Having seen unprecedented craze among people across the world centering cryptocurrencies, many governments are now planning to launch their own national digital currencies.
But question is can those be called cryptocurrencies? Will those be same by nature with that of cryptocurrencies including Bitcoin? Certainly not.
Bitcoin developer and applied cryptography consultant Peter Todd clearly says that the government backed- digital currencies are not decentralized by nature unlike public blockchains and cryptocurrencies like bitcoin.
At the Genesis London conference held in the UK, he said:
“Basically all currencies are digital currencies — the ultimate ledger of truth in currency systems is nearly always digital. Maybe some terrible backwards country like North Korea might be keeping it all on paper but if you go to most places in the world, it’s going to be digital records. So most places have digital currencies already. Equally, most places you can transfer money digitally. Cryptocurrency is not about being able to move money digitally, it’s about auditing. In the case of decentralised cryptocurrency, it’s about the ability to move money and audit it without permission. But when you’re talking about a government currency, obviously there’s permission, a central authority and control — end of story.”
He further says public blockchains or cryptocurrencies can be easily audited as transaction data and financial information are kept in a public ledger, which is accessible to anyone involved with the network.
So, the national digital currencies, branded as cryptocurrencies and decentralized networks--structurally and fundamentally-- are not different with existing systems based on fiat currency.
In last several months, a number of countries including Iran, Venezuela, and China have either announced their plans to launch national cryptocurrencies or already conducted initial coin offerings (ICOs) to introduce a state-backed digital currency.