In brief

  • A presidential candidate for Ecuador has found a way to keep the gold standard alive—blockchain.
  • Geovanni Andrade proposes to mint a gold-backed crypto.
  • But will he have the backing of his party, let alone the electorate?

Ecuador is not what you could call a crypto-friendly country. The closest it has come to having a favorable position towards crypto was when it moved from a ban on their use to their acceptance as assets—but not as a means of exchange. However, a presidential candidate wants to change that.

Geovanni Andrade, president of the Ecuadorian-Chilean Chamber of Mining and presidential candidate for the 2021 general election, recently disclosed his intentions to create a national cryptocurrency to facilitate transactions within Ecuador.

In an interview for the digital newspaper Primicias, the businessman talked about his government plan, mentioning that a national cryptocurrency would make internal transactions easier and facilitate their audit. He said that this was an essential aspect of his vision for the country.

"We are looking at ways to create an Ecuadorian cryptocurrency, this does not mean that we are going to escape from dollarization—we must support dollarization,” said the candidate. He continued, “It is very important that we create the cryptocurrency for all the internal benefits within the country, such as internal transactions. This would work very well for Ecuador.”

Talking about dollarization is critical in every political speech in Ecuador. The country is very divided on this topic. In 2000, then-President Jamil Mahuad dollarized the Ecuadorian economy in an attempt to curb inflation and speculation. The move cost him his term in office, but none of his successors have been able to undo his decision.

Andrade’s currency would be backed by guarantees of gold. He wants to create a vast gold refinery that would buy the raw metal from other countries, process it and store it in the country as part of its wealth reserves.

In this sense, the new cryptocurrency would be a sort of stablecoin linked to gold—like Digix—although it would also be recognized as legal tender—like the Venezuelan Petro. However, it would not be a substitute for the dollar, but a sort of alternative currency—also like the Petro.

A Realistic Plan?

It all sounds charming, but it seems difficult to achieve. Though he is still fighting for the presidency, Andrade has already lost the support of his own party. It would be the first time that Ecuador has had a politician open to the idea of financial decentralization and the use of distributed ledger technologies, even though he hasn't necessarily said anything about Bitcoin or mentioned cryptocurrencies in his official government plan, which, by the way, is suspected of being a copy of a Wikipedia site.

But if Justin Sun survived the accusations of plagiarism, so could Geovanny Andrade...right?