Home · Blog · Economics & Policy · Jan 23, 2025 · Updated Dec 18, 2025 · 10 min read

Beyond Bitcoin: How SORA Enables Supranational Economies

Bitcoin proved crypto can be legal tender. SORA’s XOR goes further by enabling nations to allocate new issuance for productive economic growth.

In September 2021, El Salvador made Bitcoin legal tender — the first country to do so. The experiment showed that cryptocurrency can function as national money. But it also exposed a fundamental limitation: Bitcoin acts as a foreign currency. El Salvador can’t mint new Bitcoin to fund infrastructure, schools, or hospitals. It can only acquire Bitcoin from external sources.

SORA offers a different model. XOR isn’t designed to be a foreign currency that countries passively accept — it’s designed to be integrated into domestic economies as adaptive money that governments can allocate for productive growth.

This isn’t theoretical. SORAMITSU, the company behind SORA’s technology, already operates the Bakong payment system for Cambodia’s central bank (processing $300 million daily) and has piloted CBDCs with the Solomon Islands and Palau.

This article explores how SORA’s framework differs from Bitcoin-as-legal-tender, why that difference matters economically, and what it would take for a country to adopt XOR.

TL;DR

• Bitcoin as legal tender — Countries can accept it but can’t create it. It’s a foreign currency.
• XOR as legal tender — Countries can propose XOR allocation for productive investments via governance.
• Economic theory — Based on Richard Werner’s research: money created for production = growth without inflation.
• Real-world proof — Cambodia Bakong ($300M/day), Solomon Islands pilot, Palau savings bonds.
• Governance — SORA Parliament uses Athenian-style random selection to allocate resources democratically.

The Problem with Bitcoin as Legal Tender

El Salvador’s Bitcoin Law (2021) made BTC valid for:

Discharging debts
Purchasing goods and services
Paying taxes

The Chivo Wallet onboarded ~3 million users (50% of the population), partly driven by a $30 sign-up bonus. Bitcoin ATMs showed more inflows than outflows. Fuel discounts incentivized adoption.

But structurally, Bitcoin has limitations as national money:

Factor	Bitcoin	XOR
Supply Control	Fixed (21M cap) — deflationary	Elastic — expands for productive use
Domestic Minting	Impossible — must acquire externally	Possible — via governance proposals
Transaction Speed	10–60 min (depends on confirmations)	~2 seconds (SORA v3 target: sub-second)
Energy Use	High (Proof of Work)	Minimal (no mining)
Governance	None — protocol rules are fixed	On-chain Parliament with democratic allocation
National Integration	Acts as foreign currency	Integrates as domestic money

The IMF and World Bank criticized El Salvador’s move, citing volatility and dollarization risks. But the deeper issue isn’t volatility — it’s that Bitcoin can’t fund domestic production. Growth depends entirely on external inflows, just like with the US dollar.

The Economic Theory Behind XOR

SORA’s design is based on Richard Werner’s Disaggregated Quantity Theory of Credit — research showing that how money is created matters more than how much.

Werner’s framework distinguishes three types of money creation:

Money Created For	Economic Effect	Example
Consumption	Price inflation (more money chasing same goods)	Consumer credit cards, personal loans
Speculation	Asset bubbles (more money chasing same assets)	Real estate mortgages, stock margin loans
Production	Real GDP growth (new goods and services created)	Infrastructure, R&D, business expansion

Japan’s post-war economic miracle (1950s-1980s) demonstrated this principle: money directed toward productive investment generated sustained growth without runaway inflation.

The SORA Thesis: XOR supply expands only when allocated for productive use — building things that generate value. This is enforced through on-chain governance where token holders vote on allocation proposals. Because everyone’s holdings are affected equally by inflation, there’s a collective incentive to approve only value-creating investments.

How XOR Legal Tender Would Work

SORA has published a concrete framework for countries to adopt XOR. Here are the steps:

Step 1: Legislate Legal Tender Status

XOR must be valid for:

Debt repayment
Goods and services
Taxes and government fees

Countries can choose:

Option A: Exclusive XOR currency (replacing existing fiat)
Option B: Parallel use alongside existing currency (like El Salvador’s dual BTC/USD system)

Option B carries less systemic risk — markets naturally gravitate toward the more efficient currency.

