Sweden Explores Moving to a Digital Currency

[jaysabi]

Sweden's government will start exploring the feasibility of having the country move to a digital currency. The country expects the review to be completed by the end of November 2022.  Sweden is among the first countries in the world to consider introducing a digital currency, where it's central bank already runs a pilot project to introduce an electronica krona based on blockchain technology. 

Before everyone starts circlejerking all over how great this is for bitcoin, you should recognize that such a system would be a competitor to bitcoin, not necessarily enhancing bitcoin value. It's built on the promise of digital currencies and blockchain generally, not bitcoin specifically, though bitcoin has demonstrated the use-case invariably.  I don't know that it would bring any tangible benefit to bitcoin specifically, but I think it would bring further legitimacy to digital currencies as a whole, of which bitcoin could potentially be a beneficiary in some capacity, though how much specifically would be hard to gauge.

Source:  https://www.bloomberg.com/news/articles/2020-12-11/sweden-explores-the-feasibility-of-moving-to-a-digital-currency

[bits4books]

So such situations should not increase the price of "classic" cryptocurrencies in principle. After all, States do not create their own analogues of BTC or ETH, but they move from one process of money turnover to another.
When you stopped using cash because you carry a card with you everywhere , it definitely doesn't mean that you started using some completely different money, you just started using a different exchange process.
I also do not think that digital state currencies will compete with cryptocurrencies simply because there are completely different areas of application and the principle of distribution and control. A complete transfer from cash is more good than bad, if only because it is convenient. But you can’t say that digital currencies will somehow directly affect cryptocurrencies

[jaysabi]

So such situations should not increase the price of "classic" cryptocurrencies in principle. After all, States do not create their own analogues of BTC or ETH, but they move from one process of money turnover to another.
When you stopped using cash because you carry a card with you everywhere , it definitely doesn't mean that you started using some completely different money, you just started using a different exchange process.
I also do not think that digital state currencies will compete with cryptocurrencies simply because there are completely different areas of application and the principle of distribution and control. A complete transfer from cash is more good than bad, if only because it is convenient. But you can’t say that digital currencies will somehow directly affect cryptocurrencies

I think one difference is that certainly the control aspect.  Sweden's blockchain-backed digital currency would still be centrally controlled, vs. bitcoin's decentralized system.  I think the pluses and benefits of that are well-known and so I won't belabor them now again.  Another aspect to consider here, as you allude to, is that modern western economies are already largely digital.  We've had electronic payments in some form for decades already, and they are not the predominant means of commerce in these economies.  Would a blockchain-based system represent an improvement over the current digital system we already have given that both systems would still be centrally-controlled?  I have my doubts about that, but perhaps that is part of the study Sweden is pursing for the next year will look at.

[Lorence.xD]

It sounds like they do not want to deviate from fiat currency altogether. This is not a competitor because they are just using their fiat currency in digital form, this is good for their economy as this prevents printing more paper money and driving down the cost of printing in a mint. This is a dangerous endeavor though because there will be a lot of attacks that will target their digital banks and that can be a serious threat, hopefully they will address that problem because as technology advances the attacks are also advancing. My only question here is, if they are going for digital then that means the purpose of banks will cease to exist because the money will go directly to the people, then what will happen to this banks and will they adapt or die?

[Haunebu]

Sweden hasn't confirmed anything since you mentioned that they are simply testing the possibility. Many other countries like China etc have revealed that they are doing the same(Digital Yen etc).

Even if these centralized currencies are actually developed, they won't be a major threat to BTC and other popular cryptocurrencies in my opinion.

Why? Because they are basically FIAT currencies in digital form while BTC and other popular cryptocurrencies still stay decentralized in comparison. This could actually help BTC improve its value even further.

[Jawhead999]

It sounds like they do not want to deviate from fiat currency altogether. This is not a competitor because they are just using their fiat currency in digital form, this is good for their economy as this prevents printing more paper money and driving down the cost of printing in a mint.

They still use fiat but in digital form, such currencies will still print or burn their supply to make the price 1:1. It's just like a stable coins, but more worse since government have full control of the currencies.

My only question here is, if they are going for digital then that means the purpose of banks will cease to exist because the money will go directly to the people, then what will happen to this banks and will they adapt or die?

I'd say they will adapt, banks will become an exchanges between fiat cash and fiat digital. Until all the citizens fully start using fiat money in digital form, I can't know what will happen with banks. It can be customer support and service with their online wallet or die since they're useless.

[verita1]

This is good news for the bitcoin, crypto and blockchain community. This is a project that has been idealizing since 2019. Sweden, considered one of the largest economies in the world, begins to test cashless with its own e-currency.
It is only a pilot test that we hope to be very successful because it is innovation and it is what we are waiting to see how Blockchain technology works when it is used in all sectors of society.

