Cryptocurrencies such as Bitcoin, are the digital currencies, aiming to transform economies into cashless societies. Photograph:( Reuters )
There has been an interesting twist in the world of cryptocurrencies. While India is linking the concept of Bitcoin to a Ponzi scheme and is dismissing the idea of making it legal, many countries, on the other hand, have been aggressively working on issuing their own virtual currencies. Interestingly, a couple of them have already released state-backed digital tokens.
Cryptocurrencies, such as Bitcoin and Ethereum have gained momentum in the last few months.
And it’s not just private players which are backing this new-age currency. In fact, governments across the globe have also started to consider releasing their own cryptocurrencies.
Countries such as China, Estonia, and Iran have already floated ideas for their own digital currency.
Venezuela has gone ahead and released the world’s first sovereign cryptocurrency - the Petro. The oil-backed digital token raised about 735 million us dollars on the first day of its pre-sale earlier this month. The country is now preparing for a new cryptocurrency called "petro gold" that will be backed by precious metals.
Apart from Venezuela, the Marshall Islands are also going to issue a cryptocurrency that will be circulated as legal tender. The new currency will be called SOV and it will act like regular money.
Its legal tender status has been approved by the country’s parliament. It’s interesting to note that the country has capped the SOV supply at 24 million tokens in order to prevent inflation.
While some countries are in the process of issuing digital currencies, others are still working on regulations to govern them. For instance, Switzerland has started to treat some digital currencies as securities under regulatory guidelines.
Singapore's central bank is assessing whether additional regulations are required to protect investors in cryptocurrencies. Other countries like South Korea, where trading in cryptocurrencies is more popular, are also looking at more efficient ways to regulate them.
But India has taken a different path. The country is planning to bar cryptocurrencies from its payments system. India's finance ministry has already cautioned investors about the risks of trading in cryptocurrencies. While many countries are embracing cryptocurrencies, there is still speculation whether it can transform economies into cashless societies.
The article was written with inputs from Reuters.
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)