LBCoin has a hybrid system that integrates the bank’s private network with the NEM public network. It aims to show citizens how to store digital assets.
The Central Bank of Lithuania officially announced on July 23rd 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 very open to blockchain technology.
LBCoin is the first central bank-issued collectible digital currency that people have come to know about in the world. Its characteristics make it a unique case since it has a hybrid infrastructure. Its interoperable system integrates the private network of the Lithuanian bank with the NEM public blockchain.
The features of the system allow transactions to remain visible to the public. This is a prominent element, given that the use of a public network among projects managed by central banks is unusual.
The central bank described the project as a financial experiment aimed at showing citizens how to store, exchange, and use cryptocurrencies. At the same time, the institution itself will experiment with cryptocurrencies to know its characteristics and benefits.
The Lithuanian financial institution announced that the coins would be available for purchase and storage on the institution’s e-store website. However, it subsequently reported that it was facing technical problems and promised to resume the sale at a later time.
LBCoin consists of 20 collectible tokens; each one of them represents one of the characters who signed the country’s Independence Act.
Users interested in digital currency from the Central Bank of Lithuania must access the institution’s e-store website, register, and comply with the identity verification procedure that the platform requests.
Once they transfer EUR 99 (equivalent to USD 111.30) for the cost of the package, they will receive 6 randomly selected tokens. They can exchange it for a physical silver coin for an additional value of EUR 19.18 (USD 22.26).
After receiving the tokens, customers will be able to transfer them to their wallet, which must be compatible with the NEM public blockchain, according to the webinar of Marius Jurgilas, member of the Board of Directors of the Central Bank of Lithuania.
Users can exchange these collectible tokens with other people, sell them, give them away, or collect them. They can also exchange them for a physical silver coin in the form of a credit card, which the institution also issues. However, they must understand that it is not a legal tender.
One Step for Banks in Europe
LBCoin is the first digital currency project that a bank in the specific euro area has completed. However, it is also a sign of the paradigm shift of traditional banking, which in the past was closed to cryptocurrencies.
Crypto assets are gathering momentum as more traditional financial institutions are daring to venture into the blockchain ecosystem. It was not until the appearance of Facebook’s Libra project that Europe began to change its vision regarding cryptocurrencies.
There may be further changes and cryptocurrencies may continue in the digitization plans of European central banks. The agency that regulates US banks has already stated that cryptocurrency custody services are a modern version of the activity that banks do.
By Willmen Blanco