Speculation increases that an independent Scotland could adopt bitcoin as national currency

On Thursday, Scottish citizens will make a monumental decision: Remain a part of the U.K., or go it alone as an independent E.U. nation. As the debate rages on in Scotland itself, and referendum becoming too close to call, many experts have found themselves considering the very real possibility that Scotland will sever its 307-year-old relationship with the United Kingdom. That outcome prompts an important economic question: Without the pound sterling, what will the newly independent nation of Scotland use as its national currency? While the most likely possibility is the euro, several observers have begun floating an idea that would have seemed ludicrous only a year ago. What about bitcoin?

It’s not as far-fetched an idea as it might seem, and the concept is being presented by some credible figures in world finance. The thinking is that a post-independence Scotland would be severed from the pound sterling, and might be understandably reluctant to enter the already messy Eurozone with a relatively weak hand. The obvious choice in that situation would be for Scotland to create its own currency, spending years — and more likely decades — re-establishing its credit ratings, internal regulations and valuation. That would require either a new central bank, or a return to the long-abandoned practice of “free banking,” allowing individual banks to issue their own currencies.

Bitcoin could, in principle at least, provide an alternative. And there is some precedent for independent currencies in Scotland, which only adopted the pound sterling 1707, and used a variety of regional currencies and bullion well into the 1800s. As Guy Debelle, the assistant governor of Australia’s central bank, recently told The Guardian: “The Scots can go back to experimenting with a multitude of currencies, Bitcoin and the like, and we can just sit back and see how it goes. A nice natural experiment about the future of money in Scotland—again. Because, as I said, they tried this in the 18th and 19th centuries. It worked for awhile, but eventually fell apart.”

A variation on this concept is the Scotcoin alt-coin, which seeks to create a national cryptocurrency for an independent Scotland. Scotcoin seems like a longshot, however, with only marginal gains as Scotland’s independence referendum approaches, and a current market cap of around $220,000. Given the catastrophe of Iceland’s attempt at a national alt-coin, Auroracoin, there is little reason to think a national cryptocurrency would be a better solution than an established one like bitcoin.

Whatever the result of the referendum, the fact that bitcoin and other digital currencies are being presented as serious possibilities to solve a national-level economic problem speaks volumes for the progress cryptocurrencies have made in recent years.