Thats interesting… Yeah this is funny… I would never have imagine this back in 2009 lol… How far all of this has gotten… What was once just a small tiny ponzi scheme (Bitcoin) that has now grown into the biggest ever seen in history and what ripple effects it has had on the this world… Sometimes I have to pinch myself just to re-question myself if all of this is really real.
Regarding their coin.
If you can use it as legal-tender within the country and pay your taxes in it, not forced but with a choice of this coin or the dollar. Then there will be an intrinsic value of the coin, if it becomes cheaper to pay taxes in the coin versus the dollar, people in that country would buy up the coin to where the cost/benefit meets. So this creates an intrinsic value by arbitrage.
Something bitcoin will never have, that is, intrinsic value. Bitcoins intrinsic value is 0, now and forever, and you dont have to believe me, the market is stronger than bitcoin, and will price it at 0 eventually. This is the largest ponzi-scheme Ive ever seen, once we reach peak bitcoin, it could take a long time to die out.
Now if the country completely replace the dollar with a Crypto, that would mean the intrinsic value of that coin would be more or less the size of that economy - now due that economy probably being shit, without having done any research on it. No specific or unique companies within Country that would create demand for the currency to buy their products. So it is probably going to be your very typical and small economy which means it is only going to have value by arbitrage on the exchange markets - so there would be a floor. Value by arbitrage will work like this. If I can buy a product in this country that is cheaper than in another country I can buy the product here and sell it elsewhere.
Now I can see they have a BNP of 183 Million USD… At best I think the intrinsic value with FULL ADOPTION of the country, replacing the dollar as their national currency would be 40.000.000-400.000.000 USD
This is in comparison to average m1-m3 of GDP/Money supply in several countries, with a non-fractional banking system, the value will be somewhere in between - the market will find the true value.
Now if they make a Crypto, and if they fully adopted it, what value would it have to the overall crypto market. Well the overall crypto-market would use it as a intermediary, like Tether, this would just be a actual intermediary, and a trusted one - and here in lies the problem. If the fair value is 400M USD, and all this extra demand made it 800M USD,
If they have the rights to print more of this coin, they can benefit themselves from this by printing, stealing value from this overvaluation. Taking advantage of that… For their government or their people… Thats bad, but they would have an incentive to do this, and if they keep it to a minimal they will get away with it - everyone would be happy, because they would still be the best in town… for now…
People think tether works, but it doesn’t, because its a scam… and yes it will work… Until it doesn’t… and cause a lot of pain… and the crypto market is so desperate for a intermediary value stable coin that we are willing to risk to use Tether. Even the people who know it is a scam… Will use it as they assume they wont be in it when it goes to 0… Thats how desperate the crypto market is.
Now if its a fixed supply, they cant take advantage of it, which is good, and this overvaluation wont hurt them directly, but will hurt them indirectly through volatility. The market can probably handle a double up, but if it becomes 3, 4, 10, 20x over the intrinsic value now you have volatility and that means they would dump using that system since their internal economy cant function with that.
So again, they are simply to small to really bring in liquidity as a stable coin, the other issue is the anonymity, if it is not anonymous it wont be traded on exchanges and it cant be used as a intermediary coin, the market wont care about it. The real deal-breaker here is when we get a National, Private, Fixed supply, Crypto-currency backed by Assets, preferable Gold… Since this has always been the preferred money of choice of the free market, it still is to this day.
We can trust commodities because they are the same everywhere and no one controls them, they are, what they are. I believe the Ideal Crypto-currency for the next 50-300 Years (where we are not interplanetary society) would be a Crypto backed by gold. The only problem to solve is who manages the Gold… is a foundation and trust in Switzerland safe enough? is a government promise safe enough? Do we need put the gold in a vault and send it into orbit around earth? legally owned, audited, and its integrity validated, but non-accessible, but we know its there? Could we even maintain a peg that way?