Before that. What is a Cryptocurrency?
A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Cryptocurrencies use decentralized control as opposed to centralized digital currency and central banking systems. The decentralized control of each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database. Bitcoin, first released as open-source software in 2009, is generally considered the first decentralized cryptocurrency. Since the release of bitcoin, over 6,000 altcoins have been created.
So what would happen if every nation replaced their existing paper money with crypto ?
1. Less trees will be chopped down
If everyone from each country switched from paper money to their own national cryptocurrency there will be less need of paper money. The printing of paper money will decrease or completely stop. Since less paper money or none is needed the number of trees being chopped would decrease. This could help to reduce the effects of climate change and reduce deforestation.
2. Mints would shutdown and loss of jobs could occur
Well if a country does not use paper money anymore, why would they wanna keep their mints running. Obviously they would shut it down and this would lead to those working at a mint to losing their jobs.
3. Paper money would become extinct
Cryptoccurencies are very easy and convenient to use. This is enough to make everyone in a nation to use crypto. Nobody would carry paper money in their wallets anymore. This will lead to a cashless society which is an aspiration of many nations. Everyone would just have a smartphone to carry their cryptocurrency and spend it wherever they could.
4. Huge budget savings
Printing paper money involves very high costs but with crypto all these costs can be cut down for maximum savings.
5. The value of these cryptocurrencies would be stable
Who would use a cryptocurrency for daily trade if its value is highly volatile. Stable coins are the answer. All these stable coins will be backed by a particular contry’s national currency with a 1:1 ratio. You could refer to Singapore’s 1SG coin.
** About 1SG coin
1SG seeks to facilitate transactions by pegging one 1SG token to one Singapore dollar. Through a centralized, fully-collateralized legal asset (Singapore Dollar), the token value of 1SG is guaranteed at a 1:1 exchange rate. The project aims to engender confidence through blockchain records and bank financial reports audited by an independent third party. ---CoinMarketCap
6. New jobs would be created
Governments would hire software engineers, blockchain analysts, crypto enthusiasts and etc to run the national cryptocurrency. Graduates from this field would have more job opportunities in their own nation and this will decrease the rate of migration from third world countries to other nations.
7. All these national cryptos would have to be pegged to a another cryptocurrency to create open markets
Well now for our paper money, most nations peg their currencies to the US Dollar as it is one of the most stable fiat currency. When every nation switches to a national cryptocurrency, who’s cryptocxurrency will they peg it to maintain the current world open market for trade and investments. Would it be United States’s version of their national cryptocurrency? Maybe Bitcoin (quite dangerous I think)? For instance if every national crypto was pegged to Bitcoin, the world economy could become extremely volatile like Bitcoin price and economic recessions would occur at more frequent phase. But if Bitcoin was the answer, nobody will have full control on the world economy like the United States since bitcoin is decentralised and its value depends on the whole world. It would just take some renowned person to give a negative comment on Bitcoin to tumble the world economy. If every national crypto is pegged to USA’s national crypto, all that scenarios with bitcoin would not happen.
8. Govermnets would give all their citizens free national crypto
Why? The government would do this to encourage more of their citizens to switch to crypto as it can help the government to achieve the goal of becoming a cashless society. If these happens throughout the world, be happy we are gonna get some free money. Something like how Aurora coin was given out for free to Iceland citizens.
**Story of Aurora Coin
Auroracoin (code: AUR, symbol: ᚠ) is a peer-to-peer cryptocurrency launched in February 2014 as an Icelandic alternative to bitcoin and the Icelandic króna. The unknown creator or creators use the pseudonym Baldur Friggjar Óðinsson (or Odinsson). They stated that they planned to distribute half of auroracoins that would ever be created to all 330,000 people listed in Iceland's national ID database beginning on March 25, 2014, free of charge, coming out to 31.8 auroracoins per person.Auroracoin was created as an alternative currency to address the government restrictions on Iceland's króna, in place since 2008, which severely restricts movement of the currency outside the country. Iceland's Foreign Exchange Act (at the time) prohibited the foreign exchange of bitcoins from the country, according to a government minister. Auroracoin was the first of a number of country-based cryptocurrencies. ---Wikipedia
9. Public could monitor nationwide transactions
Most cryptocurrency payments are recorded on a public blockchain. Any suspicious transactions could be identified by the public. It would be harder to carry out money laundering and such acts could be detected by the authourities if the crypto had a public blockchain.
10. How would the cryptocurrency be like?
Governments who have a lot of resources might just create their own cryptocurrency with their available resources. Some goverments might just create tokens such as an ERC-20 token on the etherum network, TRC-20 tokens on the tron network and etc.
11. Nation with huge populations would have strong national cryptocurrencies
For a crypto to have a stable and strong value, more people have to be using it. There must be a high demand for the crypto. Nations with huge populations like China, India and Russia will benefit from this and possibly their economies would become stronger with the use of their own national cryptos.
National cryptocurrencies are the future of money systems. The impacts of this tech should be researched and experimented thoroughly for it to be benificial to the world economy.