The Central Bank of Tunisia has announced that its new national cryptocurrency, the E-Dinar, has begun to launch, although for now it is just in a testing phase. Many other countries have proposed national cryptocurrencies, and several countries have actually launched them, but what makes Tunisia’s national cryptocurrency unique is that it is backed by fiat at a 1:1 ratio.
Essentially, for every E-Dinar that will be in circulation, a physical fiat Dinar will be placed in the Central Bank. Citizens will be able to convert E-Dinars for physical cash and vice versa. This concept is the first of its kind for a national cryptocurrency, but stablecoins like USD Coin (USDC) which operate basically the same way have already existed for years.
Apparently the advantages of the E-Dinar include that it is far cheaper to print, since literally it will be printable via the click of a mouse versus having to expend paper and ink. Also, the E-Dinar will be more transparent and traceable, which will help root out money laundering and tax evasion.
Perhaps the most impressive aspect of the E-Dinar is that it will stomp out counterfeiting. Fiat bill technology has constantly been improving in order to prevent counterfeiting, yet counterfeiting continues worldwide. A cryptocurrency can simply never be counterfeited. One only needs to check the official block explorer of a cryptocurrency to verify that a transaction is real.
Russian fintech firm Universa Blockchain is a key partner in the E-Dinar project, and will actually be running the nodes which secure the network and receiving a percentage of all transactions.
The highly centralized nature of the network is perhaps a major disadvantage for the E-Dinar, since that means there are centralized points of failure which can take down the entire system.
Thus, there are both positive and negative attributes of Tunisia’s experimental E-Dinar. Only time will tell if the E-Dinar will be successful.