Auroracoin’s development team plans a second coming as new scandals emerge with government corruption surrounding 2008’s bank collapse.
Iceland’s financial turmoil is back with a new scandal related to 2008’s bank failures. Wintris Inc., a British Virgin Islands-based company revealed to be owned by Anna Sigurlaug Pálsdóttir, wife of Prime Minister Sigmundur Davíð Gunnlaugsson, is claiming 515 mln. isk (icelandic kronas, over 4 million USD) in bankruptcy funds from the three failed banks during the crash. Seeing this as a corrupt move, opposition parties are reportedly moving towards a no confidence vote in the Prime Minister, and a petition calling for his resignation has acquired more than 12,000 votes.
The 2008 banking collapse created fertile ground for crypto
Auroracoin, a cryptocurrency made for the Icelandic people, generated a great deal of interest when plans were announced to distribute it directly to the people themselves. The distribution was carried out without a proper infrastructure in place for conversion into local currency, resulting in a steep price drop as citizens attempted to sell off their coins. Amid new problems stemming from corruption in Iceland’s government, a renewed Auroracoin push is planned by the development team this year.
Cointelegraph spoke with Pétur Árnason, Chairman of the Auraráð foundation, and Hlynur Þór Björnsson, a Foundation board member, about Auroracoin’s second coming.
Cointelegraph: What prompted the creation of the Auroracoin project?
Pétur Árnason: I can’t answer for the original developers since they were anonymous and none of the current developers was involved with that. The Auroracoin project is an experiment to jump start an cryptocurrency economy. The idea was to distribute cryptocurrency to a whole nation where everyone had an equal chance to claim the coins and take part in the experiment. What better way to get a cryptocurrency economy going.
Hlynur Þór Björnsson: The fundamentals and the reason for Auroracoin are still the same. There are currency controls in Iceland after the banking collapse in 2008, history of endless devaluation of the local currency, the Icelandic krona, and decades of inflation.
PA: Iceland is the perfect place to conduct such an experiment. The country is closed behind capital controls which means that its citizens are not allowed to buy foreign currency. Iceland has the highest internet usage in the world and are technically inclined and we experienced a full blown bank collapse in 2008 making the people of Iceland more aware of the dangers that we face with the banks and the current monetary system. Most importantly is the size of Iceland’s population. There are only 330.000 people living in Iceland. Contrary to most other altcoins who are trying to conquer the world, Auroracoin has a clear and reasonable goal.
HB: The 2008 banking collapse created fertile ground for crypto. The bad part of the perfect storm is that the people here can't buy Bitcoin due to the currency controls.
Auroracoin’s “airdrop” to the people of Iceland
CT: What was the distribution plan for Auroracoin?
PA: Auroracoin was distributed via an so called airdrop where all Icelandic citizens were given the equal chance to claim their fair share of Auroracoins. Half of the total coin supply was to be distributed in three phases. For the first phase all the coins that were reserved were divided by the total number of Icelandic citizens which resulted in each person being able to claim 31.8 AUR. For the second phase of the airdrop the airdrop was reset the amount was increased to 318 coins. Same was done for the third and final phase except the amount was doubled and went to 636. Then when the airdrop was finished the remaining coins were to be burned.
CT: Meaning, the remaining 50% were destroyed?
PA: Yes the remainder of the 50% that was reserved for the airdrop were burned.
HB: After the creator of the coin (Baldur) finished the distribution and burned the remaining coins he left the development up to the community, which is where we come into the picture.
PA: This was the last task of the original developers which were known by the name Baldur Friggjar Óðinsson. They have not been heard from since.
CT: So their idea was to gift Auroracoin to the world and then disappear, much like Satoshi did with Bitcoin?
HB: More or less.
PA: Yes seems like that was the idea. Baldur had stated that from the beginning, so it was not like it was a surprise to anyone when Baldur stopped communications.
Post-airdrop price collapse
HB: During the airdrop a price drop for Auroracoin was expected, when the airdropped coins came to the market. Since there was no exchange operating in Iceland where people could buy the coins others wanted to sell it was a one way market only sellers and no buyers. It is estimated that 10% of the airdropped coins ended on foreign crypto exchanges and were traded for Bitcoin. Icelanders interested in the project were unable to buy those coins because of the currency controls. Now this is about to change. An Icelandic exchange (ISX) is opening in Iceland that will trade Auroracoin / Icelandic krona. This will be the second birth for Auroracoin and give Icelanders a chance to buy and sell the coin without the currency controls being in the way. We hope this will lead to new price discovery for the coin and jumpstart an economy around the coin in Iceland.
