The Republic of the Marshall Islands will become the first sovereign nation to issue a cryptocurrency that will be legal tender, aka "real money". The Marshall Islands is a country of 60,000 people spread out over numerous small islands located near the equator in the Pacific Ocean.
The “Sovereign” blockchain platform token, “SOV” for short, will be sold to the public through an ICO. The SOV will circulate as legal tender in the Marshall Islands by late 2018 alongside the current local currency, the U.S. dollar.
Cash raised from the Marshall Islands ICO, expected to be several hundreds of millions of USD, will go towards, among other things:
- Healthcare for the country’s older citizens, many of whom suffer health problems resulting from above ground nuclear testing done by the US from 1946 to 1958. (The U.S. already pays $30 million a year as compensation)
- A contingency fund meant to mitigate the effects of rising sea levels on the low-lying island country.
- Green energy infrastructure.
- Universal internet access for the county's smaller and less populated islands and islets.
“This is a historic moment for our people, finally issuing and using our own currency, alongside the US dollar. It is another step of manifesting our national liberty,” President Hilda Heine said.
National pride may be a driving factor moving more small countries towards the establishment of a national cryptocurrency as legal tender. David Paul, Environment Minister of the Marshall Islands, said that “The Marshall Islands is the first nation to adopt a transparent crypto monetary system, and we are proud of it. We are excited to be the world’s first nation to leapfrog into the era of digital currencies.”
SOV has the benefits of cryptocurrency plus the legal and regulatory framework that covers sovereign currencies. So, though it will be the legal tender of a relatively tiny economy, the impact of the SOV on legitimizing cryptocurrencies as real money is expected to be huge.
Venezuela has claimed that its Petro is the world's first sovereign cryptocurrency. But the Marshall Islands has taken issue with that claim, noting that the SOV will be, by national law just enacted by the Marshall Islands Parliament, the legal tender of the country, whereas the Petro is not. The SOV will be a decentralized cryptocurrency with a price determined by the free market, whereas the Petro's value is pegged to a commodity, a barrel of Venezuelan oil, whose price can be manipulated at will by the Venezuelan government.
Y-combinator startup Neema is the Marshall Islands ICO partner. Neema first initiated a process whereby it would find a country with which to partner to create a cryptocurrency which would become the legal tender of that country.
“SOV is the promising starting point for the adoption of cryptocurrencies by sovereign nations,” said Peter Dittus, former secretary general of the Bank of International Settlements and Neema’s senior economic advisor. He went on to say that the SOV’s “…protocol provides a promising balance between transparency and privacy and we’re excited to develop it further. It is state of the art technology, put to good use, with the right values in mind and a clear purpose.”
By: BGN Editorial Staff