Bhutan, a tiny Himalayan kingdom known for its Gross National Happiness index and its environmental conservation efforts, is also making waves in the crypto space. The country has partnered with Ripple, a San Francisco-based company that provides cross-border payment solutions using its cryptocurrency XRP, to launch a digital version of its national currency, ngultrum.
The project, announced in September 2021, aims to create a paperless and interoperable ngultrum that can be used for domestic and international transactions. The digital ngultrum will be powered by Ripple’s blockchain technology, which enables fast, cheap and secure transfers of value across borders.
According to Ripple, the digital ngultrum will help Bhutan achieve its vision of becoming a carbon-neutral nation by reducing its reliance on cash and enhancing its financial inclusion. The project will also enable Bhutan to tap into the global crypto market and benefit from the innovation and opportunities that it offers.
Bhutan, in contrast to the approach taken by some other countries that have either banned or restricted the use of cryptocurrencies. For example, China has cracked down on crypto mining and trading activities, citing environmental and financial risks. India has also proposed a bill that would outlaw private cryptocurrencies and create a central bank digital currency instead.
Bhutan is also different from the one adopted by El Salvador, which became the first country to adopt bitcoin as legal tender in September 2021. El Salvador’s move has been met with criticism and skepticism from various quarters, including the International Monetary Fund, the World Bank and the U.S. Treasury. Some of the challenges faced by El Salvador include technical glitches, legal uncertainties, public protests and environmental concerns.
By creating a digital version of its own currency, rather than adopting an existing one, Bhutan retains its monetary sovereignty and avoids the volatility and unpredictability of bitcoin. By partnering with Ripple, rather than relying on a third-party platform or app, Bhutan ensures that its digital ngultrum is compatible with international standards and regulations. By using Ripple’s blockchain technology, rather than bitcoin’s proof-of-work mechanism, Bhutan minimizes its energy consumption and carbon footprint.
The crypto initiative could serve as a model for other countries that want to embrace the benefits of digital currencies without compromising their economic stability and environmental sustainability. Bhutan’s crypto initiative could also boost its reputation as a progressive and innovative nation that values both happiness and technology.