The world's "first" sovereign digital currency: unveiling the Malaysian ringgit SOV

Since March, COVID-19 has suppressed the vitality of the global society and economy, and various policies and news seem to be unable to mobilize everyone's dull and anxious mood. However, this is a major event in the blockchain and currency circles, especially its design based on blockchain technology to pursue the mechanism that the government cannot issue currency arbitrarily, which is in sharp contrast to the central banks of many developed countries who are reluctantly carrying out unimaginable monetary quantitative easing policies during this epidemic. Will this be a successful digital currency experiment? ! Let history answer it.

Relying on ALGO, the issuance of Malaysian Ringgit has taken another step forward

This is a race against time: the issuance of the world's first national digital currency, the sovereign currency (SOV) of the Republic of the Marshall Islands, a Pacific island nation, has entered the countdown. In early March, SFB Technologies, the designated organizer of the Marshall Islands sovereign currency project, announced that the project has decided to cooperate with the well-known American public chain Algorand (ALGO) to build a sovereign currency SOV that circulates with the US dollar by leveraging the Algorand protocol's advantages in speed, scalability, security, and compliance control capabilities, helping the Marshall Islands operate efficiently in the global economy.

Jim Wagner, co-founder and CTO of SFB Technologies, said: "Algorand was selected from a number of leading blockchain protocol projects after extensive market research. The company has already supported several mainstream use cases, and due to its unique features, the platform has the capabilities required to issue, manage and distribute SOV on a global scale. The partnership between the Marshall Islands, SFB and Algorand ensures that the SOV will be built on a scalable and secure platform."

"The Marshallese nation's vision to participate and integrate into an open financial system on a global scale by leveraging the technological capabilities of blockchain aligns with our belief that a truly global and decentralized society can be achieved through Algorand technology," said Silvio Michali, Algorand founder, MIT professor, and Turing Award winner. "We are proud to support the country's groundbreaking journey toward mainstream digital currency adoption."

The Marshallese government will oversee the operation of SOV, which will be the product of a combination of Algorand blockchain capabilities and SFB's identity management and compliance platform. Kenneth Keddie, spokesman for the Marshallese National Assembly, said: "I am excited about the technical partnership with Algorand. With it, a strong alliance is forming to develop the SOV project. This is another milestone in the development of the financial services industry in the Marshall Islands."

The unfamiliar Marshall Islands

Let me first introduce the Republic of the Marshall Islands. It is a "micro-island country" with beautiful scenery in the central western Pacific Ocean. It is adjacent to the equator in the south and has a beautiful natural environment. It is known as the black pearl of the South Pacific. The land area is 181 square kilometers, consisting of 29 atoll islands and 5 small islands, totaling 1,225 islands of various sizes.

The Marshall Islands has a population of 54,300, with the vast majority of the population concentrated in the capital, Majuro, and Ebeye Island in Kwajalein Atoll. The Marshall Islands is a sovereign republic in free association with the United States. In September 1991, the Marshall Islands became a member of the United Nations. However, the Marshall Islands have long been economically backward and heavily dependent on foreign aid, with more than 60% of its fiscal budget relying on overseas aid from the United States and other countries and regions. The current currency in circulation is the US dollar.

With an average altitude of only 2 meters, the Marshall Islands is at the forefront of the global fight against climate change and has always supported a global response to climate change based on international cooperation and sustainable use of resources. In the process of international cooperation on climate change, the Marshall Islands gradually realized that a similar international cooperation approach is needed for currency. The result is that the SOV, the world's first fair and sustainable sovereign currency, is being issued in full swing.

What is Malaysian Ringgit SOV?

SOV (sovereign) is a blockchain-based sovereign currency and the new legal tender of the Republic of the Marshall Islands.

On February 26, 2018, the Marshallese legislature passed a law establishing the SOV as the new legal tender of the Marshallese country. This means that, unlike Bitcoin, Libra and other cryptocurrencies, the SOV is currency, just like the US dollar or the euro.

