Best Bitcoin Exchange for Sweden
There may soon be official crypto money in Sweden. This would take the whole sector to a new level – and change the way money is handled forever. Iota and Stellar are two well-known names in the race.
Foreword: The success of Bitcoin and other crypto currencies has awakened central bankers worldwide. Many scream for regulation – and there will be. But others are wondering what state money should look like in this new world, what advantages blockchain, distributed ledgers and digital money can bring. Most of these considerations are still superficial, even if the media likes to claim: “Country XYZ is tinkering with the Bitcoin killer”. But in fact these new technologies have what it takes to massively change our monetary system. The tools that are now being created can be very useful for central banks. Bitcoin is the stone of the momentum, but only moderately relevant for central banks. Rather, it is a matter of renegotiating the relationship between monetary guardians, commercial banks and the public. A microcosm for these developments is Sweden, which is already working on its e-crona. In this mini-series on Money & Crypto we shed light on where the journey could take us.
The first real crypto currency
When you hear “crypto currency,” you think of Bitcoin. But the term is wrong. Bitcoin can be used as money – so it resembles gold. But money and currency are not the same. Currency is usually the payment instrument that is managed and introduced by the state or central bank. This distinction is important because only when central banks venture into the field of digital money will we see the first genuine crypto currencies.
That is not an argument for or against Bitcoin. As long as there is demand, the original cryptoset will hold. But if we look at the case of the Swedish e-Krona, we see that it has little to do with Bitcoin. But if E-Krona were really introduced, it would give a huge boost to the whole crypto and blockchain sector.
Sweden is not Japan
In part 1 and part 2 of this series we have worked out why of all countries Sweden is ahead in the development of a real crypto currency. This is directly related to the displacement of cash and the general technical affinity of Swedes.
The contrast to this is Japan, for example, where people are enthusiastic about Bitcoin and cash at the same time. Not even in Germany and Austria is the use of cash so high. The result: the central bank sees no need for a state crypto currency.
Only cash is really true
Different in Sweden. The Reichsbank there has already invented paper money as we know it today. And now we are working on an E-Krona. The reason for this is not the “threat” by Bitcoin but a problem that the renunciation of cash brings with it. The saying “only cash is truth” applies. In our daily life we don’t notice this at all, but the money on our accounts is not to be equated with notes and coins.
When the going gets tough, only physical money is considered “legal tender”. The numbers that we send back and forth in digital form are merely units of account that represent a claim against the commercial bank. In the extreme case of a banking crisis, this money can be irretrievably lost. Hence the need for deposit insurance.
Danger to the financial system?
But the head of the Reichsbank, Stefan Ingves, has recognized: “If the cash disappears completely, the public would only have access to private bank money in accounts. But the banks still have access to central bank money. In “normal times” this is not a problem. But in times of crisis, public confidence in the banking system can waver.
From the point of view of the central bank, however, it is unacceptable for confidence in the monetary system to decline at the same time. Then the central bank would have completely failed in its core task. That is the real reason why Sweden, which tends to be cashless, is further along the road to a genuine crypto currency than any other country. Not because they want to deprive people of access to cash, but because the displacement of cash can pose a real danger to the financial system in the long term.
The many features of the E-Krona
At the same time, of course, it is an opportunity: on the basis of blockchain technology, it is now possible for the central banks to supply individuals with central bank money for the first time. This opens up completely new options in monetary policy. We are still a few years away from a potential introduction, but a first picture is already emerging. For the development of E-Krona, the Reichsbank has assigned ten full-time employees and estimated a budget of around 340,000 euros. According to the Reichsbank, the E-Krona
- which does not replace cash and other payment methods, but complements them.
- Ensure public access to central bank money.
- serve as a means of payment and as a store of value, such as cash.
- allow offline payments for small sums.
- possibly even allow anonymous payments.
- have a built-in option for paying interest.
- and be designed on the basis of a technical solution that allows the functions to be extended.
Iota and Stellar in the race
This is where it gets really exciting for crypto investors. Not only because an official crypto currency would boost the whole sector. But also because the Reichsbank will hardly design the technical infrastructure for the E-Krona itself. Instead, around 40 projects applied to the central bank. After an initial selection, 19 are left.
These include two projects known from Coinmarketcap: the Iota Foundation, based in Germany. And IBM, which wants to offer the same protocol based on Stellar that central banks use for their crypto currencies. If these two projects don’t come to fruition, the market will hardly register it. But if Iota or Stellar are actually chosen as the basis for E-Krona, the much criticized cryptosector will gain massive legitimacy in one fell swoop. Of course, there is no deadline for the decision. It will probably take years.