Previous 30 days of auroracoin market capitalization. Source: CoinmarketcapThat speculation in auroracoin resulted in a huge price spike prior to Airdrop with the price exceeding $97 in early March before beginning a long slide downward.After the Airdrop disbursement initiated on March 25, the price of auroracoin dropped by 50% as those receiving coins cashed them out, mostly for bitcoin on digital currency exchanges.Novel approachAuroracoin planned to give each person in Iceland with a registered Icekey number 31.8 AUR, available via a registration page only available in Iceland on its website. The day prior to Airdrop’s initial distribution on 25 March, that would have equaled $385.Today, with auroracoin valued at approximately $0.56, an Airdrop disbursement would only be worth less than $20.A number of people within the industry have had mixed opinions on whether auroracoin’s unique method of distributing coins would be effective. Even more of an issue was the true utility of the coin as a form of value.The main concern some levied is that auroracoin is not accepted as a form of payment in Iceland, which might make it a purely speculative instrument and not an alternative to the country’s own krona.However, the Icelandic government’s heavy-handed control of the country’s banking sector means the krona is the only payment option within the country right now.So, people aren’t spending auroracoin, and instead they are selling it. The main factor that leads to this conclusion is that heaviest trading for auroracoin didn’t occur in its speculative pre-Airdrop phase. It actually happened the week after the coin was released to Iceland residents, who then promptly cashed them out. 
All time BTC/AUR trading. Source: CryptsyIceland’s banks looking at bitcoinWhile Iceland’s parliament has been discussing what to do about auroracoin and other digital currencies, one of the country’s largest banks, Íslandsbanki, recently held an educational session on the subject of bitcoin.Held by Íslandsbanki’s wealth management unit, the event was reportedly one of the first to ever publicly discuss digital currencies in Iceland. The meeting was held in a Reykjavik concert hall, just down the street from the country’s central bank.A number of Íslandsbanki executives spoke, and there were some panels consisting of economists and leaders from the country’s payments industry. One attendee at the event was able to provide translated quotes to CoinDesk.Sverrir Þorvaldsson, the director of risk at Íslandsbanki, told the audience early on:“The bank is not a participant in the bitcoin community in any way, but we keep a watchful eye.”During the session, Þorvaldsson later added that bitcoin’s value is still deeply tied to traditional money:“I think it is interesting to shine a light on the role of these exchanges for bitcoin, and the fact that it seems that these coins are still very dependent on people being able to exchange them for traditional currencies.”Þorvaldsson aslo mentioned Auroracoin, while saying that it being tied to government-backed money is also the reason why it is successful.Capital controlsÍslandsbanki holding a meeting about bitcoin is significant since Iceland’s capital controls limit the ability for financial institutions to have access to global markets. And those restrictions have largely insulated the country from cyrptocurrencies before aurorcoin was launched.During the global financial crisis in 2008, global cross-border capital flows were reduced significantly.Although it did trend back up in 2010, capital flows have gone back down during the past few years that such information has been available.This is an interesting metric that can only be attributed to government-backed money since decentralized forms of value have no borders and are currently not encumbered banks susceptible to monetary policy. 
Source: The EconomistIceland’s capital controls were enacted to protect the country’s interests from outside forces and create a stronger internal economic environment.Years later, Óðinsson, auroracoin’s founder, thinks that the restrictions have gone on for far too long:“The longer the capital controls remain in place, the harder it will be to get rid of them. They were only supposed to last a few months initially, now we are closing in on six years,” he said.Logo image via Official Auroracoin WebsitealtcoinsauroracoinIcelandOriginal author: Daniel Cawrey