All Financial Wisdom

Sweden Might be the First Country to Adopt a National Bitcoin Currency

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Sweden has been demonstrating throughout Economic History that, although it is a country of modest means in a global context, it is a truly innovative country in socioeconomic terms.

In Sweden there is a serious political, academic and even social debate about whether the country should start “mining” its own Bitcoins.

Sweden has been a country that has been an authentic pioneer in aspects that have ended up setting the very foundations of our socio-economics of today.

Sweden was the first country to adopt fiduciary money, that is, paper money without intrinsic value (it is a simple piece of paper), but with a face value backed by the issuing state. Needless to say, this issue also had its great risks, but the Swedes opted decisively for their Swedish crowns stamped on paper.

We have also seen more recently how Sweden is one of the pioneer countries in the adoption of a cashless society. It is true that there is currently an open debate in the country about the convenience or merit of taking this electronic step.

Today, in Sweden, only 2% of GDP is in the form of bills or coins in circulation, while in the USA , in Switzerland or in the Euro Zone, the figures are around 10%, and in Japan this percentage is double.

A new Viking Bitcoin approaching our shores is now seen on the high seas

Now, the Swedes are showing once again that they are ahead of many other countries in the conception and progress of their socioeconomy. They are seriously considering what uses, advantages, disadvantages and risks would come with the creation of a “Swedish Bitcoin.”

We must begin by saying that the Swedes were not the first to assess the adoption of a state cryptocurrency. The fact is that Venezuela was the first country that, had not only raised the issue, but has even decided to issue the famous Petro.

However, this crypto-currency is not being taken seriously, and it is not advisable to deposit in it our savings accounts. Remember that it is reliability (along with its adoption and the possibility of using it in any transaction)  that matters.

What gives greater veracity and seriousness to the proposals of the adoption of a Swedish Bitcoin, in front of the speculations of other countries, is how nervous the Swedish banks are getting, because they know they are potentially the biggest losers. It is for this reason that we have decided to bring you this analysis now.

Many, many unknowns

One can not foresee all the ultimate implications for a socioeconomy that may end up adopting a crypto-currency. But the Swedish banks are not exactly as concerned about the socio-economic consequences of entering into the crypto-society, as about the risk it can pose to their traditional business model. However, a country- wide crypto-adoption would have its advantages.

One of those advantages would be to deepen this trend inaugurated in the Nordic countries with the arrival of the society without cash. The Swedish Bitcoin would be, after all, another form of electronic money. That is why it shares with the electronic money the obvious advantages in terms of ease of use, ubiquity, speed of transactions regardless of the amount, reduction of fraud, etc. Obviously, a Swedish crypto-currency would also entail those technological and national security risks that come with crypto as well.

Other differential factors 

A state Bitcoin would return to the Central Banks the economic prominence that they now face with a decentralized Bitcoin that is totally beyond their control. A Swedish Bitcoin, however much it was a crypto-currency, however much it was also based on Blockchain, somehow would cause the Swedish Central Bank to recover all or part of the control of the currency.  Remember that Bitcoin, after all, is software, and as such it supports many possible implementations. The problem is not that the final string of ones and zeros has been written by a state or a decentralized node, but the requirements with which it is decided that this string of bits be written.

Do not doubt that one of the functional requirements of any Central Bank would be to control its issuance: this is what its power, its ability to influence, and the possibility of regulating an economy hinges on.

There are also many risks such as the possibility of being robbed cleanly. Equally unreal is to think that an economy can self-regulate itself 100% with hardly any regulators.

Is a state Bitcoin really a good idea? Yes and no

Given the unacceptable risk of a possible financial collapse, a state Bitcoin seems to be a prudent solution halfway between the more idealistic decentralized Bitcoin and the current fiduciary money. A state Bitcoin would allow one to enjoy many of the advantages of a decentralized Bitcoin (also sharing some of its risks), at the same time that it inherits some of the necessary characteristics of the current paper currency.

We have already had several depressions in modern history, and I can not deny some of the disadvantages, but the point is that the greatest risk of all is one of socioeconomic collapse.

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