Visionizing a Fiat Cryptocurrency

Abstract

Bitcoin is part of a wider range of opportunities to creating cryptocurrencies based on blockchains. Research has shown that the existing cryptocurrencies are very volatile and often illiquid. A cryptocurrency endorsed by a Central Bank, as the starter of a private blockchain, will most likely show more stability. It may even take the form of legal tender. However, since almost all countries have their own currency already, the governments will not feel the need for an additional currency. One exception is Palestine. It enjoyed the privilege of having its own currency in the past. The purpose of this research is the evaluation of the feasibility of a cryptocurrency as legal tender. The authors recommend a new Palestinian Pound built on a private blockchain using Hyperledger. In practice it would not differ from any other fiat (legal) currency. The current weakness of not having its own currency could be turned into a strength by becoming the most advanced economy where transactions are transparent and efficient. This paper fills a research gap by analyzing the opportunities of a cryptocurrency that is actual legal tender and endorsed by a monetary authority.