Recently, the largest stablecoin Tether was launched on the Algorand blockchain. And just a few days ago we have the first national currency to be launched on the Algorand blockchain. It is a cryptocurrency SOV (Marshallese sovereign) that should free this small island state from the Pacific from using the US dollar. They chose the Algorand protocol for its scalability, speed and security reasons.
Marshall Islands
The Marshall Islands extend to the archipelago of Micronesia in the middle of the Pacific Ocean. The nearest continent is Australia, but it is more than 3000 km away. It is, therefore, a remote place.
And yet the government of fewer than 60,000 inhabitants came up with the idea of having their own digital currency. This idea has risen in 2018 and only two years later, in 2020, this digital currency comes to light. And it is on the Algorand blockchain, which scales well enough without sacrificing security or decentralization, thus solving the so-called blockchain trilemma as Vitalik Buterin called it.
For a digital currency, the features of transaction finality, transaction speed and low fees, all tighten up with security, are important.
So far, US dollars have been used in the Marshal Islands. Now, banks will have to start using and accepting the national digital currency of the SOV.
Marshall Islands / kiwirip / Pixabay
Marshallese sovereign (SOV) digital currency
The SOV digital currency has a limited number of coins. Its maximum limit was set at 24 million coins.
The SOV will not be launched on the Algorand public permissionless blockchain, but on the private permissioned co-chain. This will give the central bank and the government of the Marshall Islands more surveillance over the network than is the case with decentralized cryptocurrencies such as bitcoin, which seems logical to the national digital currency.
“The Marshall Island’s vision for global participation and inclusion in an open financial system by harnessing the benefits of blockchain technology is aligned with a truly global and decentralized society that we believe is made possible with our technology,” said Silvio Micali, founder of Algorand. “We are proud to support the country on its groundbreaking journey towards mainstream digital currency adoption.”
The determination of the total number of coins should serve to prevent unwanted inflation. For SOV, algorithms will ensure a 4% annual inflation growth. The management of coins in circulation is one of the tools that governments use to counter economic turbulences, and it is precisely those countries facing such problems, such as Argentina and Venezuela, that can learn from the progress of such states.
Venezuela has already created its national digital currency Petro, which should be covered by Venezuelan oil. However, they do not enjoy much trust at the moment. Moreover, the digital currency Petro was created in addition to the national currency Bolivar to allow the Venezuelan government to circumvent the economic embargo.
However, unlike Venezuela, the Marshall Islands are not under any economic embargo. But there is used US dollar for trade only. This will be now changed, the desire to break free, at least in part, led the representatives of this small archipelago to this interesting step.
Kenneth Kedi, Speaker of the Marshallese Parliament, expressed, “I am excited about the technological partnership with Algorand. With it, a strong alliance is forming to develop the SOV project. This is another milestone towards developing the Marshall Islands financial services industry.”
About Algorand
Algorand is the blockchain smart contract platform that aims to solve the so-called blockchain trilemma of scalability, security, and decentralization. It is based on the pure proof-of-stake (PPoS) consensus algorithm. Algorand was founded by Silvio Micali, the Turing Award-winning cryptographer in 2017.
Final summary
Algorand is a very ambitious project, which can provide the necessary security, scalability and transaction finality to the projects like national digital currencies. It is just a perfect fit. Those advantages can make them reach their long-term goal. To bring the blockchain technology, that enables frictionless finance to the world!
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