The word of blockchain continues to influence global economies. Thanks to bitcoin’s intense influence, numerous economies in the world have started to understand the power of cryptocurrencies and the benefits they carry to the economy. In a major development in the world of cryptocurrency, the government of Dubai has adopted the encrypted blockchain technology and has become the first country to launch its own cryptocurrency — ‘emCash’.
The city’s economy department partnered with one of its subsidiaries Emcredit Limited and U.K.-based Object Tech Group, Ltd. to create emCash. This new “encrypted digital currency” initiative is launched under the Dubai Economy Accelerators and is a product of the partnerships that Dubai has cultivated through their Accelerators Initiative.
To facilitate emCash transactions, Emcredit will also launch its own digital wallet emPay which will also ease currency conversion, with customers being able to choose between payment options. Muna Al Qassab, CEO, Emcredit Limited said, “Customers can choose between two payment options on the emPay platform — the existing dirham payment or emCash. While the dirham payment goes through normal settlement procedures, intermediaries and costs, emCash payments are settled directly between the user and merchant,” explained Al Qassab.
The city will also have a shared platform, called Blockchain as a Service to help Dubai government agencies use blockchain in various projects.
The Problems with Govt-backed Cryptocurrencies
A digital currency has varied advantages, such as fast processing, less complexity, and cost to name a few. Cryptocurrencies are even better.
But when they’re backed by state and national governments, we do seem to be running into some problems. Blockchain’s potential as a decentralized network and secure platform for transactions is based on exactly that — decentralization — with no central authority controlling the currency. This is the primary, and the biggest reason Bitcoin has succeeded in the first place!
With governments involved, it becomes a bit of a paradox. It naturally follows that if you had to watch a cryptocurrency — you’d rather have your eyes on bitcoins, or the many other altcoins available. A government-backed cryptocurrency is primarily a validation of the potential of bitcoin’s blockchain technology that is changing the world every day. The launch of the emCash is the first step towards creating the new economic system.
The next big step that Dubai is working on is becoming the world’s first economy that’s built on the blockchain, with it its own cryptocurrency. This is where the city’s efforts differ, and could potentially influence economy throughout the UAE.
The Wall Street Journal reports that another initiative has already been started is the development of a citywide blockchain payment system, where the 38 cooperating partner government entities, financial institutions, and other city departments connect over one blockchain payment platform. Another example, for a project that’s already in the works, is to transfer all government documents onto a blockchain by 2020.
With such futuristic projects, the true potential of blockchain and cryptocurrencies can be used to create a much more stable and lasting economy which has a lesser risk of inflation and is free from any kind of fraud. But it would be very surprising to see government-backed cryptocurrencies succeed, since they ultimately happen to be digital national currencies, practically speaking. In such a context, the crypto economy is likely to remain loyal to the likes of bitcoin!