New Virtual Currency Launches in Iceland
Last week a virtual currency was launched in Iceland which its founder hopes will help circumvent the country’s capital controls and eventually replace the crown. The founder, who is known by his pseudo name Baldur Friggjar Odinsson, said that the Auroracoin will free Icelanders from their “financial prison.”
Since the collapse of its financial system in 2008 Iceland has been debating whether to adopt the Euro, the Canadian dollar or go with the crown which lost more than 50% of its value during the crash.
Soon after its launch the Auroracoin was valued at around $11. However, it is unclear whether its holders can spend the currency. Odinsson says that he hopes that the Auroracoin can mimic the success of bitcoin. In an email to Reuters he wrote, “The people are being held in a financial prison. Auroracoin is an effort to break down the walls of this prison.”
An emerging market economist at Danske Bank, Lars Christensen, said that unless Icelanders were allowed to pay taxes in Auroracoins the new currency is unlikely to succeed. However, he pointed out that given Icelander’s lack of support for the crown and the lack of economic stability, adopting a virtual currency is not unthinkable.
“If you wanted to find somewhere where the conditions are in place, where the public is ready to accept an alternative to their own currency, Iceland is the place,” he said.