Sovereign backed and regulated cryptocurrencies are increasingly gaining acceptance as novel solutions to the world’s economic crisis. The Bank of England announced launching its own cryptocurrency, RSCoin, a few months ago to strengthen the British economy and facilitate global trade, while the central bank of China, or People’s Bank of China, is working on replacing the present monetary system by a cryptocurrency that utilizes the blockchain technology.
Along the same footsteps, a sovereign backed blockchain and cryptocurrency for Asia, which has been named “CoinAsia”, was proposed via a paper that has been published a few days ago to act as a reserve currency for the whole Asian continent. The author of the paper delved into the effect of CoinAsia on the economy of Asian countries along a scenario that predicts sovereign backed crytocurrencies to be the main means for exchanging value within the next 10-20 years.
What Are Regulated and Sovereign Backed Cryptocurrencies?
Regulated and Sovereign Backed Cryptocurrencies (RSBC) are cryptocurrencies that are backed by governments similarly to fiat currencies. Within such ecosystem, these cryptocurrencies, which are known as NationCoins, are endorsed by governmental sovereign guarantees. NationCoins are mined on a secure Controlled BlockChain (CBC), that would promote hassle free transactions; however, NationCoins aren’t centralized as they will be managed by a central authority i.e. the government.
An RSBC has the following features:
1- Its blockchain will be backed by enormous and reliable computing power, or hashing power, which will yield new units of the sovereign backed cryptocurrency.
2- The price of a given NationCoin will be estimated via the “free market” concept i.e. peer based valuation
AsiaCoin – A Predictive Scenario:
A large number of Asian countries are considered “info-tech giants”. Accordingly, they collectively possess enormous computing power, as they have many computers that are among the world’s list of top 500 supercomputers.
When it comes to peer based valuation, individual Asian Central Banks, or the Asian Development Bank ADB, can offer the sovereign backed guarantee to the proposed Asian cryptocurrency, CoinAsia. Presently, almost all of the world’s cryptocurrencies, except e.g. RSCoin, are decentralized currencies that are not backed up by any government, Central Bank or any other form of central authority.
The author of the paper suggested that CoinAsia would be backed up by Asian and/or international economic bodies such as AMF and International Monetary Fund IMF under the supervision of the United Nations UN. CoinAsia can be a pan-Asian cryptocurrency, just like Euro is to Europe, that will be backed up by an Asian economic organization or a designated sovereign authority. CoinAsia will operate on a Controlled BlockChain (CBC) that will be administered by examples of the aforementioned organizations. In the beginning, CoinAsia’s value, or price, will be determined via a basket comprised of a group of hard currencies that represent Asia’s largest economies. Following the initial period, e.g. 5 years, the value of CoinAsia will be determined by the hashing power that countries would dedicate for mining the coin. The bonafide nature of miners, mining AsiaCoin, can be verified using either a proof-of-work, or a proof-of-sovereignty algorithm.
What are the benefits of CoinAsia?
The paper stated the following to be the advantages of CoinAsia:
1- Minimizing transaction fees.
2- Transactions would be fast, especially when compared to the current speed of transfer of funds among banks in Asia.
3- Minimizing fraud, as cryptocurrency in general cannot be counterfeited and the blockchain technology is almost hack-proof.
4- CoinAsia can be implemented as a non-inflationary currency, via limiting the total coin supply.
5- Sovereign backing as when governments are introduced to the world of cryptocurrency, criminal elements can be discouraged from engaging in fraudulent activities, especially that CoinAsia will be regulated by Asia’s Central Banks, United Nations and the IMF.
6- CoinAsia can acts as a precursor to a universal Asian currency, especially that there are currently many political and economic barriers hurdling Asia from having a unified currency. Much time is needed to overcome these barriers, until then, Asians can exchange value using CoinAsia.
7- Asian governments can exchange value using CoinAsia, instead of using foreign currencies such as the US Dollar.
8- Simplified taxation model. CoinAsia would render it impossible to launder or hoard money, because the coins can be traced. Money will be ensured to remain in the circulation and it won’t be easy to shunt it out of the system, as is the case with black money.
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