Many are asking: Who knows how to build digital currencies? Monetary authorities throughout the world are rushing to design digital currencies, and many are asking: Who knows how to accomplish this?
Cryptocurrency enthusiasts have provided a solution to some of the first governments to go digital. The digital trend gives an opportunity for these anti-traditional finance rebels to generate virtual money for an entire nation.
Barak Ben-Ezer, an Israeli crypto expert, had never visited the Marshall Islands before flying halfway around the world in 2018 to suggest that the Pacific Ocean archipelago create a national currency modelled after bitcoin.
The Marshall Islands, a US-supported nation of 59,000 people dispersed across more than a thousand islands with no currency and no central bank, represented a blank slate for financial innovation. Its only link to the global banking system—and access to the US dollars used as everyday currency on the islands—was a bank in Honolulu.
Local officials were advised by Mr. Ben-Ezer that the government could develop and market its own digital currency. It’d be similar to bitcoin. People from all around the world might invest in it, yet it would be issued by a national government.
He recalls telling them, “Bitcoin is fantastic, but it’s not a sovereign currency.” “You’re sitting on a virtual gold mine.”
On his iPad, David Paul, a Marshall Islands cabinet member at the time, was exploring bitcoin technologies. He said, “I didn’t need much convincing.”
The government soon gave Mr. Ben-Ezer responsibilities for treasurers and lawmakers.
Within months, the Marshall Islands Parliament passed a bill making his creation—dubbed the SOV for sovereign—legal tender, marking a critical step toward its real issue.
China’s signs that it may be close to issuing a digital version of the yuan have boosted demand for digital-currency plans in other countries. Beijing announced on Friday that the e-CNY has been tested in more than 70 million transactions totaling more than $5 billion.
According to advisers, several major central banks have teams that model digitization scenarios, but many are also secretly turning to engineers with experience in cryptocurrencies and blockchain. Even the Federal Reserve of the United States has teamed up with scientists from the Massachusetts Institute of Technology to create a digital dollar.
According to Cornell professor Eswar Prasad’s book “The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance,” which will be published in the fall, smaller economies may have more to gain and less to lose by experimenting with a new sort of monetary system. Some smaller countries have been more open about enlisting the help of crypto experts.
In late 2018, Canadian Jay Joe received a text message from a financial-technology associate informing him that the Bahamas central bank was seeking proposals to help build a digital version of the Bahamian dollar.
The digital-security and blockchain expert put together a team that had worked on tokenized electronic payments, the cryptocurrency ethereum, and financial-system technology based on blockchain, the electronic ledger technology that underpins bitcoin and other cryptocurrencies, despite having only visited the Bahamas on a cruise.