Marshal Island’s digital currency to be hosted by Algorand blockchain

Recent reports reveal that the Algorand blockchain will be used to build Marshallese Sovereign (SOV), the digital currency of Marshal Island. Algorand announced the development yesterday when it said that the SOV organizers have chosen its blockchain for security, scalability, and speed. Chief technology officer and co-founder of SBF technologies, Jim Wagner, revealed that the Algorand platform has the capabilities and requirements needed to offer SOV digital currency worldwide. According to him, the blockchain firm has the “functionality required to issue, manage and distribute the SOV on a global level.”

Plan initially approved in February 2018

The plan to develop a digital currency by the Marshal Islands was announced in February 2018, when a new law was passed to make it a legal tender. With the launch of the new digital currency, Marshal Islands hopes that it will reduce undue pressure on the US dollar, as the Islands nation’s official currency. However, the law had some setbacks from IFM, which delayed its launch until this period. IFM released a 58-page report, giving reasons why the adoption of the digital asset as the new legal tender was not a good idea. As at the time, IMF said if Marshal Island issues another legal tender that uses cryptocurrency, it would increase financial integrity and macroeconomics risk.

IMF warns of negative consequences of using digital currency

The IMF asked Marshal Island to look into the situation properly before taking any decision that would affect its economy negatively. It said the nation should seriously consider launching a digital currency because the potential gains from revenues are quite on a smaller scale compared to potential costs from governance, compliance, and reputational risks. But with the current plan to launch its digital currency, it seems the Island nation is going ahead with their project, despite the advice of IMF against it.

20 million SOVs will be issued initially

The initial plan is to put 20 million SOVs in circulation, but 40% will be sold to people all over the world, based on the reports from SOV Development Foundation. Afterward, the supply of the digital currency will increase by 4% each year, according to the report. The SOV launch team revealed that this rate is fixed by the SOV blockchain algorithmically. He also stated that the SOV team chose the rate to encourage long-term growth and sustainability. The Marshal Island government plans to introduce the SOV through a token pre-sale, while future rights to the digital currency will be issued in a series of auctions that will run for18 months.