According to media reports, Lithuania will be the first country in the eurozone to launch central bank-backed digital token called LBCOIN.
Next week, Lithuania_a country which has been overall friendly with cryptocurrencies will issue 24,000 blockchain-based digital tokens called LBCOIN as part of a project to trial central bank digital currencies and blockchain technology in everyday use.
Think of a physical representation of Bitcoin-style virtual money.
The sharp decline in the use of cash and the prospect of Facebook’s 2.5 billion users adopting the Libra stablecoin has forced central banks to start considering launching their own digital coins.
The 24000 blockchain-based digital tokens will go on pre-sale next week in packs of six for €99. Each of the coins will feature a portrait of one of the 20 men who signed Lithuania’s declaration of independence in 1918. The tokens will be divided into six categories according to the signatories’ varying areas of activity.
The coins are intended largely as collectors’ items, like limited edition stamps or Pokémon cards. The bank expects users to trade them – either with the bank or in private blockchains – to build a set of tokens (one from each of the six categories).
A complete set can be exchanged for a physical silver “coin” resembling a credit card and with a nominal worth of €19.18 to commemorate the declaration of independence.
Marius Jurgilas_deputy governor of Lithuania’s central bank said, LBCOIN is similar to a central bank digital currency (CBDC), which is tradition money in digital form issued and governed by a country’s central bank. While many cryptocurrencies such as Bitcoin and Ethereum are decentralised – with transactions verified and stored on a distributed ledger – there will be a significant degree of central control over LBCOIN.
According to Jurgilas, No one in the central bank community was thinking about digital currency seriously before we realized that there is a legitimate threat that someone else will take our space.
“We need to provide society with what it wants,” he added.
The Bank of Lithuania has said that the use of LBCOIN as a means of payment “is not encouraged”; this should be seen as a trial for state-backed digital currencies.
By contrast, cryptocurrencies such as bitcoin are produced by solving complex maths puzzles, and governed by disparate online communities instead of a centralized body.
“At a time when central banks are beginning to change their thinking on digital currency, LBCOIN is probably the most advanced experimental playground to test different reincarnations of the CBDCs,” Jurgilas told the news outlet.
He opined that CBDCs had the potential to transform the role of banks when it comes to processing payments.
CBDCs could change the role of commercial banks – which currently host all electronic accounts for the customers’ funds- when it comes to processing payments, Jurgilas said.
Also, “At the moment, the only way to hold central bank-issued money is to hold the physical cash,’’ he added.