won’t be able to provide a paper trail of ownership will have to pay tax on crypto-ruble at the capital gain rates. It will encourage the development of low-cost crypto-payment systems, which allows the exchange of rubles for goods only in digital currencies where ownership can be tracked.
China Taking a Step to Cryptocurrency Implementation
People’s Bank of China has already created a prototype of a digital currency that may be circulating in the market in times to come, alongside Yuan. The country is testing possible scenarios in a simulated environment and running dummy transactions using digital currency with a few commercial banks in China.
Making Quantitative Easing Easier with National Cryptocurrency
The rise of new economic age with cryptocurrency as a national currency will make quantitative easing much easier. Quantitative easing is an economic concept, whereby the central bank purchases predefined amount of financial assets and government bonds to give a boost to the economy. By having a national cryptocurrency, it will be easier to execute the concept of quantitative easing.
Why is National Digital Currency a Better Idea?
Abed further added that nationalizing the digital currency is a better option as it is more transparent, immutable, and efficient. In fact, there have been talks between the Central Bank of Jamaica and Bitt to enable testing this technology. At the same time, the company has been running the active pilot programs in other Caribbean countries.
Jamaica is encouraging the FinTech startups by enabling them to operate in the country. The main reason behind these efforts is to foster innovation. A representative of the Caribbean Development Bank said that they do not want to be in a situation where regulatory authorities have a strong and dominant hand initially. He further said that the Caribbean can be used as a virtual space to test the new technology in a secure environment. These efforts will eventually enable them to take bigger steps in the future.