If you’ve never wondered how much damage a bad reputation can cause, this North Korean revelation is pretty spot-on. The cryptocurrency community is jittery as North Korea announces its plans to develop its own cryptocurrency.
You see, if another country announced such crypto plans, we would be in a celebratory mode as then it would represent a significant step forward for the acceptance and adoption of blockchain tech and cryptocurrency at a governmental level, but North Korea’s crypto decision might do more harm than good to bitcoin.
A North Korean Cryptocurrency
The representative of the North Korean government disclosed that the country is planning to launch its own cryptocurrency. The yet to be named cryptocurrency will bear semblance to bitcoin or other cryptocurrencies and is still in early development stages. The official tasked with managing South Korea’s cultural relations and cryptocurrency conferences, Alejandro Cao de Benos stated:
“We are still in very early stages in the creation of the token. Now we are in the phase of studying the goods that will give value to it.”
Alejandro went ahead to say that it will not be a digitized version of the North Korean won.
This is not the first time the country is dipping its toes into cryptocurrency. In fact, the country gathered experts for a cryptocurrency and blockchain conference back in April.
The thing is, a North Korean cryptocurrency mocks the core vision of bitcoin, is driven by wrong motives and it paints a bad picture of bitcoin and other cryptocurrencies based on the bad reputation that the regime has with cryptocurrency – all the ingredients to curtail mass adoption of cryptocurrency.
North Korea’s Cryptocurrency Is The Antithesis of What Bitcoin Stands For: Decentralization
Bitcoin is built on the blockchain technology, a decentralized public ledger that confirms transactions without the need for central oversight. This North Korean cryptocurrency will differ significantly from the cryptocurrencies we’ve all come to know and love, although the idea of adopting cryptocurrency and blockchain is futuristic.
Suffice it to say, it is highly unlikely that a communist, dictatorial, and militaristic government like North Korea is out to create a legitimate cryptocurrency with the idea of decentralization in mind.
North Korea’s Past History With Cryptocurrency Taints Bitcoin’s Image
North Korea has been accused on multiple occasions of involvement in cyber-attacks on cryptocurrency exchanges and financial institutions to fund its weapons program. Last month, Reuters published a report by the UN stating that North Korea had stolen to the tune of $2 billion from exchanges and banks via sophisticated hacking, even though the government’s officials refuted these allegations, saying that they were rumors “aimed at tarnishing the name of the Republic”.
Also, North Korea has been directly linked to the infamous Lazarus hackers group that infiltrated Sony Pictures in 2014 and also stole crypto from South Korea’s UPbit exchange.
These accounts obviously weaken the integrity of bitcoin. A country with such a bad reputation may unfortunately further fuel the idea that cryptocurrencies aid fraud.
It doesn’t come as a surprise that North Korea wants to develop a cryptocurrency with hopes of getting around sanctions imposed by the United States and other nations. Perhaps, North Korea is taking a page from Venezuela’s book, but obviously blind of the repercussions.
Venezuela waded into cryptocurrency by creating Petro as a digital alternative to their fiat currency, the bolivar, in a failed attempt to circumvent sanctions and solve its economic woes. Needless to say, the oil-backed cryptocurrency was banned by US President Donald Trump through an executive order which currently awaits voting into a bill.
The same fate could befall North Korea’s planned cryptocurrency if and when it sees the light of day.
North Korea’s Economy Is Dying
Cryptocurrency adoption has been prevalent in wealthy nations with state of the art technology. This is not the case for this hermit nation. In plain terms, North Korea’s economy is in shambles as it is. The country’s flagging economy has been a product of severe drought and international sanctions aimed at halting its nuclear weapons program.
Evidently, the country’s military ambition still takes center stage at the expense of its economic development. In 2018, the country’s international trade plunged by more than 48% while the sanctions shrank its exports by close to 90%, and it has not yet recovered.
Despite reports that the country has enough technical expertise to develop a cryptocurrency, based on its knowledge in crypto mining and conducting crafty hacks, it will be an uphill task for the cash-starved nation to convince its citizens to use it because of trust issues with the already abysmal economy.
The Bottom Line
The same way the US banned the Petro, other countries might feel the need to be more aggressive if embargos can be countered through the use of cryptocurrencies. Therefore, a hardline should be drawn when it comes to the creation of vain cryptocurrencies that are clearly a means of economic relief and circumventing sanctions. If not, earnest and vital adoption of cryptocurrencies will be suppressed.