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 were left with precious few realistic alternative means by which to store wealth.
Enter Auroracoin, a cryptographically secure NA aiming to provide power and peace of mind to users and shore up the local economy.
2. Liverpool Local Pound (UK)
This latest edition to the national altcoin scene comes courtesy of Israeli Blockchain startup Colu. Having originally focused on developing and issuing of colored coins, Colu last year changed its focus to concentrate on national altcoins full time - perhaps an indication of where the industry is heading.
Liverpool is its first project, with another release in East London planned in Spring 2017. Unlike the rest of the UK’s local currencies such as the Bristol Pound, which are essentially fiat currencies, the LLP is Blockchain-backed.
Users download the Colu app and a wallet, purchase LLP via credit card and can then spend funds at participating merchants in the Liverpool area. The exchange rate, of course, is pegged to GBP at 1:1.
In turn, merchants pay a £25 monthly membership fee to cover implementation costs. The idea, Colu says, is to keep wealth circulating in the local area in a country where it has recently become cheaper to order goods from far and wide online.
The project, although only in operation since around the start of 2017, has already attracted more than 3000 users, all of whom received an incentive worth £5 for using the altcoin.
“This technology will lead us to a new type of banking that will promote financial inclusion and provide better services that cater local banking needs - in order for that to happen the complexity of this technology should be transparent to end-users,” Colu continued about the currency.
3. Scotcoin (UK, Scotland)
Calling Scotcoin a competitor to England’s Liverpool Local Pound may ruffle a few feathers in 2017. Described by developers as “created by Scots for the people of Scotland to use in any manner they wish,” this national altcoin for an as yet non-independent nation has gathered considerable momentum since its launch in 2016.
In much the same way as the LLP, Scotcoin aims to be a completely versatile means of transacting for any form of goods or services. “Scotcoin is digital cash and gives the people of Scotland an effective alternative to the pound Sterling,” the coin’s website states.
Unlike any other UK national altcoins, Scotcoin is interestingly not pegged to GBP 1:1. Instead, 1000 SCOT costs currently just over 1 GBP. The coins use Counterparty to record transaction details. Currently, Bittrex and ANAEDV are the two listed exchanges for trading.
4. Pesobit (Philippines)
Just as Scotcoin is empowering Scotland, so Pesobit is designed to enable Filipino citizens to cut costs and increase control over remittances, marketplace purchases and other aspects of e-commerce.
Of these, the former is especially pertinent to the Philippines, the country having been a hotspot for remittance activity since the end of the 1970s.
“If we need strong demand from the general public, we need to make crypto as simple as possible and that's why we're using a simple POW/POS coin,” developers wrote introducing the altcoin on the Bitcointalk forum in August 2016.
“Pesobit will target Remittance, Freelancing and eCommerce while at the same time retain the normal practices of altcoins via trading and staking that the International community can partake of.”
Pesobit’s successful ICO underscores the interest national altcoins can generate if marketed correctly. Despite somewhat lackluster performance after a spurt of interest caused by the ICO, trading activity continues.
National altcoins and the future
As with any nascent economy, national altcoins worldwide have had a rough initial few years. Lists of popular coins as recently as 2014 are now basically defunct resources, as many coins popular at the time have since died out.
The latest wave of national altcoins are coming into being in an entirely different Blockchain economy. Non-monetary implementations of Blockchain, while not pertaining to currency per se, are introducing a much wider section of society to disruptive, decentralized technology. National altcoins, marketed as a consumer service first and foremost, stand to benefit from this popularity.
The past few years have also seen growing discontent with government fiscal policy in many countries, including Iceland, the UK, Eurozone states and the Philippines - all of which have a growing national altcoin scene. This is another factor influencing public interest in an alternative currency over which they may exert more control - if educated properly about the potential of this currency.
“It's safe to say that by looking on the advancements in this space in a very short time frame we need to expect more and more countries starting to move from passive interest to a real deployment which is amazing news for the blockchain industry,” Colu added.
Some may say that a local focus and empowerment of a localized group is conservative and in contrast to an all-inclusive global perspective. However, from a technological point of view, Blockchain-based currency is anything but inward looking - anyone can use it, with the right knowledge, and create a secure, private and borderless means of additional financial freedom.