[Psynthax]

Blockchain really is a breakthrough of this decade. So many governments and corporations implementing it within their system. Can't wait to see how blockchain grows in the next few years considering in a decade it's already impactful in effort to disrupt our traditional economy.
Whether it's just for testing, they atleast spend time digging through the benefit of blockchain better than nothing I guess. Moreover, these government just gonna create stablecoin-like digital currency which I assume will not be harmful for those decentralized coins.

[pilosopotasyo]

Sweden is not the only one and this will be the trend that is going to happen countries are going to use their digital cash, a digital cash that they can control, they are not likely to use Bitcoin because they cannot control it and just prefer to use their own and although you are right that t will be Bitcoin's competitor in some way but it will always validate that Cryptocurrency is here to stay and Bitcoin is it's main product.

[amishmanish]

These Scandinavian countries with their public amenities and the target of low corruption always sound like the best places to live in. Considering the relatively benevolent nature of the governments there, the main reason for them to move to a blockchain based currency may be the transparency and ease of movement/ usage.
Countries like Sweden spend a lot in public amenities and if those expenses are on a blockchain, the possibility of inefficiency and corruption will become lower still. I wish more governments around the world could take care of people the same way.

[Hydrogen]

Sweden could have the largest population of microchipped consumers in the world. Which could make them uniquely suited as a testbed for emerging digital currencies.

Thousands Of Swedes Are Inserting Microchips Under Their Skin

In Sweden, a country rich with technological advancement, thousands have had microchips inserted into their hands.

The chips are designed to speed up users' daily routines and make their lives more convenient — accessing their homes, offices and gyms is as easy as swiping their hands against digital readers.

https://www.npr.org/2018/10/22/658808705/thousands-of-swedes-are-inserting-microchips-under-their-skin

A central bank or government issuing digital currencies carries a potential to minimize advantages offered by crypto & blockchain. Banks and governments trend towards focusing on short term value. Which negates the emphasis on building long term value, stability and HODL which bitcoin has become known for.

The best development banks and governments could hope for is an independent currency to compete against currencies they issue. In order to produce market competition and an impetus towards stability, value and innovation which over the long term would benefit everyone.

[judeafante]

Countries like Sweden spend a lot in public amenities and if those expenses are on a blockchain, the possibility of inefficiency and corruption will become lower still. I wish more governments around the world could take care of people the same way.

Sweden is a good model they have a well-placed system that can make implementing digital currency much easier, they could become a good model for those who like to launch a digital currency but like OP said it will become a direct competitor of Bitcoin but it will also promote Cryptocurrency usage.

[wxa7115]

Sweden could have the largest population of microchipped consumers in the world. Which could make them uniquely suited as a testbed for emerging digital currencies.

Thousands Of Swedes Are Inserting Microchips Under Their Skin

In Sweden, a country rich with technological advancement, thousands have had microchips inserted into their hands.

The chips are designed to speed up users' daily routines and make their lives more convenient — accessing their homes, offices and gyms is as easy as swiping their hands against digital readers.

https://www.npr.org/2018/10/22/658808705/thousands-of-swedes-are-inserting-microchips-under-their-skin

A central bank or government issuing digital currencies carries a potential to minimize advantages offered by crypto & blockchain. Banks and governments trend towards focusing on short term value. Which negates the emphasis on building long term value, stability and HODL which bitcoin has become known for.

The best development banks and governments could hope for is an independent currency to compete against currencies they issue. In order to produce market competition and an impetus towards stability, value and innovation which over the long term would benefit everyone.

I did not knew of this, I can understand why people could insert some form of technology in their bodies in order to survive or to improve their health and quality of life significantly but choosing to do so over such marginal gains is something I cannot understand.

It is because of developments like those that we need bitcoin, people are willing to exchange their freedom and privacy for the dumbest things, and I have no doubt that they will elect to use those centralized coins without asking a single question giving governments the power to then change the currency as they see fit and benefit enormously out of it.

[NeuroticFish]

I can understand why people could insert some form of technology in their bodies in order to survive or to improve their health and quality of life significantly but choosing to do so over such marginal gains is something I cannot understand.

Exactly. In a world where you can have NFC rings, i.e. probably same/similar tech without getting it inserted inside your body, what this people are doing is clearly an exaggeration.

Now to the topic: Since they already use their money only digitally, this move is an obvious step. For average Joe will most probably nothing change, while the companies will not have to pay fat fees to VISA/Mastercard.
It's about a lot of money that now leaves their country and can remain in there, maybe as some smaller fee the central bank could ask for keeping the system up and running.
And just imagine what power will the government have over the population's money...

