Cointelegraph’s Guide To National Altcoins: A Viable Local Alternative?
National altcoins are becoming an increasingly robust phenomenon in countries throughout the world. Like Bitcoin but thinking local, their aim is to strengthen community economies. Want to find out more about national altcoins? Cointelegraph is here to tell you everything you need to know.
Although Bitcoin itself has only been around since 2009, the intervening years have seen an explosion of altcoins catering to almost every purpose.
While most come and go quickly and cater to a technical niche, another type of altcoin has also emerged, aiming to serve the non-technical consumer as efficiently as possible in everyday life.
These are national altcoins (NAs) or national cryptocurrencies (NCs) - cryptocurrency alternatives to fiat ones which seek to provide an alternative to cash, cards and legacy finance.
Not to be confused with bank-issued digital currency, which is also commonly referred to as national cryptocurrencies, national altcoins are independent of authorities. They have sprung up in countries across the world, from the UK to Iceland, Israel and Canada, but are mainly focused on Europe.
In this article, we will use the term ‘national altcoins’ to describe bank-independent currencies under discussion. The term ‘national cryptocurrencies’ refers to those which are issued and controlled by banks.
Why do national altcoins exist?
Given the ease and low entry barrier to Bitcoin and the often counterproductive volatility of many altcoins, you might wonder why anyone would bother introducing another market competitor at all.
There are a number of reasons why.
Firstly, they cater to local socioeconomic demand. A country (or area of a country - see later) where citizens are actively looking for a stable, controlled alternative to their problematic currency, for example, is fertile ground for NAs. In fact, this is the primary background behind the creation of the most successful examples of NAs yet seen.
In Iceland, for instance, dissatisfaction with government policies following the banking collapse, as well as rising support of previously fringe parties such as the Pirate Party of Iceland, saw the creation of an NA which has become the flag-bearer for successful implementation of the technology.
Economic uncertainty, then, often plays an essential role in a developer’s decision to create an NA. Not just uncertainty, however, but strict regulations on traditional currencies can foster demand for an alternative.
Most recently, the city of Liverpool in the UK launched its own Blockchain-based cryptocurrency dubbed the Liverpool Local Pound. Implemented by Blockchain startup Colu, its aim is to add strength to and keep wealth within the local economy.
The concept does not involve replacing the pound sterling; rather, the Liverpool Local Pound makes a statement by showing how a digital currency can be used to strengthen communities even while the majority of citizens will continue to use fiat.
“Every trial and research conducted by a central bank is valuable to us - we believe the blockchain based national currency will be our future,” Colu told Cointelegraph.
The idea of ‘making a statement’ is a further reason NAs come into being - be it a protest, a demonstration of the effectiveness of disruptive fintech, or something else.
The leading national altcoins
Now that you understand what national altcoins are and why they exist, Cointelegraph presents a selection of the developing industry’s leading examples.
Included here are both NAs in the true sense - those serving an entire country - and NAs with a more limited scope, but which can still be freely purchased and traded by anyone.
1. Auroracoin (Iceland)
The de facto leader and first mover in the NA industry has been three years in the making. Originally launched in 2014, Auroracoin was a response to civil discontent with Iceland’s government. Unpopular financial decisions and distrust of senior politicians gave rise to support the country’s Pirate Party, which following elections last year now enjoys some control at state level.
Three years ago, however, mainstream politics remained in control. Capital controls on the krona and a complete ban on Bitcoin meant that citizens