ScotPound, the digital currency proposed for Scotland by the New Economic Foundation (NEF), lacks some of the integral advantages a true cryptocurrency should possess, says the economist Chris Cooper in his recent DCEBrief article.

However attractive this project may seem in connection with Scotland’s possible transition to independence, “the impact of a new government-backed digital currency may provoke concern among the rest of the cryptocurrency community,” argues Cooper. 

The example of MintChip, a Canadian governmental digital currency that existed between 2012 and 2014, shows that government-issued digital money lacks the main benefits a “conventional” digital currency can provide: independence from governmental control; independence from national currency fluctuations; independence from transaction costs. 

Thus, the idea of ScotPound rather “misses the point”: there should always be a “healthy distance” between the state and a cryptocurrency, although the latter requires governmental support, Cooper says.

A digital currency has been proposed for Scotland by NEF as a possible solution to the monetary problem that emerged in connection with the country’s 2014 independence referendum, in which the Scots voted against leaving the UK. “The fear of losing the pound was one of the decisive factors in the eventual result,” says NEF, proposing the ScotPound introduction. According to NEF specialists, the new cryptocurrency can be implemented alongside with the pound, thereby avoiding immediate rejection of the pound and providing monetary basis for the future independence.

The ScotPound will possess a number of advantages for the people. Those include lower costs for business due to a new payment system, “enabling Scottish businesses to accept payment for goods and services without being charged fees by banks and global credit card firms,” and an economic boost caused by the proposed 250 ScotPound dividend for everyone, NEF says.

Alexander Tanhkhilevich