Benefits of blockchain
SO WHAT ARE THE BENEFITS of the blockchain? In the Caribbean we have restrictive barriers to doing e-commerce.
We have high remittance costs. It’s estimated that globally remittance costs can be reduced by up to 95 per cent by this protocol. Remittance in the Caribbean is a human rights issue, so we have a very revolutionary and libertarian stance towards this. We sincerely believe that in the oligopoly of the banks there is exploitation of people and that in a digital age a digital unit of account, which now exists, is going to bring competition into this environment and ultimately that means we will have a better access and better priced financial service with enhanced services being provided and that’s only good for our economies, good for our region and good for our people.
Bitcoin is very easy to send and receive whereas a bank wire will take three days to clear because one or more of the banks are taking that one day of interest rate. That doesn’t happen on the blockchain – transactions process in ten minutes approximately. So this is not an abstract concept. One of the things that you could do with these unique units of account is you can assign them corresponding identifiers, meta data can be put into them and you can tie them to the value of other assets. This is being done. This is one of the things that our organisation is planning to do with the help and cooperation of the Central Bank of Barbados. We are planning to create an electronic digital dollar in Barbados, which will allow people to transact using all of the wonderful innovations of the bitcoin blockchain, but their assets will not be tied to bitcoin’s value – it will be tied to fiat currency, which is issued by the Central Bank and held with a commercial bank in a trust account, which is publicly audited, which means you have a digital IOU.
This principle has been applied today by companies around the world using the blockchain to tag diamonds, to settle markets between banks, inter-bank exchanges. It is being used by NASDAQ on their private stock markets. The Barbados Stock Exchange should be interested to hear that the technology that Bitt uses and that the blockchain represents can connect them instantly to the most transparent, secure and accountable ledger which has ever existed. The blockchain is used to prove ownership of property, smart assets. It is used to prove ownership of any intellectual property. There are gold IOUs tied onto the blockchain meta data. IBM itself is looking at the Internet of things, which already exists around us, communicating hardware devices. One of the big challenges that you have in that system from a cyber crime perspective is uniquely identifying each of these. How does your fridge know it’s talking to your washing machine and not being hacked? Give it a unique identifier which is issued on this blockchain ledger and you have proof that this is indeed your washing machine talking to your fridge or to a drone delivery network or whatever wonderful innovation IBM and other entrepreneurs are comming up with.
So who accepts bitcoin globally? The who’s who accept it basically. You can pay for any Microsoft product using bitcoin, you can buy any Dell product using bitcoin, you can pay for your satellite TV and one of the more interesting things for your consideration is Cheap Air and Expedia.com. both accept bitcoin payments for flights and both of those online services allow you to book hotels in Barbados, which means that today, even if the hotelier is not aware of it, there are users paying for hotels using bitcoin and that process is quite straightforward. There is over US$75 million transacted every 24 hours via bitcoin exchanges like bitt.com. So if you the merchant do not like bitcoin, do not want bitcoin, you sell it for US dollars and an organisation like Bitt receives those and then we sell them at a commercial bank and then we get Barbadian dollars and then we disperse those to the hotel and they have been paid and they have accessed a payment option which currently stands at a market cap of $3.5 billion and over 4.5 million users in its five years of existence. Every curve is going up exponentially and so we are talking about a phenomenal market potential for it e-commerce.
It’s not the merchants who are accepting bitcoin, investing in it or looking at it. NASDAQ is using a protocol for issuing digital assets on the blockchain to maintain their private stock markets at very low cost and transparently. GoldmanSachs put US$50 million into a company that offers a universal wallet service like Bitt.com does the New York Stock Exchange was part of an investment round of US$75 million this year into another wallet provider like bitt.com. And then you have UBS, which has a dedicated research group. CitiBank is investing, Barclays Bank is accepting bitcoin deposits and the list goes on.
It has been three hard years for my partner and I and the early members of our team. And it’s been a journey for us but we are finally reaching the point where what we researched and figured for ourselves a few years ago is now coming to the attention of the mainstream media and being taken very seriously by financial institutions, and Barbados needs to follow suit.
Oliver Gale is co-founder and chief financial officer of Bitt, a Barbados-based digital asset exchange, remittance channel and merchant processing gateway. He made these comments during a presentation at the recent Domestic Financial Institutions Conference.