Step 2: Deploy Localized SORA Wallet

The SORA mobile wallet is open-source and customizable. Governments can:

Add national branding and language
Integrate with existing payment infrastructure
Fund development through the SORA Builders Programme

Step 3: Appoint Government Liaisons

A coordinator (or committee) interfaces with the SORA ecosystem to:

Draft funding proposals for productive investments
Analyze factor-input utilization (land, labor, capital, technology)
Communicate with SORA Parliament

Step 4: Request XOR Allocation

Governments submit proposals to the SORA Parliament for funding. Proposals must demonstrate productive use — infrastructure, R&D, education, healthcare — that generates value exceeding the allocation.

Key Difference from Fiat: In debt-based systems, governments borrow money and must repay with interest, creating ever-growing debt. With XOR, allocation for productive use doesn’t create debt — it creates value. If a bridge costs $1M to build but generates $50M in toll revenue over 20 years, the economy is richer, not indebted.

Example: A Hypothetical Grid Modernization Proposal

To illustrate how productive allocation works in practice:

Stage	Details
Proposal	Country X requests 50M XOR (hypothetical value: ~$15M) for rural electrical grid modernization
Projected Output	Grid connects 200,000 households, enables $40M/year in new economic activity
Supply Impact	50M XOR minted → ~0.5% supply expansion (illustrative; assumes 10B circulating)
Holder Dilution	All XOR holders experience 0.5% dilution
Net Effect	If $40M annual output > $15M allocation, the economy grows and XOR gains backing — dilution is offset by value creation

All figures are illustrative. Actual XOR price, supply, and proposal economics would vary.

This is simplified, but illustrates the core logic: productive allocation creates more value than it costs, making supply expansion net-positive for all participants.

Real-World Proof Points

SORA’s framework isn’t purely theoretical. SORAMITSU has deployed blockchain-based monetary infrastructure for multiple governments:

Project	Country	Status	Scale
Bakong	Cambodia	Live (since 2020)	$300M+ daily volume, 3M+ transactions/day (as of 2024)
Bokolo Cash	Solomon Islands	Pilot completed	Cross-border bridge to SORA network tested
Savings Bonds	Palau	Demo (Oct 2024)	Retail bond purchases in 2 seconds on SORA v3 testnet

Bakong is particularly significant. It’s a functioning CBDC used by millions of Cambodians, processing real money at scale. It’s connected to payment systems in Thailand, Laos, Vietnam, and Malaysia — you can scan QR codes across borders.

This proves SORAMITSU’s technology works in production. The question is whether governments will take the next step: integrating with SORA’s public network rather than running private infrastructure.

The SORA Parliament: How Allocation Decisions Are Made

If countries can request XOR allocation, who decides which proposals get funded?

The SORA Parliament is a multi-stage governance system inspired by Athenian democracy. Its key innovation: random selection (sortition) for decision-making bodies.

Why Random Selection?

In traditional democracies, politicians can be lobbied, bribed, or captured by special interests. They know they’ll be making decisions, so they can be influenced in advance.

Sortition prevents this by not revealing who will decide until the last moment:

Stage	Body	Function
1	Citizens	Bond XOR to gain proposal rights
2	Agenda Council	Randomly selected; filters spam proposals
3	Interest Panels	Domain experts analyze proposals
4	Review Panel	Collates expert opinions into pros/cons
5	Policy Jury	Randomly selected; makes final yes/no decision

Oversight bodies (Monetary Policy Committee, Financial Markets Authority, Oversight Council) monitor the process for compliance.

Current Status: The SORA Parliament is still in development. SORA v2 uses a simpler governance model with Council and Technical Committee. Full Parliament implementation is planned for SORA v3 (Nexus). See the SORA Nexus Complete Guide for current specifications.

Governance Risks Worth Watching

Random selection reduces some capture risks, but doesn’t eliminate all failure modes:

Plutocracy — Large XOR holders have more at stake, but also more influence. Quadratic voting or reputation systems could mitigate this, but aren’t yet implemented.
Low participation — Most DAOs suffer from voter apathy. If only 5% of holders vote, the “democratic” label becomes questionable.
Coordinated proposals — A coalition of countries could theoretically dominate the proposal pipeline. Safeguards exist in the multi-stage review process, but haven’t been stress-tested.

