In the last couple of years, there has been a lot of talk about the idea of central national banks developing their own digital currencies. While big companies that are even outside of the FinTech industry have been at this process for a long time, arguably even before blockchain came to the stage, national ventures have only started to crop out after bitcoin and other cryptocurrencies already established themselves.
Today, especially in the Far East, Europe, and North America, many governmental agencies are working on developing some application for shared digital ledger, whether this is a currency, document tracking scheme or something else. However, most of these have in common the notion that these are taking place in developed nations and generally speaking, rich regions of the planet.
Like often in the history of the global economy, it seems that those with the least amount of influence or monetary means are once again being left out of this slow-burning tech revolution. While countries that are in the development phase are still somewhat clinging onto the blockchain train, most underdeveloped nations are not even on the radar of the blockchain ecosystem, aside from things like humanitarian aid.
But now, a piece of news might be a good indicator that this trend is starting to change. Here is the breakdown of how digital currencies could come about in underdeveloped countries and also, how this could be a big game changer for all of their citizens.
When it comes to underdeveloped countries, Palestine is probably one of the staunchest examples. Located next or inside of Israel, depending on who is asked, Palestine’s neighbor is one of the most developed and organized nations in the Eurasian region. Palestine territories, on the other hand, are anything but.
Since the mid-2010 the country of Palestine splintered not only in the geographical sense but also in a political one. The West Bank is under the control of the continuation of the PLO military and political movement that now runs the region as Fatah. On the shoreline of the Mediterranean, the Gaza strip is being run by Hamas after it won local elections more than a decade ago.
Finally, there is also a part of Jerusalem that is counted as a Palestinian territory, making the situation completely mixed up both in the political and economic sense. When the presence of Israeli military and security forces is added to the equation, it is clear why Palestine is both poor and incredibly complicated for any form of development or investment that is not basic humanitarian aid.
But, there is an initiative that is trying to use the concept of a digital currency and employ it in this harsh social and political environment.
The Palestine’s monetary authority seems to be looking for a way to build its own cryptocurrency. The story was covered by Reuters which reported that the key man of the Palestinian Monetary Authority, Azzam Shawwa stated that the organization is looking for a solution similar to bitcoin for its central currency, which as of now does not exist.
At this point, the territories use a mix of euro and US dollar as means of monetary transaction. Of course, those who interact with the Israeli businesses also utilize the shekel, but not to the extent of the western global currencies. Because of the huge hurdles connected with any potential creation of a traditional fiat currency (basically, the institution is prohibited from doing this) and printing this money for the population, the more effective route might cover the digital-only principle.
Shawwa also stated that the same digital currency might have some kind of physical commodity used as its base, which could be reserves, oil or gold. Naturally, while this is not the same as a bitcoin network, which is widely used today for anything from online BTC casinos to digital Forex trading, and which employs the hashing power as its supporting value. But, along with the differences, the concept would be immeasurably useful for anyone living in the Palestinian territory.
Because of the instability factor, services like PayPal are not available in the territories, while regular banking services are also very complex entities for the regular citizens. Now, the Palestinian Monetary Authority did not give an answer to the question when the Palestinian pound might go live, but the institution wants to see it launched in the period of the next five years.
There is a huge potential for this type of development in the poor nation of the world, even though it might not seem like it. The core idea that allows this step to take place is the widespread use of smart digital devices like smartphones and tablets. This, coupled with the development of the mobile networks, provides even the poorest regions with some level of internet connectivity.
This is all that is needed for a digital currency to function. Additionally, there are several big global initiatives that are actively trying to provide internet access to different parts of the world independent of the mobile network infrastructure. When one of these initiatives becomes a success, the connectability levels of the poor regions will go even further up, supported by ever-falling price of low-end smartphones
In this setup, creating a digital currency would demand little resources from any government. Of course, building the digital currency is only the first step towards its adoption and there would be most certainly many running problems with it. Some, in theory, like a sudden rise in price, followed by rapid selling period, could potentially sink the same currency in a manner similar to an economic or financial bubble bursting.
But, the same currency should be perceived as an additional part of a national infrastructure that is currently missing in many countries. While it certainly will not be perfect immediately (or even ever) it still provides something people in the underdeveloped countries can use to improve their lives.
This is basically everything that represents the development process for any region. With digital currency operating on a national level, individuals and then bigger groups of people could find a way out of poverty, which is a road that the whole country could eventually follow.