SOV utilizes the innovative concepts and technologies of digital currency. SOV and SOV Chain are designed with Marshallese values ​​at the core. Compared with traditional legal tender, SOV has the following characteristics: (1) Sustainability. The supply of SOV is fixed by an algorithm, so it grows slowly and sustainably and will not be manipulated by the government or banks. (2) Fairness. Anyone can use SOV, and SOV is fairly distributed among all holders. (3) Security. According to the SOV compliance agreement, each SOV user must pass the registration verification and conduct compliance checks. Of course, user details are confidential. (4) Simplicity. SOV is easy for everyone to use and easy for institutions to protect and regulate.

Marshall hopes that the emergence of SOV can become a model for solving global problems: leading the world and benefiting the whole world with simple, safe, fair and sustainable solutions.

Why do we need Malaysian Ringgit SOV?

According to the SOV white paper, which is also the world's earliest sovereign digital currency white paper, the Marshall Islands issued SOV because it believed that cross-border finance was inefficient, unnecessarily complex, and costly. The current patchwork of international supervision, although intensive, is opaque and easily circumvented. Here, there is an interesting background: in December 2017, the European Union announced that the Marshall Islands was included in the tax haven blacklist. Is the Marshall Islands issuing digital currency to avoid the EU's blockade? ! Or is it to turn over a new leaf and start all over again? !

Second, Marshall believes that governments and banks can create new currencies at will, and bad actors can use traditional government currencies and cryptocurrencies to easily launder money across borders and finance terrorism. Worse, billions of people cannot even access basic financial services due to cost or lack of channels. Therefore, Marshall believes that issuing SOV will help implement a sustainable, safe and fair monetary policy.

Although the SOV white paper is concise, its goal is not small. It may not be fully recognized and used as a reference for subsequent sovereign digital currencies in the future. However, as a relatively thorough blockchain digital currency that strives to be achieved in one step, if SOV can limit the drawbacks of excessive currency issuance, it will be a major change in the history of currency.

How does the Malaysian Ringgit SOV work?

SOV is a sovereign digital currency that is still issued and supervised by the government, and every transaction is stored on the SOV blockchain, ensuring transparency, security and reliability.

When the SOV chain is first issued, 24 million SOV will be created. Every year, the SOV supply will only increase by 4%. This rate was chosen to promote long-term sustainability and prevent runaway inflation. The supply is algorithmically determined by the SOV blockchain to ensure that it cannot be manipulated.

The Marshall Islands hopes that interested international people can benefit from the world's first fair, secure and sustainable sovereign currency. Therefore, 40% of the 24 million SOV initially issued will be sold to people around the world. In addition, people who hold SOV and register on the SOV verification network will be able to receive SOV anywhere in the world and will be eligible to receive part of the 4% sustainable annual growth of SOV.

In order to ensure the stable issuance of SOV, SOV adopts a gradual sale method, that is, the time-release monetary issuance method (TRMI). The pre-registration of TRMI has begun and it is reported that it will start soon and will last for 18 months.

The author has pre-registered and is waiting to become the holder of the world's first sovereign digital currency. According to the white paper, to ensure fairness, this new supply will be automatically sent to all eligible users.

SOV Foundation

The SOV Foundation is a Marshallese non-profit organization whose mission is to oversee the distribution and development of SOV. One of the Foundation's initial responsibilities is to oversee the design, development and implementation of the SOV chain and the initial distribution of SOV. Once SOV is launched, the Foundation will be responsible for building a service ecosystem around SOV and ensuring the long-term stability of SOV.

Foundation Governance

The SOV Foundation will initially be managed by seven directors: two appointed by the Marshallese government and two appointed by SFB; these four directors will then jointly appoint three additional directors, who will come from the fields of international finance, technology and politics.

In the long run, the SOV Foundation will transition to a more decentralized governance method: elections based on the SOV chain.

Trust Fund

The initial SOV supply, along with TRMI proceeds, is mostly earmarked for distribution among four Marshallese government trust funds. In addition, 10% of the initial SOV issuance will be distributed to Marshallese citizens.