On 25 March 2014, all Icelandic residents who held national identification number in that time, if they wished, could receive a truly amazing gift. Each of them was granted the right to claim 31.8 Auroracoins (AUR) - a new cryptocurrency created to captivate this tiny and unusual nation somewhere on the edge of Europe.

Necessity Crisis Is the Mother of Invention

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The Icelandic fiduciary currency - króna - has been struggling with inflation virtually since the beginning of its implementation at the beginning of the 20th century. During the crisis, from March 2008 to March 2009, the inflation reached up to 15.2%! The value of the Icelandic króna fell by as much as 50% at that time! As we know, Iceland has suffered an extremely turbulent crisis, with the collapse of the three largest banks, the resignation of the government and a significant impoverishment of the population, among other things. Mortgages increased by up to 20%, while the value of the properties fell significantly. The capitalisation of the Icelandic stock exchange evaporated by 90%. The situation was very serious, and every now and then, protests broke out in the streets by embittered Icelanders. Some voices to change the flawed currency to the euro or a completely new currency were raised by politicians in that time, but non of this happened.

_{OMX Iceland 15 stock exchange index from January 1998 to October 2008.
Source: Wikipedia}

A few years later cryptocurrencies popped out. Iceland had all the necessary predispositions to become a paradise for rapid cryptocurrency adoption - the public almost does not use cash, electricity due to geothermal energy is nearly for free, so mining is very profitable, and the high instability of its currency should create demand for all the inventions resistant to inflation. In February 2014, not too long after the first serious crypto boom, information about a new mysterious virtual currency based on the Litecoin protocol, called Auroracoin, appeared in the Icelandic media.

The First Ever National Cryptocurrency

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Auroracoin's name refers to the phenomenon of northern lights, which is one of the integral phenomena of Icelandic nature that attracts tens of thousands of tourists every year. The logo of the cryptocurrency contains an old scandinavian rune ᚠ which means "wealth". In the airdrop conducted on March 25th (which was followed by two more successive phases), the creators planned to distribute as much as 50% of all coinage to Icelanders. After all, more than 45,000 people claimed their share of the cryptocurrency, which is about 14% (!) of the population, and each of them received the equivalent of $385 (taking into account the market price at that time)! Thus, Auroracoin was one of the first, if not the first, cryptocurrency designed to serve primarily one nation. During the following years in different parts of the world similar attempts to create a crypto assigned to one country or region were conducted, to mention Spaincoin, Scotcoin, Britcoin or Gaelcoin, but none of them achieved such success and was not as close achieving it as Auroracoin.

Icelandic Satoshi Nakamoto

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One of the most electrifying things about Auroracoin is that, like Bitcoin, the identity of its creator (or group of creators) is not known. Father of Auroracoin hides under the pseudonym Baldur Friggjar Óðinsson, which is a combination of three characters from Nordic mythology - Baldur and his parents Frigg and Odin.

_{Baldur's Street in Reykjavíku}

Baldur's unknown identity was one of several reasons for public criticism of Auroracoin by part of the Icelandic political scene. Some of them were also concerned that the new cryptocurrency might pose a real threat to the country's (already weakly performing) economy, e.g. by facilitating tax evasion. There were also voices that Auroracoin is simply a scam and all the other criticism that affects cryptocurrencies in general (e.g. lack of central control or authority of a major institution).

Óðinsson strongly condemned the criticism of the authorities, pointing out that the narrow elite "sacrifices" the Icelandic folk by taking advantage of the disastrous financial system, thereby losing authority over the financial matters of their citizens. "The power must be taken away from the politicians and given back to the people", said Baldur, reminding Icelanders, in a way, that they had already lived in a system that met almost all the requirements of libertarianism (about which I will probably write a separate article one day).

Invention of Auroracoin therefore had a pretty strong ideological aspect - the liberation of Icelanders from the disastrous influence of government regulations and financial institutions. Óðinsson even stated that the government could, of course, prohibit the use of Auroracoin, but is not in a position to stop Icelanders from using the cryptocurrency without turning it into a police state.

Downfall?

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Auroracoin became a topic in mainstream media. Before the first airdrop the price spiked up. The price rose so fast and so high that it was strange even considering the fluctuations that the cryptocurrency market is known for. For a moment it has become the third largest cryptocurrency in the world in terms of capitalization, just behind Bitcoin and Ripple! However, with each subsequent phase of the airdrop, the value of it dropped equally dramatically fast. A nation that wanted to free itself from the raging inflation and flaws of its currency paradoxically saw something quite similar in this cryptocurrenty self-proclaimed saviour of their finances. The price, which reached nearly $100, dived in an extremely short time below $2. Most Icelanders who took claimed their coins sold them instantaneously to another cryptocurrency. Since then, with the exception of the 2017/2018 bubble, the value of 1 Auroracoin has remained within the range of $1.

_{Auroracoin price from its beginning until today.Source: Coinmarket}

Is Auroracoin widely used in Iceland today? It is not, and the main reason for this is likely to be its rather turbulent start. Today's developers of this crypto associated with the Icelandic Blockchain Foundation (which was born this month on the canvas of the former Auroracoin Foundation!) note that at the time of the airdrop there was no cryptocurrency exchange in Iceland, there were no applications for merchants to accept Auroracoins and there were no mobile wallets. In short, all the infrastructure that would allow Auroracoin to be adopted on the Icelandic market was created much later. Its start was not very well thought out and it became a victim of it's own success. After such a significant loss of value, Auroracoin lost the trust of the majority of it's enthusiasts, and then it became almost forgotten by Icelanders...

All this has resulted in the fact that today Auroracoin is used by only several places in Iceland, such as an ice cream parlour, a computer shop, a mechanic or a sports coach. Although "is used" may be too generous expression - these places accepted Auroracoin, but very rarely someone really pays with it. The daily volume on the only Icelandic ISX exchange fluctuates around $8,000, and on Bittrex it is even lower. However, after the creation of ISX, further attempts are being made to revive the project and it may still find its supporters. The establishment of the Icelandic Blockchain Foundation could change something in this direction. I don't believe that Iceland may eventually be bypassed by the world's cryptocurrency (r)evolution, so I bet that Icelanders will hear about Auroracoin once again some day.

However, there is something that really shocked and intrigued me. In addition to these few small and medium-sized merchants, Auroracoin is accepted by two really "big players". It is Harpa, the most prestigious event venue in Iceland, and the architectural symbol of Reykjavík and Strætó, the largest (if not the only one existing) urban and inter-urban bus network in Iceland.

_{It's me in the front of Harpa, which accepts payments in Auroracoin!}

The situation is quite bizarre, but hey, after all, is Iceland, a country of many eccentricities and paradoxes!

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I was so intrigued by the history of what happened to me that I decided not to limit myself with just reading and writing about it, but I also decided to find out If it's really possible to use Auroracoins in one of the listed merchants. Did it work? To be continued!

_{Sources:
http://en.auroracoin.is/
https://cointelegraph.com/news/auroracoin-makes-a-comeback-in-iceland-the-country-mired-in-financial-scandals
https://www.coindesk.com/icelands-auroracoin-passes-litecoin-becomes-third-largest-altcoin-market-cap/
https://www.ibtimes.co.uk/what-auroracoin-icelandic-cryptocurrency-passes-litecoin-1-billion-valuation-1438833
https://bitcointalk.org/index.php?topic=1467050.0}