Sortition helps against predictable bribery, but it doesn’t automatically solve turnout, cartel behavior, or stake concentration. SORA’s Parliament design addresses many governance failures, but it’s new territory. These risks deserve ongoing scrutiny as the system matures.

Challenges and Honest Assessment

SORA’s framework is ambitious. Here’s what’s working and what remains uncertain:

What’s Proven

Technology works at scale — Bakong processes $300M/day
Cross-border interoperability — QR payments across 5 Southeast Asian countries
Fast transactions — 2-second finality demonstrated on SORA v3 testnet

What’s Unproven

Full Parliament governance — Still in development; hasn’t been stress-tested
XOR as actual legal tender — No country has adopted it yet
Long-term price stability — Token Bonding Curve theory, but limited real-world data

Structural Challenges

Challenge	Details
Regulatory friction	Most countries have unclear or hostile crypto regulations
Political will	Adopting XOR means ceding some monetary sovereignty to a decentralized network
Technical literacy	Government officials need to understand blockchain governance
Competition	Other CBDC platforms (e.g., from China, IMF) have more resources

Who This Is For

XOR legal tender makes most sense for:

Small nations seeking alternatives to dollar dependency
Countries with unstable currencies looking for credible monetary infrastructure
Governments interested in productive credit creation rather than debt-based financing

It’s less compelling for:

Large economies with functioning central banks
Countries prioritizing monetary sovereignty over network effects
Jurisdictions with strict crypto prohibitions

Conclusion: A Different Kind of Crypto Adoption

El Salvador showed that cryptocurrency can function as legal tender. But Bitcoin-as-legal-tender has the same structural limitation as dollarization: the country can’t create money domestically to fund growth.

SORA offers a different path. XOR isn’t a foreign currency to be passively accepted — it’s a supranational system that countries can participate in actively, proposing productive investments and receiving allocations through democratic governance.

Whether this vision succeeds depends on:

Technical execution — SORA v3 (Nexus) delivering on its scalability and governance promises
Political adoption — At least one country taking the leap beyond pilots
Economic validation — Demonstrating that productive credit creation works in practice

The infrastructure exists. The theory is grounded in real economic research. What’s missing is a first mover willing to test it beyond pilots.

Further Reading:

FAQs

How is XOR different from stablecoins like USDT or USDC?

Stablecoins are pegged to fiat currencies (usually USD) and backed by reserves. They inherit the monetary policy of the underlying currency. XOR has its own monetary policy — supply expands based on productive use proposals approved by governance, not based on USD inflows. It’s designed to be an independent economic system, not a wrapper around existing fiat.

Can any country adopt XOR, or only small ones?

Technically, any country can adopt XOR. Practically, small nations with limited monetary sovereignty have more to gain. Large economies with stable currencies and functioning central banks have less incentive to integrate with a supranational system. The framework supports both exclusive adoption and parallel use alongside existing currencies.

What prevents inflation if governments can request XOR allocation?

Two mechanisms: (1) Proposals must demonstrate productive use — investments that create value exceeding the allocation. (2) All XOR holders vote on proposals. Since inflation affects everyone’s holdings equally, there’s collective incentive to reject proposals that don’t generate real value. This aligns government and citizen interests.

Is SORA trying to replace central banks?

Not exactly. SORA provides infrastructure that central banks can use (as Cambodia does with Bakong). The XOR legal tender framework is an alternative for countries that want to participate in a supranational system rather than running fully independent monetary policy. It’s a choice, not a replacement.

What’s the difference between SORA v2 and v3?

SORA v2 runs on Substrate (Polkadot ecosystem) with basic on-chain governance. SORA v3 (Nexus) is being built on Hyperledger Iroha 3 with the full Parliament governance system, faster transactions (~1 second finality), and hub chain architecture for connecting CBDCs, DeFi, and cross-border payments. See the Nexus guide for details.

Has any country actually adopted XOR as legal tender?

Not yet. Cambodia uses SORAMITSU’s technology for Bakong (a CBDC), but Bakong is a private ledger, not XOR on the public SORA network. The Solomon Islands and Palau have run pilots. Full XOR legal tender adoption would require legislative action and political will that no country has demonstrated yet.

Financial Disclaimer

Information on Soranauts is educational, not financial advice. Crypto and DeFi carry risk. DYOR and consult a professional. Past performance is not a guarantee.

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