[amishmanish]

The best development banks and governments could hope for is an independent currency to compete against currencies they issue. In order to produce market competition and an impetus towards stability, value and innovation which over the long term would benefit everyone.

I doubt that when banks and governments start issuing their own cryptos, they would be open to any form of competition.

Ideally though, IF the politicians or economists were to suddenly agree that even the lazy central banks should have some "competition", then maybe they would say that stability and innovation are desirable. Yet, the way things work, financial institutions have zero accountability. Things seem to be working fine for the politicians as well as banks currently. People are least concerned about what irresponsible banks does to them in the long term. It is hard to see a future where politicians would be compelled to compete for votes on the basis of a vision of best banking/ currency practices. We have bitcoin but it is also getting subject to government interference and regulation with every passing day.

[pixie85]

Sweden hasn't confirmed anything since you mentioned that they are simply testing the possibility. Many other countries like China etc have revealed that they are doing the same(Digital Yen etc).

Even if these centralized currencies are actually developed, they won't be a major threat to BTC and other popular cryptocurrencies in my opinion.

Why? Because they are basically FIAT currencies in digital form while BTC and other popular cryptocurrencies still stay decentralized in comparison. This could actually help BTC improve its value even further.

They were testing this since 2018. It's old news.

I remember that they were conducting research by removing all places where only cash was accepted like old styles of parking meters, subway ticket machines, car washes. All those old coin terminals were changed to card readers which increased the use of electronic payments. It's their first step into a cashless society.

Is it good? I don't think so. It gives the government more control.

[exstasie]

Before everyone starts circlejerking all over how great this is for bitcoin, you should recognize that such a system would be a competitor to bitcoin, not necessarily enhancing bitcoin value.

I don't view CBDCs as competitors. They are just another form of fiat money, which people will continue piling into risk assets like BTC.

They are mostly irrelevant. There is a chance they could complement cryptocurrency markets (trading on DEXs and exchanges) if they were to run on interoperable blockchains. Not sure how likely that is though.

[NeuroticFish]

I don't know that it would bring any tangible benefit to bitcoin specifically, but I think it would bring further legitimacy to digital currencies as a whole

It's not only the legitimacy.
I was just thinking: there's a good chance they may do development in the direction of making crypto easier to spend. Possibly hardware that'll make crypto as easy to use as today's cards, maybe without the need of scanning QR codes with your phone. It could be good and interesting.

[magneto]

Sweden's government will start exploring the feasibility of having the country move to a digital currency. The country expects the review to be completed by the end of November 2022.  Sweden is among the first countries in the world to consider introducing a digital currency, where it's central bank already runs a pilot project to introduce an electronica krona based on blockchain technology. 

Before everyone starts circlejerking all over how great this is for bitcoin, you should recognize that such a system would be a competitor to bitcoin, not necessarily enhancing bitcoin value. It's built on the promise of digital currencies and blockchain generally, not bitcoin specifically, though bitcoin has demonstrated the use-case invariably.  I don't know that it would bring any tangible benefit to bitcoin specifically, but I think it would bring further legitimacy to digital currencies as a whole, of which bitcoin could potentially be a beneficiary in some capacity, though how much specifically would be hard to gauge.

Source:  https://www.bloomberg.com/news/articles/2020-12-11/sweden-explores-the-feasibility-of-moving-to-a-digital-currency

It completely makes sense for them since Eurozone yield curves are deep in the negatives and eventually cash would necessarily need to be phased out in order to remove the implicit 0 nominal lower bound for consumer interest rates. This would allow further monetary easing.

As you said though, this is not necessarily good news for BTC.

I don't get why people get so hyped over this stuff when clearly it'll detract away from decentralisation as a founding principle of cryptos. The more that governments intervene in this field and create their own cryptos, the less attention BTC is likely to get; since even though BTC is still a far better long term store of value, the medium of exchange properties of both are the same.

[el kaka22]

First of all we do not need bitcoin to grow rapidly and be accepted everywhere around the world in order to be happy about these news. What do you think we are expecting from nations, suddenly make bitcoin their national currency?

The good part is, if nations start to use blockchain technology that would make things a lot better, obviously politicians are as corrupt as it comes in many nations of the world so they will not want blockchain tech, where one nation shares where all the taxes are going, whereas a corrupt nation can't do that so they will postpone this as long as possible. However as long as blockchain technology is utilized in a good way from governments I will be happy about it, I do not need bitcoin to be super high thanks to nations, I just want crypto to get more love.