The Marshall Sovereign (SOV), which could become the first state-supported digital currency to enter circulation, will be built using the Algorand Protocol.
SFB Technologies, the technology provider responsible for delivering the SOV initiative, announced Monday that it has chosen the Algorand protocol as the blockchain base for the next digital currency in the Marshall Islands.
SFB co-founder and CTO Jim Wagner said in a statement that Algorand was selected after “extensive market research among the main protocol options”. Algorand was sufficiently secure and scalable for the SOV to be properly issued and managed, he added.
“One of the strengths of the Algorand protocol is the speed at which we operate, with transactions not only fast but also with absolute finality”, explained the chief operating officer of Algorand Sean Ford to CoinDesk, adding that the main chain was easy to use and could evolve dynamically to manage fluctuating volumes.
“We know that our technology has the capacity to support this effort,” he added.
Imagined by Silvio Micali, professor at MIT and winner of the Turing Prize, Algorand is conceived as an evolving network of proof of participation without potential governance problems, such as pitchforks. Having raised more than $ 60 million during a public token sale last summer, the protocol is already used by an Icelandic e-money startup to develop fiat currencies on the blockchain.
In accordance with its agreement to build the Marshall SOV, Algorand will provide the basic technology for the creation, issue and ongoing management of digital currency. The company will also provide technical support once the currency is launched, ensuring that it constantly meets the country’s requirements.
The SOV will not be built on the public blockchain of Algorand, but on an authorized version, known as a “co-chain”, which will give the government and the central bank of the Marshall Islands greater surveillance of the network. Digital currency will be pegged to the US dollar – the country official – and will algorithmically fix its inflation at 4%.
The Marshall Islands first declared its intention to launch a digital currency in early 2018 to work alongside the U.S. dollar. In a guest article for CoinDesk, the Marshallese Minister for the President and the Environment said that the nation was working with international regulators to ensure that the SOV meets all compliance requirements.
Algorand has been working with the nation on its SOV initiative for several months. The launch is expected to take place later in 2020, and with the Chinese and Cambodian governments also planning to issue their own digital currencies, the race for the first is already underway.
“It all depends on the pump,” said Ford. “We work very actively with [the Marshall Islands] like the first one out of the door. “
Ford added that the SOV could be made compatible with the digital currencies of other sovereign countries, as part of a global ecosystem, in the future. He said: “We know that central bank digital currency initiatives are just growing, many different countries are collaborating and are now thinking about how they can take advantage of blockchain in this space.”
Ford has not confirmed whether Algorand has partnered or is considering partnering with other countries to help them develop their own sovereign digital currencies.
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