WHY THIS MATTERS IN BRIEF
- With more countries starting to develop and deploy their own national cryptocurrencies it’s only going to be a matter of time before they become the norm, that said though that time is still decades away
Hot on the heels of China, Estonia and Sweden who have all recently announced their own intentions to create national cryptocurrencies Vladimir Putin has announced that Russia will issue its own official cryptocurrency, the CryptoRuble, putting an end to months of speculation about the country’s approach to the technology. While, in a way, it indicates an embrace of the likes of Bitcoin and Ethereum, the CryptoRuble is unlikely to share the truly decentralised nature of other coins.
Even though the country has taken a hard line on other cryptocurrencies in the past, calling them “illegitimate replacements for the official currency,” reports coming out of Russia just a few months ago suggested the country was looking to develop its own variant, but now, even though details are still scarce, sources say the CryptoRuble won’t be able to be mined but instead will be issued and tracked by the government like ordinary fiat currency. And that, of course, does away with one of the primary draws of cryptocurrencies because, as many people will say the entire point of something like Bitcoin is to free commerce from the tethers of government-run fiat currencies.
That said though the CryptoRuble looks like it will be blockchain based which will at least give it a veneer of decentralisation and could help prevent things like online fraud.
According to the reports Rubles and CryptoRubles will be able to be freely exchanged and traded for one another, although how exactly is still unknown, but that said it’s likely to be an official exchange that requires people to prove the currencies “origin,” probably using some form of documentation, and it also looks like for the medium term at least, the two currencies will be joined at the hip.
From the announcement it also seems clear that the idea is to stimulate the online economy in a way that doesn’t rely on foreign money markets or third party transaction brokers, while at the same time allowing the government to closely regulate and track it. However, at a practical level, moving to a national cryptocurrency also makes a lot of sense because by the very nature of blockchain the technology will let governments see, in real time, how their economies are performing and let them create fiscal policy almost on the fly, and it will also have implications on fraud and tax evasion too, hopefully helping to put the brakes on at least part of today’s illicit $4 Trillion “dark” economy. And, from my point of view, I know this is just the beginning of a trend so stay tuned for more countries following their lead.