2017 can be called the year of crypto-mania. It was the year where interest in cryptocurrencies had quadrupled. Bitcoin had jumped from just below $1000 in January 2017 to nearly $20,000 in December 2017. Ethereum had also greatly increased in value. It rose from $10 to $752 in just a year.
Seeing the increase of value in cryptocurrencies and a rise in public interest, many have tried to get in on the action, including governments.
“I confidently declare that we run CryptoRuble for one simple reason: If we do not, then after two months our neighbors in the EurAsEC [Eurasian Economic Community] will,” said Russia’s Minister of Communications Nikolai Nikiforov.
By creating a national-cryptocurrency, there will be no need for a central intermediary, such as banks, to process and track financial transactions. Clients would be able to open an account at a central bank or any other bank and use their services in a manner similar to a bitcoin wallet.
Many claim, that creating a government-backed cryptocurrency is paradoxical to the Bitcoin whitepaper, which was supposed to create a cheap, anonymous, and borderless currency. Bitcoin was supposed to provide banking services to people who could not use standard banking due to fees or other restrictions.
Another key aspect of Bitcoin and most cryptocurrencies is decentralization. It is a peer-to-peer money transfer system at its core. By being p2p, it removes the need for a central authority such as a bank.
By having a national government-backed cryptocurrency, the coin or token would not be decentralized, as the currency will be under the control of a central banking organization. It wouldn’t be a stretch to say that it would most likely be less transparent than most cryptocurrencies and there are chances that just like with regular fiat, paper money there will be no total token supply. This means that the government could just create more tokens whenever they’d like therefor creating inflation. A national crypto token would probably have little to no anonymity features, and of course as a national token, it would not be borderless.
It will be interesting to see if consumers and citizens adopt crypto national tokens, such as the crypto ruble in the future. Seeing that the advantages seem slim to non-existent for consumers, I personally believe that the public will not adopt these tokens unless forced to by the government.