The island nation of Palau, located in the Pacific Ocean, has created history both in government finance and in the adoption of blockchain technology.
The island nation of Palau, located in the Pacific Ocean, has created history both in government finance and in the adoption of blockchain technology by launching a blockchain-based savings bonds system.
Titled "Palau Invest," the program will let it reach the government funding processes and tap into the advanced technology to realize its infrastructure development projects.
Funded by Japan's Ministry of Economy, Trade and Industry, developed in cooperation with Japanese blockchain company Soramitsu, the system has completed the prototype phase and moved into public demonstration.
The platform will enable Palau's 18,000 citizens to purchase government bonds using their smartphones once the Finance Ministry finalizes issuance criteria and receives government approval.
"The savings bonds initiative enables us to fund key projects – such as housing, SME development, roads, and other essential services – with capital sourced domestically," explained President Surangel Whipps Jr. in the launch ceremony. "These projects are not just critical to infrastructure but they also create spillover effects."
The backbone of this is the technical fabric of the system-public-permissioned blockchain of Hyperledger Iroha 2 that works on the platform of Sora v3 Hub Chain. The blockchain is created by Soramitsu, the company which developed Iroha and contributed the same to the Linux Foundation Hyperledger Project.
The project, whose full launch is eyed in 2025 following an announcement in July, is part of a broader trend of adoption for this technology in the region. Palau has been working on a U.S. dollar-pegged stablecoin project with Ripple since 2021, which entered into its second phase last year after successfully going through the first implementation.
In early 2022, Palau partnered with Cryptic Labs to develop the Root Name System, or RNS, laying the bedrock for the country's digital residency program. It is a blockchain ID that comes with Know Your Customer verification, provided as a non-fungible token.
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