Image via WhiskeyTango/FlickrCC
Right now, Isracoin, a Scrypt-based altcoin, is the third largest cryptocurrency, by market capitalization, after Bitcoin and Litecoin. But as recently as yesterday, I hadn't even heard of Israel's national altcoin, which is set to airdrop in four phases beginning May 6, at midnight. The coin's announcement post on the bitcoin talk forum, posted March 26, explains, "Israel has one of the highest levels of centralization of wealth and assets," with an iron-fisted one-percent club that controls "a whopping 93% of banking assets in the country."
Like previous emerging national altcoins, Isracoin's creators have cited a common laundry list of complaints against the existing national banking system: That it's "rife with interest over-charging on credit, low interest on deposits and high fees and charges for no apparent reason."
On its announcement, Auroracoin, the recent Icelandic national cryptocurrency, declared it was "designed to break the shackles of the fiat currency financial system in Iceland." Spaincoin's creators spoke similarly of breaking free: "Coins will be given away to Spaniards that prove their identity with their national ID chip-card so that they can start using their cryptocurrency for their purchases and financial freedom."
Naturally, Isracoin's announcement was met with sighing comments over what's been a steady deluge of altcoins, "When is enough enough?" and the token provocation, "Shouldn't this be called Palestinecoin?"
So, what's the deal with Isracoin, and how will Israelis use it to break away from its current monetary system? And how, unlike Auroracoin and other failed national altcoins, will its price remain steady (or trustworthy) once it starts getting doled out? Why will people care about Isracoin?
The altcoin's creators seem to think they've found answer. But I honestly can't tell whether Isracoin, like others, will be doomed from the start, or that unique triumph. It will be interesting to see how Isracoin's plans for distribution, or four phases of "airdrops" of the the newly-minted cryptocoin, will affect its price and stability:
Phase-I - Businesses: Beginning May 6 at midnight, an airdrop of 500 isracoins will be made to a maximum of 50,000 businesses. Granted, that is if they're interested in the new virtual currency. Could this be the checkbox Auroracoin left unchecked? It seems that putting a primary infrastructure in place for a national coin's usage could work. I can already envision the ads in Tel Aviv's nightclubs: 'Next month you'll be able to settle your tab with Isracoin!'
Phase-II - Individuals: 100 isracoins will be distributed, at midnight on June 6, to each Israeli citizen "who is able to identify himself to the satisfaction of the system, for up to 2,850,000 people." In Iceland they used social security numbers; in Spain they used their national ID chip-cards. Isracoin hasn't stated how Israelis will identify themselves to receive the 100 isracoins. The individuals phase will work in three stages to make unclaimed coins available to those who didn't get the initial memo. Eventually, the remaining unclaimed coins will be divested to the Isracoin Investment Fund (see Phase-IV).
Phase-III - Business Credit: Depending on what other national altcoins you've seen roll out, this is where things get either a) interesting, b) convoluted, or c) both. 5,000 isracoins worth of business credit will then be granted to businesses that choose to implement Isracoin. The grant will be limited to the first 10,000 applicants, and those coins will be designated for business-to-business transactions. Therefore, 5,000 isracoins will not be given directly to businesses, but will be transferred amongst them via an "intermediary system," explains Isracoin's website.
Phase-IV - Investment Fund: 120,000,000 isracoins will be given to a fund for economic development. The fund will act to pay for Isracoin's operational costs and further development. Additionally, the fund will "invest in Israeli startups, donate to charity and support projects that promote equal opportunity and/or economic freedom in Israel." And as nationalistically as possible, the fund will act to wall-in its wishful recipients, requiring them "to mostly use ISR directly and not exchange it to other currencies."
So, is this the foolproof way of stabilizing the next national currency? Perhaps. If bitcoiners have repeatedly said something I mostly ignore, it's a tired line about having faith. If businesses adopt, support, and back an altcoin before individuals can cash out and spend it, then who the hell needs faith? Just follow the dotted line.