The term may be merely new to some readers, but shortly it will be as common as ‘Bitcoin’ is today. As common people and authorities recognize the rapidly proliferating usage of cryptocurrency. Governments intend to adapt to the modernized financial system however leading to centralization of assets by introducing ‘Govcoins’. This can be perceived as a modern method to control capital.
Cryptocurrency Vs Govcoins
Cryptocurrencies gained popularity for their major feature – they are virtual assets in the digital realm, secured by cryptography. These are based on blockchain technology, that is, spread across computers all over the world, this makes the system decentralized. The decentralized structure of cryptocurrencies allows the elimination of any intermediate party (i.e. the government and central bank) and is directly available to the people.
Indeed there are several beneficiary factors of a decentralized monetary asset,
- Unlike a centralized system, our personal information isn’t entrusted in a few hands.
- The decision-making power regarding funds lies in the hands of the crypto holder.
- There is minimal censorship, the integrity of privacy is maintained. Often in centralized systems, it is seen that the government shuts down the social media accounts or information transacting portals, to censor the traffic within the network.
- These networks are more of an open development platform, anyone with the appropriate knowledge can use the technology for innovations and startups. This could be an opportunity for businesses to flourish.
- The potential economic ownership lies with those who contribute to the network.
However, lately, Bitcoin, Ether, and other cryptocurrencies are ill-utilized for money laundering and financial crimes. Businesses and organizations are gradually adopting blockchain technology to gain the financial power, cryptocurrency bestows on anyone in possession. Bitcoin is considered a legal tender in numerous countries it is constantly compared with the concept of traditional money. Governments hereby want to regain the authority on finance and make their institutions anticipate its functions in the future of digital currency.
Concept Of Govcoins
Countries along with their governments have been preparing and experimenting with their personalized cryptocurrency. It might be better perceived as a centralized “digital” currency with encryption based on a centralized network.
There will be no bank account for govcoins, unlike traditional monetary assets. However, usual cryptocurrency exchange platforms may not be utilized to operate these as well. People will be allowed to use ‘Govcoins’ directly from the Central Bank through an app. In this procedure, the function of intermediate financial institutions, cheques, credit cards, debit cards is eliminated. A centralized network will be established between the Central bank and the country and the devices of individuals. This might also be called, Central Bank Digital Currency (CBDC).
This idea of centralization of assets has been put to execution in more than 60 countries, many of these have already launched their digital currency and several are studying its effects on the geopolitical ecosystem. For example, China has launched its e-Yuan (with a mode of retail distribution). Yuan is being used by more than 50,000 people. Dubai has come up with its DubaiCoin (DBIX), the European Union intend to launch its digital version of their currency, digital Euro (by 2025), Sweden has come up with e-krona, Vietnam has its cryptocurrency called Vietnamese đồng, the USA is preparing for an E-Dollar &c.
The persistent fear of losing control over capital has made authorities take such a step in to find a middle ground. Authorities aim to make Govcoins a mainstream asset, parallel to the traditional money and currency used by them. The loss of ability to intervene in the financial arena with the emergence of Bitcoin and other cryptocurrencies threatened their authoritative position, especially as cryptocurrency is reaching more masses (crossing all boundaries). This could be also a reason to eliminate the ‘volatility of the cryptocurrency market’ as it brings along itself a range of risks and opportunities of financial terrorism, going unnoticed.
How Is This Concept Perceived By Digital Coin Holders And Experts?
Although, Neil Henderson posted on Twitter as ‘The Economist’ claim Govecoins as “digital currencies that will change the future of finance”. (no one knows for good or for bad)
Replies to that tweet are generally in a tone of mockery and disapproval by commoners.
The hashtag “#Govcoin” was launched way back in the initial stage of this idea, and there were tweets that could be discerned as turning down the idea. A tweet in reply to BadPutty on July 11, 2016, said “I am not going to put any money into #GoveCoin”.
Now is this a decision solely taken by the government or the citizens agree to the centralization of assets. Are they left with no option and forced to put their money on ‘Govcoins’? We might have to wait for further information.