This is the first cryptocurrency from a central bank in Europe

Key facts:
  • LBCoin has a hybrid system that integrates the bank’s private network with NEM’s public network.

  • It aims to show citizens how digital assets are stored.

The Central Bank of Lithuania officialized this July 23 the launch of its digital collection coin LBCoin, a cryptocurrency that runs on the NEM blockchain. The project represents a challenge for eurozone central banks that have not been as outspoken about blockchain technology.

LBCoin is the world’s first known central bank-issued collectable digital currency. Its characteristics make it a unique case, since it has a hybrid infrastructure: an interoperable system that It integrates the private network of the Lithuanian bank with the public blockchain of NEM.

Due to its characteristics, the system allows transactions to remain visible to the public; an element that stands out, given that among the projects managed by central banks the use of a public network is unusual.

The project was described by the central bank as a financial experiment that takes objective to show citizens how cryptocurrencies are stored, how they are exchanged and other elements related to the daily use of these assets. At the same time, the institution itself will experiment with cryptocurrencies to know its characteristics and benefits.

The Lithuanian bank announced that the coins would be available for purchase and storage in the institution’s electronic store, but later reported He was facing technical problems and promised to resume the sale on Friday, July 24. A request for comment from CryptoNews awaits responses.

What to do with an LBCoin?

LBCoin consists of 20 collectible tokens, each representing one of the characters who signed the country’s independence act.

A user interested in a digital currency from the Lithuanian bank must enter the institution’s electronic store, register and comply with the identity verification procedure requested by the platform.

Once you transfer the 99 euros ($ 111.30) that the package costs, you will receive 6 randomly selected tokens, which are redeemable for a physical silver coin that has an additional value of 19.18 ($ 22.26). Each collectible token represents one of the figures that participated in the signing of the independence act of that country.

After receiving the tokens, clients will be able to transfer them to their own wallet, compatible with the NEM public blockchain, as explained in the webinar Marius Jurgilas, member of the Board of Directors of the Bank of Lithuania.

LBCoin was launched in commemoration of the 20 figures who signed the Lithuanian Independence Act in 1918. Source: Bank of Lithuania

These collectible tokens can be exchanged with other people, they can be sold, given away, collected or exchanged for a physical silver coin that has the form of a credit card, which is also issued by the same institution. However, it must be borne in mind that this is not a legal tender.

“Buyers interested in this currency have a period of 2.5 months to buy it, after which the project will be closed. This means that there will be no new LBCOIN issued or physical tokens to redeem after the project ends, “added Jurgilas.

One step for Europe’s banks

LBCoin is the first digital currency project carried out by a bank in the euro area, but it is also a sign of the paradigm shift in traditional banking that in the past was closed to cryptocurrencies.

In fact, crypto assets are gathering steam as more traditional financial institutions dare to venture into the blockchain ecosystem. But it wasn’t until the appearance of Facebook’s Libra project that Europe began to change its vision regarding cryptocurrencies.

In October last year, as CriptoNoticias reported, the president of the European Central Bank (ECB), Mario Draghi, expressed a criterion of greater openness about cryptocurrencies.

At the time, the financial authority noted that the European System of Central Banks (ESCB) was evaluating cryptocurrencies. This as part of an effort to establish the implications of these financial technologies in monetary policy, as well as in the security and efficiency of payments. Too, recognized the future potential of cryptocurrencies as a means of payment.

Before the statement released by Draghi, financial authorities were not as open about cryptocurrencies. Even, in January of last year, the director of the highest financial regulatory body of the European Union referred to crypto assets like “fairy tales”.

All in all, it is possible that changes will continue to occur and cryptocurrencies will continue in the digitization plans of Europe’s central banks. Above all, after the body that regulates US banks pointed out that cryptocurrency custody services they are a modern version of banking activity.

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