Australia Sees Bipartisan Effort To Establish Virtual National Currency

On August 7, 2017, it was reported that Australian lawmakers are considering measures to tokenize the Australian dollar (AUD) in an attempt to wage competition against Ethereum, bitcoin, and other established cryptocurrencies.

Labor Senator Sam Dastyari and Liberal Senator Jane Hume have joined forces in a bipartisan effort, calling upon the Reserve Bank of Australia (RBA) to develop blockchain technology for the island nation. "We can’t compete with our Asian neighbours when it comes to producing cheap goods and services anymore," said Dastyari. "We can compete when it comes to financial services but that is going to mean big, bold decisions.” His sentiment echoes recent pivots by officials, including changes to the budget plan in July of 2017 which saw an end to the government's policy of double taxation on cryptocurrencies, and a FinTech partnership with Japan, meant to bolster innovation with a cooperative framework.

According to the report, Hume spoke to Australian Parliament citing blockchain technology as a technological revolution. “The opportunities for government, academia, and the private sector are enormous,” said Hume.

The RBA has choices on the road ahead, should it continue forward with a tokenization of the AUD. It could be accomplished by setting up a central node but this would be risky; if the node is hacked or compromised, a system collapse might occur. Furthermore, centralization lacks the intrinsic qualities of a distributed system, a factor that many value cryptocurrencies for.

Alternatively, the bank could build its own network of nodes. This costly endeavor would likely require a lot of capital effort and research and development on the bank's behalf; setting up a blockchain from scratch takes time and resources. A great deal of coding and expertise goes into testing the efficacy of networks. Existing networks are continuously in various stages of development, even as this is written.

Still, perhaps the most viable option may be to mirror the efforts of Singapore and make use of the already ubiquitous Ethereum Virtual Machine, atop which a decentralized network already exists wherein the AUD can be tokenized.

Regardless of the approach, the message is clear: Australia wants to be able to compete in a landscape of ever-changing financial technology and economics. Lawmakers have turned to blockchain platforms to make it happen.