Litecoin founder Charlie Lee says Taiwan should establish an official digital coin directly tied to its currency. A lawmaker says it would save overseas investors money and hassle on making currency conversions.
But their ideas are not the only ones. A proposal in Taiwan for an official coin faces opposition from people who believe crypto should stay decentralized.
Linking cryptocurrency to official units such as the new Taiwan dollar can make them more easily convertible, ideal for trade rather than just speculation, Lee told Business Next. Sweden, Israel and Russia, and others, have backed national digital currencies.
Tether’s USDT, a cryptocurrency coin linked one-to-one to the U.S. dollar, he notes, can do this function.
Skeptics of a government-backed coin believe it would violate the decentralization principle of digital currencies.
Taiwan opposition party legislator Jason Hsu also advocates issuing a “Taiwan Dollar Digital Coin” primarily for financing cross-border trade.
Taiwan’s manufacturing industry spends a lot on U.S. dollar-to-Taiwan dollar conversions, which the digital coin could do, Hsu says in the same Business Next article. The digital coin could do this transaction, he said, and blockchain could potentially replace the letter of credit.
Taiwanese investors with overseas income should try for a way to avoid exchange rate volatility, he said.
A role for blockchain
But the establishment of an official currency requires agreement on technical matters such as building a blockchain or distributing the coin on an existing blockchain.
The public blockchain should offer enough security if provided with enough people to mine the currency, said Lee, whose started the world’s sixth biggest crypto unit. He says it’s not cost-effective to pay for mining a Taiwan currency due to the risks.
A government-supported blockchain in Taiwan could expand the sector as a whole and let crypto traders capitalize upon advantages over neighboring China, Lee said.
Lee worked before as an engineer for the San Francisco-based digital currency trading platform Coinbase. He remembers how Coinbase had trouble opening a local currency bank account in Taiwan and rejections by local banks.
Unclear regulations coupled with the “conservative attitude” by local banks made it difficult for Coinbase to establish operations, Lee said.
The lawmaker says a developed blockchain sector can bring tourists to industry summits.
He cites the Swiss city of Zug as an example. More than 200 blockchain organizations are registered in the area, bringing industry events that translate to tourism revenue.
Taiwan has potential, Jason Hsu said, as at least three blockchain companies contact him every week with an interest in expanding in Taiwan. He agreed that unclear regulations have prevented them from coming to Taiwan, leading some of those companies to other markets.