Marshall Islands, home to approximately 53,000 people and the US Dollar (USD), are about to become the first nation to hold a sovereign cryptocurrency.
So what exactly does this mean?
In essence, a sovereign currency, or sovereign money, is defined as legal tender, something of value which is recognised by the state as a facilitator for trade. Whilst cryptocurrency is not the opposite of legal tender (illegal tender) it is not generally recognised as sovereign, meaning the state cannot exercise any power over it. This, is where Marshall Islands are about to get one step ahead of the game.
Interestingly, as I have mentioned, Marshall Islands only recognise the US Dollar, so, in their move to follow the rise in cryptocurrency, they have not only become the first nation to ‘recognise’ a cryptocurrency, they are the first nation to hold sovereign power over their own cryptocurrency. Unlike the Venezuelan Petra for example, which is not yet sovereign under Venezuelan law.
To nationalise it’s roll out, The Marshall Islands will be issuing a small amount of SOV to its residents, ensuring that everybody has the chance to start spending and saving in SOV before it becomes open to worldwide investment.
Marshall Islands President Hilda Heine said, “This is a historic moment for our people, finally issuing and using our own currency, alongside the USD. It is another step of manifesting our national liberty. Allocating SOV units directly to the citizens will circulate the currency and distribute wealth efficiently to our people.” Globes [Online] 2018.
The revenue generated by the worldwide investment into SOV, will be put back into Marshall Islands own economy, boosting healthcare, the climate, energy services, and those who have suffered consequences of the US nuclear tests.
Only time will tell when it comes to the success of SOV, it’s still very immature and needs time to grow, however, once external investment opens, it is expected to expand alongside the larger e-conomy and become cemented as a serious contender in the cryptocurrency market. Sceptics are starting to disagree, stating that the freedom of most commercial cryptocurrencies is key to their success and that a state controlled cryptocurrency holds no benefits, so the question stands, why would the citizens stop using the US Dollar, if, at the end of it all, the SOV doesn’t have any additional advantages associated with using it?
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