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In 2018, the Marshall Islands announced that it is working on developing a cryptocurrency that would effectively replace its current legal tender and become the official currency in the Oceanic republic. The new digital currency is called Sovereign Coin (SOV).
Since the gradual rise of cryptocurrencies all the way back in 2008, many businesses have started using them as an effective means of transaction, but the Marshall Islands will become the first country to make this shift on a national scale. The country has gone through several meetings with stakeholders from the US Treasury and representatives of the United Nations. The Marshall Islands decided to become the first country to establish cryptocurrency as a legal tender. Not just a state-sponsored cryptocurrency, but the official currency.
The Marshall Islands is a country of over 1,000 islands located in Oceania, halfway between United States and Australia. The Marshall Islands faces instability due to the country’s geographical features, just two meters above sea-level, encountering challenges such as drought and nuclear contamination that have have deemed many islands uninhabitable.
Establishing a Modern Economy via Crypto
SOV adviser, Steve Tendon, explains that since the country has a tragic history of being a bomb testing site and will be one of the first places on earth to face the consequences of climate change, it is looking to establish a sustainable economy via modern financial instruments like crypto. The rising sea levels are a growing threat to the country as on average it is only two meters above sea level.
Furthermore, the increasing acidity levels of the sea can cause damage to the base of the islands by eroding the soil and the corals supporting it. The effects of climate change and pollution can affect one of the biggest export industries of the country, coconuts. It will also affect the ecosystems and fisheries which are primary source of income for the country.
Tendon stresses that aside from the climate problems affecting the economy, the financial aid that the Marshall Islands receives from the United States will halt in 2023. This could severely damage the economic stability of the Pacific country.
With an average elevation just two meter above sea level, most of the islands are underwater on regular day. Tendon draws similarities with the mystic legendary island, Atlantis, saying that the country is at the risk of disappearing underwater as well.
The idea behind creating a strong and stable cryptocurrency is to create a digital database in case the islands’ citizens must evacuate the country; with a digital currency, they can have their digital information safely stored on a blockchain. The Marshall Islands does not have its own legal tender currently and uses the US dollar. As a recognized nation, it aims to create its own legal tender in a digital form.