The Marshallese sovereign (SOV), which could become the first state-backed digital currency to enter circulation, will be built using the Algorand protocol.
According to the announcement, SFB Technologies, the appointed organiser for the Marshallese sovereign initiative, selected the Algorand protocol for its speed, scalability, and security.
The company is also bullish on Algorand’s ability to effectively implement required compliance controls and the transaction finality required for a national currency.
Algorand is designed as a scalable proof-of-stake network free of potential governance issues, like forks. The protocol is already being used by an Icelandic e-money startup to develop bring fiat currencies onto the blockchain. Algorand will provide base technology for the creation, issuance and ongoing management of the digital currency. The company will also provide technical support once the currency has launched, ensuring it continuously suits the country’s requirements.
The SOV won’t be built on the public Algorand blockchain but a permissioned version, known as a “co-chain,” that will give the Marshallese government and central bank greater oversight of the network.
Marshall Island has capped the SOV supply at 24 million tokens in order to prevent inflation. The supply is algorithmically fixed by the SOV blockchain at annual increase of 4% so that it cannot be manipulated. 40 percent of the total supply will be made available globally for investment.
“The Marshall Island’s vision for global participation and inclusion in an open financial system by harnessing the benefits of blockchain technology is aligned with a truly global and decentralized society that we believe is made possible with our technology.” – Silvio Micali, founder of Algorand.
The Marshall Islands first stated its intention to launch a digital currency back at the beginning of 2018 to work alongside the U.S. dollar. The Marshallese minister in-assistance to the president and environment said the nation is working with international regulatory bodies to ensure the SOV meets all compliance requirements.