Australia’s Labor senator Sam Dastyari and Liberal senator Jane Hume have called on the Australian Reserve Bank to blockchenize their dollars so as to compete with decentralized digital currencies like bitcoin and ethereum.
“We can’t compete with our Asian neighbours when it comes to producing cheap goods and services anymore. We can compete when it comes to financial services but that is going to mean big, bold decisions,” senator Dastyari said before adding:
“The question for Australia is are we going to follow or are we going to lead. We need to find a bipartisan way of doing this.”
The rich country has been overshadowed in this space after following IRS’s approach of double taxation on digital currencies, which some consider as an outright theft.
They then somewhat changed their tune, seemingly following the much lauded approach of London’s FCA in creating an Australian Fintech sandbox with suggestions their parliament may repeal double taxation.
But after the great spring and what might turn out to be an even great summer, which has seen digital currencies rise to a market cap of now almost $120 billion, some lawmakers are asking for a bolder approach in digitizing the Australian Dollar itself.
Senator Hume told the Australian parliament blockchain’s invention is the next frontier in the technological revolution. “The opportunities for government, academia, and the private sector are enormous,” she said to lawmakers.
Australia risks being left behind if they do not pursue development of its own blockchain based official currency, said senator Dastyari, but how can the central bank do so?
They could just run one central node with everyone connecting to it through light wallets, but that node would be a central point of failure which may cause an entire systemic collapse if its hacked.
There would therefore need to be at least a hundred with a thousand or more preferable, but then the central bank would lose control over the currency with an increase or decrease in monetary supply likely to take considerable time, if achievable at all.
A third option being looked at by Singapore’s Monetary Authority is to tokenize the dollars. That is, ethereum’s public blockchain with its 30,000 nodes and robust code can act as the base foundation, with national currencies issued as tokens on top of it.
That would have plenty of advantages as far as the money aspect alone is concerned. Payments would be settlement, getting rid of clearing houses. And a payment to your neighbor would be no different than a payment across the globe.
Moreover, they could do many cool things by algorithmically analyzing prices, inflation, and the rest, allowing them to increase or decrease supply according to the much greater data availability. So keeping a stable value for the Australia dollar.
But a tokenized dollar would lose some interesting qualities of public blockchain currencies like ethereum in particular. That is, its codeable money aspect might be limited, if at all existent, unless they are able to furnish it with smart contracts too, in which case there would be a boom in innovation potentially at the scale of the industrial revolution as industry and finance races to incorporate the new capabilities.
That potential can give strategic advances for both companies and nations as the first to the game might be able to race ahead, so increasing their talent, know-how, and being better placed to allocate their resources.
Which is why we have been seeing some jurisdictional competition with London rising after New York’s Bitlicense debacle in 2014 and now South Korea in particular, but also Japan to some extent, becoming a significant player after China’s heavy handed intervention earlier this year.
Russia has also shown greater interest in recent months while America’s law makers keep being distracted with the government seemingly in stand-still, allowing the continuation of what looks like the previous administration’s policy towards this space.
Because their decision towards ICOs and the bitcoin ETF has shown they’ve learned nothing, but there are signs of change as the Republicans start settling in, with many waiting for a u-turn because the blockchain constituency significantly backed Trump and his free market agenda – although of course like any community they are much diversified in political leanings.