Imperatives for Government to Adopt Distributed Ledger Technology (DLT) Systems and Cryptocurrency

Another country joining the cryptocurrency bandwagon is the Government of Dominica. Following the passage of their Virtual Asset Business legislation in May 2022, the Government of Dominica has entered into an agreement with TRON.

TRON Protocol is one of the leading blockchain ecosystems, known for its cost-efficient crypto settlement mechanism.

In a report published in tronweekly.com, TRON obtained the Government of Dominica’s endorsement to issue Dominica Coin (“DMC”), a blockchain-based fan token, to help promote its natural heritage and tourism attractions.

Prime Minister Roosevelt Skerrit explained about adopting cryptocurrency and blockchain is one of the strategies for economic development stating that “Dominica is committed to building a more inclusive and diversified economy with the help of new technologies. The open and cost-effective nature of the TRON blockchain infrastructure will play a vital role in better integrating Small Island Developing States like Dominica into the global economy in the future.”

Ahead of the Government of Dominica, El Salvador has adopted Bitcoin as legal tender last year.  On April 2022, the Central African Republic have legislated Bitcoin also as their official currency.

With this trend of blockchain and cryptocurrency adoption by national governments, the question that comes to mind is, will other countries follow this trend?  Judging from the growth of the market capitalization and the growing interest of people on this particular asset class, it is most likely that more and more countries will have to catch up soon.

But how soon, will be determined on their level of awareness and realization that blockchain, distributed ledger technology (DLT) and cryptocurrency collectively are technological phenomena that government throughout the world should not ignore. This is because just like the internet, this is a technology that eventually will transform the way things are done in the economic, financial, physical and virtual realm in the years to come.

For this reason, the question as to what country most likely will follow on adopting this nascent disruptive technology is no longer relevant.  What is needed at this point in time is for government executives, legislators and bureacrats to ask themselves this question – How ready are governments in terms of hard and soft infrastructure requirements, as well as in having the needed policy framework necessary to harness full benefits of blockchain, DLT and cryptocurrency?  

Answering this question would be a great challenge more particularly for government technocrats. Without comprehensive understanding and appreciation of the concept of cryptocurrency, and the complex processes of DLT considering existing and potential use cases, most likely decisions will be affected considering financial interests, pre-conceived notions and biases.

Countries who understand the benefits of blockchain technology, the pioneering DLT that made possible the creation of Bitcoin being the first cryptocurrency, adopted the technology much early, even without embracing the digital asset.  Most notable of this is China having the most number of patent applications in the world, but impose a ban on bitcoin, initial coin offerings and exchange transactions in the country. It can be remembered that no less than Chinese president Xi Jinping seized the opportunity quite ahead saying “We must take the blockchain as an important breakthrough for independent innovation of core technologies,” in a speech to the members of the Political Bureau of the Central Committee sometime in 2019.

What is obvious is that blockchain and other DLT systems has enormous potential which governments of various countries just can not totally ignore.  That is why blockchain and DLT related patent applications is continously growing.

What is obvious is that cryptocurrency as payment system is just one the use cases of DLT.  Obviously the list is endless, considering a gamut of use cases, and potential application possibilities. 

Consensys – consensys.net – explained in their website that “blockchain technology’s core characteristics include decentralization, transparency, immutability, and automation. These elements can be applied to various industries, creating a multitude of use cases. Then listing most pertinent blockchain use cases for enterprises, institutions, and governments. These includes Capital Markets, Central Bank Digital Currencies (CBDC), Decentralized Finance (DeFi), Digital Identity, Energy and Sustainability, Finance, Global Trade and Commerce, Government and Public Sector, Health Care and Life Sciences, Insurance, Law, Media and Entertainment, Real Estate. Retail Fashion and Luxury, Sports and Esports, and Supply Chain Management.

Considering these limitless potential of DLT, and the use of cryptocurrency that offers access to financial services especially for the un-banked marginalized sectors, that also facilitates cost-efficient cross border payments, along with various economic impact including employment generation and value creation, there really is a need for national government to formally institute appropriate policy framework for its development and accelerated mass adoption.

We are now in a fast changing global environment where the physical and virtual world is now  on-going transformation, eventual pseudo-integration and convergence. The continuing advancement in computer technology, mobile communication and the internet make all these things possible.

A condition as Kian Bakhtiari described as hyperreality, a state where the physical and virtual worlds converge.  With animation, artificial intelligence (AI), internet of things (IOT), metaverse and Web3 which are previous buzzwords that are now coming to reality.

The advent of this technological trend sets the imperatives to make vital changes on the way things are to be done.