Above: Marla Dukharan of Bitt speaking at the T&T Chamber of Commerce meeting on digital currencies. Photograph by Mark Lyndersay.
BitDepth#1115 for October 17, 2017
Navin Seeterram, Trade and Business Development Unit Manager for the T&T Chamber of Commerce, tried to set the tone for the morning’s discussion by noting of money that, “These instruments have value because we imbue them with that value.”
The TT Chamber of Commerce’s recent discussion turned out, despite the occasional drift toward conversations about BitCoin and helped along by some folksy but effective moderation by JMMB’s Nigel Romano, to be a useful session on the potential of the blockchain and the way that digital currencies will revolutionise the way we do business.
Marla Dukharan, Chief Economist for digital currency evangelist and blockchain service implementer Bitt, based in Barbados, opened her conversation about the blockchain by pointing out the inefficiencies of the current systems of banking and value trade.
Dukharan, famous that morning for her challenge of the Finance Minister’s budget and fiscal policy for 2018, had another mission speaking with the captains of industry and their duly appointed representatives gathered at the Chamber’s Westmoorings offices and it was no less daunting, to make a case for the end of the “trusted third party” in financial transactions using the blockchain.
Not surprisingly, the economist led with numbers.
According to the World bank, two billion people, 40 per cent of the world’s adults and fifty percent of the world’s poorest are unbanked.
One billion women worldwide are unbanked and 73 per cent of the unbanked live in 25 developing countries.
These are the very nations, including much of the Caribbean region, that the global financial sector seems keen to shed, or at least to limit its dealings with using the clinical financial term, “derisking.”
Among the unbanked, 16 million have access to a mobile phone and the World Bank has set a goal to provide universal access to banking by 2020. Furthermore, the economist argued; digital finance could add US$37 trillion to the GDP of emerging economies.
Dukharan skipped quickly over the MPesa example in Kenya, which is normally trotted out in support of such initiatives, but which succeeded because of the significant distance challenges it overcame so effortlessly.
Of greater relevance were figures that indicated that the digitising of government transfers in India cut bribe demands by 47 percent and the possibility of eliminating both the delays and costs (up to 15 percent) charged on remittances from first world nations to developing nations, a sum estimated to reach US$500 billion this year.
Bitt’s mission is stated directly on their website: “To financially empower everyone and provide infrastructure to support a digital financial ecosystem throughout the Caribbean, that will stimulate economic growth and financial access for this and future generations.”
The company plans use the blockchain to pursue the monetary union for the Caribbean community that’s been written into the Treaty of Chaguaramas since 1973.
Bitt calls its project the Caribbean Settlement network, “a multilateral clearing and settlement facility within the Caribbean region” that it’s describing as CaribCoin for consumers.
The first stage is to eliminate the need to use US currency as a bridge within the region, limiting each nation’s need to tap their foreign exchange reserves to do transactions within the Caribbean.
As a peering solution for digital value, the blockchain offers a secure and open digital ledger system that can’t be tampered with or changed. The technology is based on absolute transparency and everyone on the ledger has access to all entries at every moment in the lifetime of every transaction.
The blockchain doesn’t require trust, because all transactions are visible to everyone at all times. Names aren’t given, but if you know what you’re looking at, you can see the entire digital ledger.
Transfers of value between peers who have agreed to work with the blockchain happen instantly and with no infrastructure overhead.
Because the technology is both transparent and anonymous by design, it has become a lighting rod for the way it has been used to move money for criminal activity. It is, in that respect, a cash ATM, but one that offers its financial records up to the world.
If Nigel Romano is any indicator, bankers seem to have no theoretical problem with the blockchain as a intermediary ledger system for value transfer.
“Banks are intermediaries,” Romano said.
“Most businesses have more cash on hand on any given day than any bank does. We use other people’s money to do business.”
Wade George, Caribbean Tax Managing Partner for Ernst and Young Caribbean was more bullish on the idea.
“We are keen to get into this space,” George said, noting that EY has established a blockchain centre in New York.
Championing the blockchain and Bitcoin as trustless currencies born out of growing distrust with existing financial systems, George noted the systematic debasing of currencies in Zimbabwe, Argentina and Venezuela.
“Why would you trust governments or central banks?” he asked.
Bitt is taking a measured approach to introducing the system in the Caribbean and is currently testing the technology with Barbados currency, successfully moving value within the country. The intent is to move consumer transactions to the platform, promoting cheaper costs, faster settlement of payment and greater accuracy and accountability, lubricating the peer to peer movement of money.
The company is in discussions with the Central Bank of T&T and the Eastern Caribbean Central bank with a view to testing the system in a sandboxed environment with a limited sum of money in a quarantined space as a testbed for developing a regulatory framework.
“Once we have this rolled out in a few Caribbean countries,” Dukharan said, “we will see if it can work within the region.”
“Regulation,” she noted, “always lags behind innovation.”