Canada launches a government-backed digital currency

A new initiative recently proposed by the Royal Canadian Mint proposes to create the MintChip, a digital currency that is backed by the Canadian government.

Regular Springwise readers may recall our coverage last year of Bitcoin, the open-source and peer-to-peer digital currency that operates without the involvement of any central authority or bank. Now, a new initiative recently proposed by the Royal Canadian Mint proposes to create the MintChip, a digital currency that’s similar, but is backed by the Canadian government. Aiming to become “the digital equivalent of the coins we use every day,” in the Canadian Mint’s own words, the MintChip will target micro- and nano-transactions conducted both online and offline, whether at the physical point of sale, on mobile devices, or among peers. Based on a direct asset transfer model that moves value among participants without the involvement of any intermediary such as a credit card company (blockchain), the MintChip will require each user to have dedicated technology loaded in an account in the cloud, mobile device, USB stick or PC. The Mint explains: “MintChip is based on two technical propositions: the creation of secure integrated circuit chips to hold electronic value and a secure protocol that allows the transfer of value from one chip to another and ensures the integrity of the MintChip system. It operates without the need for personal identification, thereby maintaining the user’s privacy.” The video below explains the premise in more detail: Having recently announced that it will discontinue the penny, the Royal Canadian Mint was, for a period, challenging developers to help make the MintChip a reality. It had to stop accepting registrations early, however, because of “a very high level of interest,” it says. Winners — due to be announced in September — will receive a total of roughly CAD 50,000 in gold. Public voting and a panel of judges including Google’s vice president of payments will select where the honors go. Potential privacy issues have been flagged by at least one observer, but there’s no denying this is one to watch as it unfolds.