In recent times numerous nations have talked about creating their digital currencies however there have only been a handful that have actually started the process. The Marshall Islands, a small country in the Pacific, now joins the club.
While Venezuela is the first sovereign state to kick-start the revolution amid criticisms from rival political parties, Republic of the Marshall Islands (R.M.I) is in line to be the second nation to issue a state-backed cryptocurrency as legal tender.
The Sovereign (SOV) Cryptocurrency
Authorities of the Republic of the Marshall Islands passed the bill approving the launch of Sovereign (SOV) February 26, 2018. In a way, SOV will be the first crypto issued as legal tender by a sovereign nation, considering the fact that Venezuela’s Petro is just a crypto version of the fiat Bolivar and some politicians have even condemned the move by President Maduro.
“This historic moment for our people, finally issuing and using our own currency, alongside the USD. It is another step manifesting our national liberty,” said R.M.I President Hilda C. Hein.
RMI Initial Coin Offering
The nation will conduct its ICO event to distribute the SOV coin later in 2018.
Minister-in-assistance to President Heine, David Paul told Reuters that the total supply of SOV would be capped at 24 million tokens; a value inspired by the 24 municipalities in the nation. “This is the way for the future. As a country, we reserve the right to issue a currency in whatever form it is, whether in digital or fiat form,” the official said. The SOV presale will begin shortly.
Neema, an Israeli blockchain-based startup will handle the creation and distribution of SOV. The CEO of the firm, Barak Ben-Ezer said:
“SOV will mark a new era for the cryptocurrency. It’s about getting rid of the excuses why not shift to crypto – it’s real money, and it provides the golden path between an open ledger and total anonymity. It gives users the power to decide when and what to disclose.”
The Need for Crypto
RMI has decided to develop its cryptocurrency because of budgetary concerns. Presently, the nation receives $60 million in foreign aid from the U.S. yearly. This figure will be cut down to just $30 million in 2023.
The nation’s budget is pegged at $100 million, therefore in order to combat the economic crisis the huge drop in aid might cause, the Marshall Islands plan to save 50 percent of the funds raised during the ICO, in its trust fund and the remaining will be split across three important areas.
Unlike regular cryptocurrencies that offers almost a hundred percent anonymity to users, the SOV require users to identify themselves on the blockchain via what RMI officials call the “Yakwe framework.”
Allocation of the Funds
According to reports the U.S. used the Republic of Marshall Islands as a nuclear weapon testing area from 1946 to 1958. RMI authorities plan to use 20 percent of the funds in providing healthcare and other support for citizens affected by the U.S nuclear operations.
The nation also plans to give 20 percent of the funds to resident-citizens in the form of SOV coin and the people will be able to use SOV just like fiat money. The remaining ten percent will be used for the nation’s Green Climate Fund project.
In recent times quite a number of countries have expressed interests in creating their Central bank-backed blockchain money. Nations like Israel, Iran, and others have all talked about a national blockchain-based virtual money. However, none of these nations have made serious commitments to their projects like the Republic of Marshall Islands. Venezuela’s Petro is already on the market but faces pressure from internal and even external forces.
In essence, if the SOV project succeeds, it would ultimately prove that it is possible for a nation to have a blockchain-based currency as its national legal tender; and if the SOV fails, it would also serve as a lesson to other countries.