Marshall Islands in Pacific Ocean is set to become the first country in world to recognize cryptocurrency as its legal tender and adopt transparent crypto monetary system. The parliament of island has handed down law to create the digital currency called “Sovereign” with symbol SOV to raise some hard cash to pay bills and boost economy.
The Republic of the Marshall Islands (RMI), an island country,can be located near the equator in the Pacific Ocean with a population of about 50,000, and will be called as to be the first sovereign nation to issue a cryptocurrency that’ll be legal tender.
SOV is based on a permissioned protocol, dubbed “‘Yokwe” (meaning “hello” in the local language), which requires block chain users to authenticate. According to the SOV promoters, this “solves the anonymity problem that plagued bitcoin and precluded its mainstream adoption.”
The official statement notes that there’s a huge market need for a non-anonymous block chain system that can operate within a regulated environment. The SOV desires to be part of a broader E-conomy vision to create a society that uses block chain technology intensively, with a cryptocurrency and bio metric IDs securely recorded on the block chain.
Importance of first digital legal currency
The new currency is called “Sovereign” with the symbol “SOV.” The SOV, which will be distributed to the public via an Initial Currency Offering (ICO), will circulate as legal sensitive in the country, alongside its current local money, the U.S. money.
Y-combinator Israeli fintech startup Neema is partnering with RMI to issue the SOV, starting with a presale which will be followed by an ICO later this year.
“SOV” is a huge deal because, until now, all cryptos were in regulatory limbo,” Barak Ben-Ezer, co-founder of Neema, told Bitcoin Mag. “None of them was considered ‘real’ money by the IRS, SEC, etc. Accordingly, the IRS taxed them with capital gain tax, and the SEC wants to regulate all ICOs as issuance of securities. The IRS explained in 2014 why it’s not considered real money: because it’s not the legal tender of a sovereign nation.”
“SOV is the promising starting point for the adoption of cryptocurrencies by sovereign nations,” said Peter Dittus, former secretary general of the Bank of International Settlements and Neema’s senior economic advisor. “The Yokwe process provides a promising balance between transparency and privacy and we’re excited to develop it further. It’s state of the art technology, put to good use, with the right beliefs in mind and an obvious purpose.”
“This is a historic moment for our people, finally issuing and using our own currency, alongside the USD,” said RMI President Hilda C. Heine. “It is another step of manifesting our national liberty. Allocating SOV units directly to the citizens will circulate the currency and distribute wealth efficiently to our people. In addition, The RMI will invest the revenues to support its environment change initiatives, green energy, healthcare for those still affected by the U.S. nuclear tests and education.”
A cryptocurrency (or crypto money) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional products, and to verify the transfer of assets. Cryptocurrencies are a type of digital currencies, substitute currencies and virtual currencies. Cryptocurrencies use decentralized control as opposed to centralized electronic money and central banking systems.The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger.
Bitcoin, created in 2009, was the first decentralized cryptocurrency .Since then, numerous other cryptocurrencies have been created. These are frequently called altcoins, as a blend of alternative coin.