Cambodia, a country that uses multiple currencies, may hold the key to mass adoption of Bitcoin.
When I first got to Cambodia, the use of the dollar took me aback. The reasons were multi fold. One is that the prices are incredibly low. A dollar can buy you nearly 6-7 pastries at a local bakery. Secondly there are no coins, this means that whilst you pay in the dollar, you get your change back in Cambodian Riels. It seems to be a common knowledge that 1 dollar is nearabouts 4000 Riels. While at first getting your change back and doing the math maybe perplexing, you can get used to it. In most non-touristy shops the prices are marked in Cambodian Riels. Divide by 4000 and you can pay in dollars or you can simply shell out the Riel. Of course at the ATM, you can get either Riels or dollars but most ATMs simply spew out dollars. A big problem though remains getting change for bigger dollar bills. If you carry around 100s that you have freshly withdrawn from an ATM, you will struggle a lot.
How they have blown up the Central Bank
Cambodia maybe the only country in the world with the dubious distinction of the blowing up of the national bank. I am sure that many readers would love the idea that national banks just disappear. Well it has actually occurred there. The Banque Nationale du Cambodge or The National Bank of Cambodia was established in 1954 and started printing the Riel to end the monetary alliance between Vietnam and Laos. However, the bank met a grisly end in 1975, when it was blown up with explosives by the infamous Khmer Rouge. Their symbolic destruction of the national bank also put an end to the use of the Riel as a currency. When the Khmer Rouge were driven out by Vietnam, the Riel was reintroduced and a central bank reformulated from scratch. It was only after the UN came in and ran the country for a while in the 1990s that the reintroduced Riel lost its market value as oodles of dollars made their way into Cambodia.
Many currencies, one country
There is perhaps a case to be made for multiple currencies. It is certainly convenient as you do not have to constantly exchange money. The Indian rupee for example is widely used in Nepal and Bhutan alongside the local currencies. People also get an element of choice.
Bitcoin of course is the ideal candidate. It is easily transferable, fully global and has proven to be a sound digital currency since it came into being. We can learn a lot from the experience of countries that have multiple currencies. Cash registers and ATMs can be adapted to giving receipts in Bitcoin and local currency. You could possibly even eliminate the hassle of change by using Bitcoin and like in Cambodia, there are even possibilities of employment generation as many mom and pop small exchanges actively give out one currency for another.
Simon Dixon, CEO of Bnk To The Future echoes the possibility of a time when many people will hold dual currencies. He says:
“As governments continue their war on cash most fiat currencies will be going completely digital.”
He adds: “While digital is convenient, it will come with several features in the future that may or may not encourage their usage such as automated tax collection and the ability to switch off your funds should they choose. This is accelerated if central banks start issuing digital fiat. Bitcoin is a bearer asset like cash which is completely owned by the user with no counterparty risk. As physical cash becomes less relevant due to government's war on cash, I believe individuals will store some of their funds in digital fiat and some in Bitcoin as it grows more popular. Digital fiat will be fully exchangeable for Bitcoin through exchanges and I believe many individuals will hold dual currencies. Most goods are likely to be purchased with their countries digital fiat and a portion of their wealth will be stored in Bitcoin which is completely owned by the individual.”
Let people choose
There is one more possibility according to David Duccini of Strength in Numbers Foundation. He observes that many Caribbean countries deal with both their local currency and the dollar, “You could create a paper currency based on a public Bitcoin address that could be instantly verified as having the asset value, but would also be simultaneously accepted at a bank branch for conversion into fiat on demand, as long as the local branch could present the certificate for redemption and gain access to the private key.”
Maybe the best way to bring Bitcoin to the masses is to have it alongside a fiat currency and just let the people choose. A task maybe easier accomplished in a developing country like Cambodia where people are already used to multiple currencies than in the developed world.