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As Auroracoin “Airdrop” Approaches, What Does It Mean When A Nation Adopts A Cryptocurrency?

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Iceland has its own Satoshi. A programmer called Baldur Friggjar Odinsson has created an alternative to bitcoin that he is calling AuroraCoin and in twenty-three days he will “airdrop” 31.8 coins to every citizen of Iceland – all 330,000 of them.

It is, in short, a pretty ballsy move.

Aurouracoin (AUR) will work just like bitcoin and it’s already surprisingly popular. It’s worth $15 per coin and at launch 21 million AUR will be made available to all of Iceland’s citizens. They will use their private ID numbers to check in and receive their coins. Mining is performed through proof-of-work operations, just like bitcoin.

To be clear there is no telling how popular Odinsson’s idea will be and who or when the citizens of Iceland will start using their currency. In his manifesto, he blames the Icelandic government for “bleeding” the country.

“The people of Iceland are being sacrificed at the altar of a flawed financial system, controlled by an elite that made astronomical bets supported by the government on behalf of the people and ultimately at the expense of the people,” he wrote. “The power must be taken away from the politicians and given back to the people.”

Auroracoin is, in short, worthless at the outset. The goal, however, is to allow Icelandic citizens to once again trade outside of the country. I spoke with Odinsson about his idea and he was very forthcoming. First question? Why not just give everyone a bitcoin?

“I wish I could. Alas, it is all but impossible for Icelanders to buy bitcoins for themselves, let alone for a giveaway. Since the banking collapse in 2008, Icelanders have been subject to strict capital controls,” he said. “This means people are not allowed too freely exchange the national currency, króna, for foreign exchange such as dollars or euros. So people can’t buy bitcoins, unless someone is simple enough to exchange bitcoins for króna.

“Giving people Auroracoin is a way of introducing the nation to cryptocurrencies, currencies that can’t be controlled by politicians and central bankers. This is an attempt too bootstrap a network effect. The government will not be able to control how people use their money if the people choose to use Auroracoin rather than the króna.

The currency would allow Icelanders to begin taking part in a global cryptocurrency movement without investing actual cash. The goal, then, is for Auroracoin to become a catalyst for bitcoin trading, a sort of Trojan horse that will inject crypto into an economy shackled by post-crash fear.

He’s expecting great things on the first day.

“I expect those that are knowledgeable and enthusiastic to start claiming the coins. People will experiment. Speculators will speculate. The rate of adoption will pick up. Hopefully we will be able to keep things running smoothly.”

Sadly, Icelandic banks and politicians are calling this a sham.

“An influential government MP has called Auroracoin illegal and a ‘monetary scam.’ The Central Bank of Iceland has said that Auroracoin and cryptocurrencies are a ‘fringe activity’ and trade is possibly a violation of the capital controls,” he said. “The most read media outlet in Iceland, mbl.is, has done a fair deal of reporting on it. Other outlets have not done in-depth analysis, although they have mentioned it. It was discussed in a tech show in Channel 2 (Stöð 2) a couple of days ago.”

While the brave notion that a single actor can move markets, a la Satoshi, has been proven, it’s one thing to get a bunch of nerds excited about frictionless wealth transfer and its entirely another to convince a country to the same. Odinsson is definitely aware of these limitations. If his idea fails – and odds are it probably will – no one loses a thing. If it takes off – and that’s a big if – it would create a new paradigm for a more nation-oriented idea of crypto currency.

Auroracoin is ostensibly free, Iceland is already a haven for crypto currency mining thanks to its cheap electricity, and it’s an amazing idea to think that a single BTC fork can change an economy. It’s a brave new world, that hath such digital currencies in it, etc. Odinsson is optimistic.

“I want to break the nationalistic currency shackles of Iceland’s monetary policy,” he said. “Auroracoins can be traded all over the world, no one can dictate to the people how they can use their coins.