Considering how quickly (and how massively) the cryptocurrency space has grown in 2017, it was only a matter of time before other parts of the financial and economic world took notice and began to adopt digital tokens. More and more brick-and-mortar stores are accepting cryptocurrency payments, and now some governments are even looking into the viability of a state-sponsored virtual currency. Sweden seems to be on track to outpace nearly every other country in the world in this respect. According to a report by Coin Telegraph, the Scandinavian country may use digital currencies to become the first cashless society on the planet.

Capitalizing on Digital Currency

One issue that companies have long had with cash, no matter the type of currency involved, is that cash transactions do not leave a trace of personal data which can be gathered and used for future purposes. Beyond that, cash requires physical space and management. With digital currencies on the rise, many companies and governments have seen virtual tokens as a potential means of addressing both of these concerns in some way.

According to the Coin Telegraph report, 900 of Sweden's 1,600 bank branches do not store cash any longer, and they will similarly no longer accept cash deposits. The number of ATMs across the country is slowly decreasing, and the total value of Swedish krona in circulation has fallen by almost half from 2009 to 2016.

All of this has the central banks of the country wondering about the viability of introducing a digital currency that is backed by the government. If such a currency were to be developed, it seems that bitcoin, as the leading virtual currency worldwide, would be a likely candidate for emulation.

Privacy and Other Concerns

Switching to a cashless society does invite a number of concerns, ranging from small to significant. (See more: Countries that Are Going Cashless.)

One of the more problematic issues is privacy. Cryptocurrencies have made a name for themselves because of their anonymity and supposed security. How would that look when scaled out to an entire country? Should hackers be able to access the government digital currency, they may be able to make off with an incredible sum of money.

There are other potential concerns. Digital currency users rely on technology to conduct their transactions and monitor or control their wallets. Doing so requires a smartphone, tablet, or computer in most cases. What would happen to those individuals in a society focused on digital currencies who are not able to access those devices? Bitcoin may help somewhat in this regard, as it does not require that users have bank accounts.

Sweden's government is not the only one to consider a state-backed cryptocurrency. The local government of Dubai recently announced plans to launch a digital token of just this type. (See more: Dubai Becomes First Government to Launch State Cryptocurrency.)

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