Amazing news in the Crypto world, The Marshall Islands will be the next National Digital Currency run off a Blockchain. The Currency, the Marshallese Sovereign, will utilized Algorand Technology and will be in circulation with the USD on the islands.
What is Algorand? Algorand is an open sourced Proof of Stake Blockchain. I suggest you check it out and do some research.
The SOV will have a 4% annual inflation rate set by the algorithm in which manages it. Initially, the Marshall Islands will issue 24 million SOV. The Marshall Islands has a population of approximately 58,000 people and a total GDP of 215 Million USD. Per capita is 3,789.
Algorand currently has a Staking rate of 5.44% which is effectively its inflation rate. Algo proof of stake system secures its blockchain which means as SOV token expands, it will be necessary for ALGO to expand to hold it and secure it. Overall, I am bullish on Algo and think it has a very good Use case.
The Marshall Islands honestly are the perfect place to test this. They currently use USD but here’s the issue. The Marshall Islands population is spread out amongst 29 Atolls. In order to trade in USD, they may need cash, or banking services, but the banking services are located in the US so there are high transaction costs. This makes island to island trade being facilitate in USD is not efficient and very costly. Having a separate national currency backed by a Block Chain with a set inflation rate will enable to Marshall Islands to have economic independence. Since they are going to operate this program in tandem with the USD instead of a hard switch I do worry that this will allow Gresham’s law to take hold, (Bad money drives out Good) making people unwilling to spend SOV and want to spend USD but people want to take SOV but not USD. We will see what happens. Since the Marshall Islands are separate by so far, this will be an amazing test of the use of a Privately made Block Chain for cross border transactions, the islands being theoretical cross borders, as well as their trade with other nations. Since the blockchain inflation rate is transparent and the use is transparent, this represents a superior monetary form for the Marshall Islands as its citizens will be able to transact securely, quickly and cheaply for the first time in a long time.
We could see the Marshall Islands becoming a hub for cryptographic endeavors and stand as a model for the use of a national blockchain outside of china’s Block Chain Services Network.
I am super excited to see where this goes. I want to go visit the nation soon.