Cryptocurrency conquers the world. The popularity of cryptocurrency is growing rapidly, and the technology of blockchain that conquered the whole world dictates the new standards of financial relations in the modern society. Today, more than a thousand cryptocurrencies of different functional, liquidity and volatility are known. At the same time, in spite of the flurry of little-constructive criticism of crypto sceptics, world capital is increasingly gravitating toward cryptocurrency.
This is evidenced by a tight ICO schedule of new “coins”, promising to radically change the established macroeconomic principles. Quite logical is the position of experts who believe that in the coming years cryptocurrency will be able to become a new means of payment that will spread around the world, replacing fiat currencies.
Does the State Need Cryptocurrency?
The state needs cryptocurrency. One of the goals of the state is the regulation of real social relations that exist at the domestic and interstate levels. Public relations related to the use of cryptocurrencies should be taken for granted, which, undoubtedly, will accompany us for many years. Top cryptocurrencies (Bitcoin, Ripple, Ethereum, IOTA, Litecoin and others) accumulate billions dollars of investments and guarantee a constant increase in profits for skillful investors. Therefore, national economies feel the urgent need to regulate them, so that the crypto market is not the exclusive prerogative of private individuals. However, the basic principles of blockchain technology exclude centralized regulation of the cryptocurrency, which means that national governments need to independently enter the crypto market through the creation of their own national cryptocurrencies with state support.
Perspectives of National Cryptocurrencies
National governments are aware of the infinite financial possibilities of the crypto market. The realities of the last years indicate that the governments of many states see the future of national economies in the cryptocurrency. Thus, the Central Bank of Sweden (Sveriges Riksbank) has started the process of developing e-krone, which will allow the country to overcome the crisis of “paper” money, which almost lost the value of the payment instrument (the share of cash in Sweden’s overall money turnover does not exceed 15%). A similar way of development of the national economy is seen by Estonia, but the principled position was taken by the European Central Bank, jealously guarding the euro’s monopoly and blocking such initiatives. As early as in 2018, the national cryptocurrency of the UK, tied to the GBP, might appear.
Can the current situation become a catalyst for mass processes similar to Brexit (for example, Swexit)? We believe that it can, because cryptocurrency, which gives financial independence to private individuals, has all the possibilities to ensure such an independency on the state level as well.
Japan, being one of the world’s leading economies, has begun the process of developing J-Coin, which will bring to the modern level the turnover of money in the country.
The possibility of the release of the first oil-backed cryptocurrency, Venezuelan El Petro, has been discussing for a long time by the world’s leading economists. The introduction of such a cryptocurrency is aimed at overcoming the deep economic crisis and the rapid devaluation of the national currency of Venezuela. In late February 2018, pre-sales of a new oil-backed token began.
An interesting position is taken by the government of India, which does not welcome the use of Bitcoin and other cryptocurrencies, but began active development of the national cryptocurrency called Lakshmi.
Will National Cryptocurrencies Replace Classic Cryptos?
National cryptocurrencies will not replace the already existing cryptocurrencies. National cryptocurrencies will significantly relieve the banking network, ensure high mobility of money, and reduce transaction costs. However, such currencies will never be able to provide the anonymity of cryptomarket, its independence from government policies, the absence of intermediaries, and market pricing principles. All this makes it possible to say that in the near future nothing can force people to abandon existing cryptocurrencies.
Investment in National Cryptocurrencies
From investors’ point of view, national cryptocurrencies can be viewed as an interesting object of investment. However, it is necessary to understand that the overwhelming majority of such cryptocurrencies will have a rigid binding to the national currencies, which will minimize their relevance to the investor. At the same time, states that have been in protracted economic crises (the example, Venezuela) are not interested in such a binding, so the pricing of such cryptocurrencies will be based on market principles. Therefore, they have a high potential for investment.
However, each new national project requires scrupulous investment analysis. For example, the unexpected switching of El Petro from the Ethereum to the NEM platform raises some suspicions.
The Bottom Line for Successful Cryptoinvestors
The interest of governments in cryptocurrency testifies that the cryptomarket will continue to develop and improve in the long-term perspective. The desire of the states to regulate trading volume of cryptocurrencies will not affect their significance, but will open new horizons for the development of top-level cryptocurrencies and investing in them.