Bridging The Gap Between Economies

A need for substructure and financial security may be the reason more and more regions on the economic fringes are looking to virtual currency as a means of inclusion.

Increasing pressures mount from a world in turmoil. These regions are no stranger to scarce resources, war, economic uncertainty, and famine; all issues which may be solved with better organization and access to economic autonomy. In the absence of such autonomy and infrastructure, it has become increasingly necessary to find a way redistribute financial power. Unfortunately, a myriad of forces stands to co-opt these movements, be they corrupt non-governmental organizations that devote only a sliver of donations to the cause they purport to stand for, or intermediaries that take a cut of currency sent across the wires. If these institutions benefit from the fragmentized ecosystem they co-exist in, it is natural that they will stand in opposition to progress that could supplant them from power.

Still, a murmur for relief from the centralized banks that control currencies can be heard in opposition to those costly forces, echoing from many corners of the globe. It comes in the form of factions calling for increased self-sufficiency and effective regulation to spur economic wellbeing. It is a cry for the legalization of virtual currencies.

Already, in the border areas of the Leningrad region surrounding St. Petersburg, leaders such as deputy of the region's Legislative Assembly Vladimir Petrov, head of Slantsy district Marina Chistova, and Mayor Viktor Karpenko of Ivangorod are calling for the Bank of Russia to legalize virtual currencies, allowing for them to be circulated and exchanged. reported that Petrov recently spoke of the impact legalization may have, stating, "The measures will increase the attractiveness of Kingiseppsky and Slantsevsky districts to neighboring Estonia, and Vyborgsky district which is located near the border with Finland."

The Russian government hasn’t been passive on the sidelines of this topic. Commissions that have explored the promise of blockchain technology continue to point to the significant advantages it may provide, once obstacles of security are tackled. Less skeptical Japanese officials have thrown full support behind accepting virtual currencies as a mainstay, going so far as to do away with consumption taxes on them. 

In England, two currencies that are pinned to the value of the pound have been rising in prevalence: the East London Local Pound and the Liverpool Local Pound. Tel Aviv-based blockchain wallet provider Colu developed both coins, which are traded daily.

Singapore has shown progress with a trial run of a nationally backed virtual currency, while Senegal has already taken the necessary steps to mint and circulate one of its own. The worth ascribed to these coins does not come solely from the exchange rates of the national currencies to which they may be tethered. Another factor of value is the underlying technology, which provides such benefits as the ability to easily track where the currency is spent on a distributed ledger, as well as the capability to encode dimensions into executable distributed code contracts (e.g., regional taxes). These capabilities lend themselves better to anti-money-laundering practices than traditional fiat currencies, helping to curb corruption and assist the collection of tax revenue.

The rise of a legalized, perhaps even nationalized, virtual currency represents a bypass of the traditional power held by banking industries. By using virtual currency, individuals and governments have more systematic options as trust is seized from centralized authorities and attributed to code. Code has no agenda, and can be easily edited or corrected in the event of a harmful error; such is not the case with middlemen.

When nations, organizations, and coalitions are capable of circumventing banks by perceiving value in a blockchain-based currency, exchanges will bridge the gap between these bodies, creating a new global marketplace. As the exchanges become more established, they will continue to exist beyond the reach of banking institutions. As a means of distribution, once scaled properly, blockchain technology will present a superior manner of transferring value across the globe without middlemen taking a considerable share.