Cryptocurrencies have had quite the attention during the past couple of months, with the whole market capitalization skyrocketing and setting a new all-time high above $2 trillion. With this attention, of course, come many problems; and the biggest ones have had the governments involved.
In theory, cryptocurrencies aim to fuel a fully decentralized global financial system. This means that you would have full control over your funds; unlike today, where various financial institutions and banks have access to nearly everything you own. By living in a world with a decentralized financial system, you would not fall victim to the major flaws of the current global financial system – some of them being currency manipulation, high intermediary fees, and slow transactions.
Even though decentralization would benefit the global financial system, it also means that banks would lose their influence and governments would lose part of their power. This is the reason why most financial institutions and governments are against crypto and continuously work against them.
Lately, however, there have been major developments in the relations between the cryptocurrency industry and different governments and banks. On June 9, 2021, El Salvador adopted Bitcoin, making it a legal tender abreast with the US Dollar. Moreover, the government announced that they are giving out $30 worth of crypto to any citizen who applies to open a digital wallet. This was the first time a government accepted a cryptocurrency as an official form of payment.
To add to this, some governments, including that of the United States and the United Kingdom, have announced that they are working towards their own cryptocurrencies – and with countries like Sweden officially announcing the launch of their cryptocurrency. During the year 2017, the Swedish government published some plans on creating their own digital currency; however, whether or when e-Krona will go live is yet to be decided. The main goal of e-Krona is to boost the process of Sweden becoming the first cashless society.
When it comes to transitioning to a cashless society, Sweden is way ahead of its time. The past few years have been characterized by electronically made payments – through debit or credit cards. Consequently, more than 80% of all retail transactions are conducted electronically, removing the need for cash when making payments. Not only Sweden, but most of the Nordic countries have witnessed a decline in cash throughout the last years.
This resulted in many businesses not accepting cash as a form of payment, something that is extremely rare in other parts of the world. Furthermore, more than 50% of Sweden’s bank branches no longer accept cash deposits or withdrawals. To make sense of all this, only 2% of all transactions made in Sweden are made using cash.
What is e-Krona?
e-Krona is a blockchain project initiated by the Swedish government and their central bank, Sveriges Riksbank, back in 2017. It is an attempt to introduce the wonders of blockchain technology to their economic system by implementing a digital currency that is still under development. By doing so, Sweden aims to accelerate their plans to become the world’s first cashless society by March 2023.
Yet, Sveriges Riksbank claims that, for now, the e-Krona token is not an attempt to replace the physical Swedish Krona, but rather a new blockchain-powered form of payment. Sweden is known for being open to new innovations and embracing positive changes whenever necessary. Because Sweden became the first country to issue banknotes in 1661, it will become the first one to stop using them if they successfully become a cashless society by March 2023.
The e-Krona pilot scheme has started in 2020 and has been in the works ever since. The Riksbank aims to finish phase 1 by the end of 2021. Whether e-Krona will be a stablecoin, is yet to be decided; this means that the possibility of e-Krona’s price not being pegged to that of the current Swedish Krona exists.
This project is giving birth to a new type of cryptocurrencies that are government-backed. With the release of e-Krona, Sweden would also become the first country to have a government-backed cryptocurrency as a legal tender. Additionally, Sweden is paving the way for other countries to create their own cryptocurrencies and start the mass implementation of cryptocurrencies. But, as we stated before, this project is still under development and it is not certain whether e-Krona will ever meet the open market.
Also Read: The 10 Most Important Cryptocurrencies Other Than Bitcoin
On their official website, the Riksbank unveiled their plans of continuing their work on e-Krona. They stated that they will further investigate the need for e-Krona and the effects of an e-Krona on the economy. Moreover, they will be testing the e-Krona and its efficiency. To wrap it up, they will compare this option with different technical solutions to measure its positive and negative sides.
They also published two Economic Reviews regarding the implementation of e-Krona:
e-Krona vs. Cash
According to Svergies Riksbank, E-krona will most likely be similar to cash in many aspects. Just like banknotes, E-kronor (plural for E-krona) will be uniquely identifiable and can only be issued by the Swedish Central Bank, the Riksbank. On top of that, there will be private keys for the digital wallets, making it similar to holding cash on your wallet.
That being said, it can be argued that E-krona is trying to become a digital version of cash. However, there are also differences between E-krona and cash, leaving space for the possibility that E-krona should not be considered as belonging to the same asset type as cash. This stands mainly because it is digital and needs constant technical aids and active participants who enable transactions.
e-Krona Vs. Cryptocurrencies
The issue of whether e-Krona is a cryptocurrency or not arose with the Riksbank investigation and analysis of Bitcoin. Bitcoin is said to be a new, improved form of payment, however, it has been treated as an asset or store of value by nearly everyone. Therefore, the Riksbank and many other banks have created a new term for cryptocurrencies, and that is crypto-assets.
Because whether e-Krona will have the same price as the Swedish Krona has not been decided, we cannot say what does e-Krona identify for sure. If e-Krona is a stablecoin, it may be regarded as a cryptocurrency. Nevertheless, if e-Krona is similar to Bitcoin, it may be classified as a crypto asset.
e-Krona Scams
There are many websites that claim to be the official exchanges where you can trade e-Krona. But, since the Riksbank and the Swedish government have yet to decide whether they will issue e-Krona, it is impossible to buy them. Until today, there have been numerous reports of individuals being scammed by various false companies claiming that they are selling official e-Kronor.
Therefore, websites pretending to sell e-Krona should not be trusted until the official riksbank.se publishes news regarding e-Krona. For the latest news regarding the developments done regarding the e-Krona, always check the official Swedish Central Bank’s website.
Also read: What Is The Next Big Cryptocurrency To Explode in 2021?
Takeaways
- Cryptocurrencies are not supported by most financial institutions and governments because of many reasons, decentralization being one of them.
- Today’s global financial system is flawed and blockchain technology provides long-term solutions through cryptocurrencies.
- e-Krona is a blockchain project launched by the Swedish government and the Riksbank in 2017. It aims to create a government-backed cryptocurrency.
- e-Krona may serve as an accelerator to the process of Sweden having the first cashless society.
- Whether the price of e-Krona will be directly linked to that of the Swedish Krona is yet to be decided, but it is likely that it will.
- False information about the sale of e-Kronor has been circulating the internet, however, e-Krona is yet to go on sale.
- If the project is a success, Sweden will become the first country with its own cryptocurrency. Furthermore, they will most likely create a ripple effect, with other countries being influenced and following up with Sweden’s actions.