Central banks are experimenting with cryptocurrencies
While the Banque de France has conducted trials with Blockchain technology, others have gone further. Norges Bank, the Norwegian central bank, has published a working document, in which it envisages developing a CBDC (Central bank digital currency) to supplement its cash assets. The aim of this CBDC would be “to guarantee confidence in the currency and the monetary system”. Sverigies Riksbank, the Swedish central bank, is also looking to create an electronic krona, as the use of notes and coins is decreasing in Sweden. El Banco Central (BCU), the central bank of Uruguay, has also proposed an initiative consisting of digitising the Uruguayan peso, by creating an e-peso.
An alternative to the dollar?
Thether is a cryptocurrency backed by traditional fiat currencies. Currently, there are Tether tokens in US dollars (designated by the symbol USD₮) and in euros (designated by the symbol EUR₮). A Tether token backed by the Japanese yen (JPY₮) is in development.
In other respects, state-sponsored cryptocurrencies could enable the dollar to be bypassed and international sanctions circumvented. In February 2018, Venezuela was the first country to make use of one when it launched the Petro, a cryptocurrency with a value indexed to the price of a barrel of Venezuelan oil (60 dollars at the time). It was created to enable Caracas to find new money on the markets when the United States imposed sanctions on anyone buying Venezuelan oil.
For Iran, which is also examining the matter, the aim would be more to preserve economic relations with foreign countries than to raise funds. In effect, the use of a “crypto-rial” would make it possible to avoid using US dollars for international transactions. In the case of a French company trading with Tehran, it would receive this cryptocurrency, which it would then exchange for bitcoins and finally for euros. If no dollars are used in the process, the United States has no say in the matter.
“Think of countries with weak institutions and unstable national currencies. Instead of adopting the currency of another country’- such as the US dollar – some of these economies might see a growing use of virtual currencies”
Christine Lagarde, Managing Director of the International Monetary Fund, on the subject of dollarization 2.0.
What about GAFA (Google, Apple, Facebook and Amazon)?
Although Amazon launched its own virtual currency, Amazon Coins, in the United States in 2013, it is in no way comparable with Bitcoin or any other virtual currency. Amazon Coins are neither anonymous nor decentralised, and have no trading price. They are simply a cash reserve denominated in “Amazon Coins”, which can only be spent on Amazon, with a fixed rate.
Amazon launched its currency on the basis of strict parity with the dollar – one cent is equivalent to 1 Amazon Coin. For its launch in France, the giant decided to retain this very simple model, this time basing it on the euro. This choice demonstrates that Amazon is not seeking to create a new worldwide currency (at the moment?).
Although the creation of a virtual currency for its marketplace is not official, Mark Zuckerberg has confirmed that he would seriously consider it: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology.”
Facebook has created a dedicated Blockchain team led by David Marcus, the former head of Messenger. Before joining Facebook, Marcus was the President of PayPal. He was also a very early investor in Bitcoin and was on the Board of Directors of Coinbase…
Facebook has already enjoyed a foray into the world of virtual currencies (without being based on a distributed ledger) with Facebook Credit in 2009. At the time, the feature allowed users to purchase virtual goods, particularly within games such as Farmville. However, the feature was not the success it was expected to be and was abandoned two years later.
In the meantime, football clubs are ready to go!
PSG will be the first football club to issue its own cryptocurrency. A token (based on the Socios blockchain platform) will grant the holder a right to vote on questions submitted by the club.
Turin’s Juventus has adopted the same approach with the aim of connecting with its fans and giving them a say in the club’s management and strategy. Using the tokens they buy, supporters can actually influence Juve’s policy, particularly in relation to questions posed by the club regarding the choice of the club strip, or even friendly matches, etc.
Are you interested in cryptocurrencies? Read the two previous articles on cryptocurrencies:
Directeur conseil digital – SQLI