The problem with physically-based currencies is that basing value on physical goods lets one be dependent on the value of those goods changing.

A good example is the gold standard. If something was to happen to the price of gold (like, say, Asgardia finding a large asteroid made largely of gold), then the value of all currencies tied to gold would plummet, because the price of gold would drop like a rock.

Cryptocurrencies are only good as long as we have computers and telecommunications. That means we'd have to have our currency system linked to our telecommunications (I believe, I may be wrong), which I find is a big security problem.

Until the Constitution is out, I am trying not to put any strong thought into currencies, economics, or trade because all of those will be wholly dependent on what the laws are with regards to those transactions.

HEW

The problem with cryptocurrency is

1. traceability: cryptocurrencies are expressely made to avoid it
2. insurance: if you don't have traceability you don't have responsability (see Mt. Gox for further references)
   
   These two problems leads to
   
   
3. anti-money laundering which, in short words, means that, if we won't agree with international (Earth's) standards, we'll be enlisted into "grey lists" and other countries won't make business with us (it have been a problem for Switzerland too, so it coped with international standards to be de-listed, just to say).

That's why is preferable to have a traditional currency, even if all money transfers can be made digitally (EFT: Electronic Founds Transfer) without the need of a solid (metal) money or to relate our currency with something other which have value per se (e.g. gold).

@Dirk
If you eliminate the untraceability from cryptocurrency you'll end with a... traditional currency, as the very base of cryptocurrencies is the... crypto. ;-)

Having a currency granted by, I can say, Asgardia National Bank, under the control of Finances Ministry, will give the insurance every business you'll do with the funds will be covered (by national funds and assets): cryptocurrencies', like bitcoins, problems is everyone can found an "untraceable bank", giving away just "paper" (certificates)... then leaving with the cash, being sure he/she won't be caught.

Last but not least, our currency must have a conversion ratio with foreign ones, to make business, sell and buy goods on international market: that means other countries have to accept it and not list us into grey-lists, like many taxes paradises are.
If we'll start with a cryptocurrency we'll be prone to fall under crime and mafia about money laundering: they will buy our currency for sure, to leave us with dirty money... not something we'll like to have for sure.

In my opinion, its more practical to have multiple types of financial instruments, with well defined scope and conversion/exchange mechanisms among special purpose and general purpose financial instruments.this multiplicity of such financial instruments and demarcation of the scope of each type of financial instruments for specific purposes allows for parallel evolution of individual financial instruments as well as more resiliency in the overall economic environment during periods of updates in the specifications of relevant financial instruments. 

https://asgardia.com/en/blog/13676-distribution-of-wealth/

A misconception nowadays is that all cryptocurrencies are untraceable, Bitcoin is not 100% anonymous, unless you "tumble" your coins in sites that exists just for that. 

There are other hundreds of crypto´s that are (thankfully) untraceable and anonymous, in a way that nobody will know how many coins you actually hold, or how many coins you just sent to your sister (thus, avoiding hacker temptations to go and steal your coins from your crypto wallet), the principle of privacy, freedom and decentralization it´s embedded on almost every cryptocoin out there, what people do or don´t do with their coins shouldn´t be a matter of interest of others. 

So, I personally don´t see an issue with privacy and conducting anonymous transactions, why would anybody need to know what did I buy yesterday or where did I have dinner or whatever? Anti Money Laundering, Know Your Customer, (AML, KYC) are traditional financial institutions tools to counter attack fraud. How will Asgardia need that? 

We are hopefully creating a brand new Nation, take Estonia as an example they rely their entire voting system as well as most of their government data on the blockchain, which is the very same technology that supports and maintains cryptocurrencies alive, China announced they will be interested in creating their own cryptocurrency.

That´s the bright side in crypto, almost nobody can fraud your coins, yet vulnerabilities have been found but patched right away. So traditional ugly smelly paper money will dissapear and hopefully all the interest rate fed financial institutions too.

Our own cryptocurrency would seem to be best. 

Crypto currency is something I know a little bit about. The chance of failure for a new currency is 99% :( 
I would prefer if we would adopt one of the current crypto currencies. The one I am in favor of is called ( stellar ) there is currently 4.5…See More1

 4.5 billion dollars invested in it it is secure it is up and running it is on a number of markets it has phone apps. The type of block chain technology it uses is called the tangle this means no central clearinghouse or bank. The advantage of the tangle technology is everyone who uses it becomes a hub. This makes it very difficult to be hacked or destroyed. This is just my opinion. Please do your own research.