Every Icelandic citizen is to be given the chance to get a handful of virtual coins on 24 March.
The idea to distribute millions of the digital coins to all of Iceland's 333,000 citizens has been dreamt up by entrepreneur Baldur Odinsson.
Mr Odinsson's company is now creating, or "mining", the millions of Auroracoins needed for the giveaway.
He hopes that distributing the virtual cash to everyone will help to restore some value to the Icelandic krona.
Mr Odinsson said the project was possible thanks to an earlier government initiative that assigned a national ID number to every citizen. The ID numbers can be queried via a public database that would help the Auroracoin project to verify that people are getting only their fair share of coins.
About 10.5 million Auroracoins will be needed to give all those people 31.8 each, he told the BBC in an email.
Like many other virtual currencies, Auroracoins are based on the more well-known Bitcoin system, in which each coin is represented by a unique registration number.
'Immune to centralised meddling'
Mr Odinsson said that Iceland kept very tight control on currency flows in and out of the country.
"Auroracoin will be immune to centralised meddling of any sort," he said.
Work was already under way to "pre-mine" or produce the unique identifiers that represent the coins. More details about how Icelanders can claim their coins would be given nearer the launch date, Mr Odinsson said. People would have up to a year to claim their share.
Stories about Auroracoin in Iceland point out that Baldur Odinsson is a pseudonym and the company behind the project is based in Panama.
One story also pointed out that Iceland's controls on virtual currencies could stop people converting Auroracoins into a more valuable form of digital cash.
The Auroracoin project is starting as the value of Bitcoins suffers another sharp drop. The currency lost about 20% of its value in a day as its main exchange briefly halted withdrawals as it tackled some technical issues.
After Bitcoin trading at around $850 (£520) for weeks, it dropped in value to about $690.