Ideas populated by Kim Dotcom (Kim Schmitz) very often resemble pranks; on April 1st the doubts double. On the Internet Party the multifaceted talent voiced the necessity to create a local state-backed up cryptographic currency that will co-exist with the present fiat NZ dollars.
First signals warning about the intention have emerged some days earlier, as the proposal has been already a rumor since March 26th. The “encrypted digital currency for international transactions” was one in the series of announcements together with the intention to pass a second fiber cable in the Pacific Ocean.
According to the current scenario the new alternative coin would be backed up by the government and become a subject of taxation.
Vikram Kumar, the chief executive of Internet Party, confirmed the project. He sees it as an additional instrument for the monetary policy. The new coin will be less affected by unforeseen events and have integrated deflation mechanisms.
David Tripe, banking expert from Massey University, criticizes the idea. He compares the local fiat currency with online units, asking:
“Why would we need two digital currencies when we have already got one? Why we would want another to compete with it?”
His point of view is very simple and logical:
“What tends to happen in that sort of situation is the currencies get a little misaligned with each other and the one that is less reliable drives out the one that is more reliable. It is something called Gresham's Law that was described in the reign of Elizabeth I.”
However, Mr. Kumar and Mr. Dotcom see numerous benefits for the society apart from lower transaction fees. It is a pity they have not named them!