CT: Because of this initial lack of exchange, would it be fair to say that the initial rollout didn't go as expected?
HB: True.
PA: Well it was a factor. There were few factors in fact. One would be the hype and price explosion that happened before the airdrop. This created a situation where the coin was hugely overvalued and had nowhere to go but down fast and hard. The attention became too much about the price.
HB: Also other infrastructure such as mobile wallets were missing, and payment solutions for merchants were also missing.
PA: Another factor was the fact that an the developers were unknown and holding enormous funds in their hands. This created some uncertainty and distrust. Then you have the absence of an exchange. An exchange is an essential part if you want to jump start an cryptocurrency economy. To begin with, merchants and others willing to accept a cryptocurrency need to have the option to convert the cryptocurrency back into fiat as they need that to purchase their stock, pay bills and salaries. As the economy evolves the merchant should have less and less incentive to trade the crypto back to fiat as he would start to be able to use it for his expenses.
CT: And this infrastructure was lacking in Iceland at the time, correct?
PA: Yes. There wasn’t much of an infrastructure in place at all when the airdrop started, and that is the main reason the current developer group has been close to silent in the past year. We wanted to avoid all hype and take the time to secure the coin as best we could and create the missing infrastructure before we would raise the sails again.
Auroracoin’s great renaissance
CT: So you've been preparing behind the scenes for a great Auroracoin renaissance?
PA: Yes we have been working hard for the past year to prepare the structure that needs to be in place for Auroracoin to be adopted here in Iceland. We have done our best to secure the coin, we are working on merchant tools, wider range of wallets and most importantly creating a secure and easy to use exchange where the Icelandic public can trade ISK and AUR. We have also cleared up all legal views regarding usage and trade of Auroracoin in Iceland.
We have sent official requests to the Central bank, The Financial Supervisory Authority and the Directorate of Internal Revenue. All have responded that there is nothing in our laws that prohibits trade or any general usage of Auroracoin and other cryptocurrencies in Iceland. The Directorate of Internal Revenue has also stated that trade with cryptocurrencies does not include VAT as it is considered as any other currency trade.
HB: It's all legal but the only thing we have to consider is that the currency controls have to be respected so the Icelandic people can't sell the Icelandic krona for USD or EUR to buy cryptocurrencies. But trading cryptos for ISK (icelandic krona) is legal.
CT: What can we expect from round two of Auroracoin?
HB: Well we are starting a promotional campaign inside Iceland in April.
PA: We have established a legal entity in Iceland that will front all the education, promotion and legal disputes. That is Auraráð, The Icelandic Auroracoin Foundation.The Foundation is open for anyone that has an Icelandic social ID and is a place where we are creating the Auroracoin community in Iceland. Which brings me back to the premise burn.
What I forgot to mention there is that before Baldur burned the remainder of the premine he donated 1 million Auroracoins to the Auroracoin Foundation. The Foundation intends to use those funds to promote Auroracoin in Iceland, support for merchants and distribute Auroracoin further in Iceland by means of promotion. We are planning some initial promotion here in Iceland in the end of April and we will be opening the ISX exchange in early May. During the ISX opening we have plans where we will have wide coverage in Iceland. ISX is the first cryptocurrency exchange in Iceland and that by itself is newsworthy but we are not leaving that up to change so we are taking steps to get proper coverage. We are finishing the rebranding for Auroracoin where we will introduce it in a different way to people.
HB: Perhaps the first crypto exchange not trading Bitcoin!
PA: This is just the moment we will raise our sails again. We only look at this as the beginning of our trip. We are well aware that an adoption of a cryptocurrency doesn’t happen overnight and this will be a battle over the next years. And that is the journey we have been preparing for the past year. We want to establish trust which was lacking when Auroracoin first came to the scene. That is why we are open on who we are, established the Foundation and have been securing the coin.
Auroracoin is in no way a coin that will focus on developing new tech. We are absolutely focused on cryptocurrency adoption and as such we build on technology that has been proven to work for others. Our goal is adoption in Iceland and with that we hope to be able to plow the road for other cryptocurrencies, that any obstacles that Auroracoin needs to face and overcome will benefit all of the cryptocurrency community.