Part II – Using digital currencies to increase Caribbean participation in the Internet economy
A continuation of Shiva Bissessar’s (of Pinaka Technology Solution), firsthand account of the discussion on digital currencies in the Caribbean at the recently held 10th Caribbean Internet Governance Forum in the Bahamas, along with his own views on the subject.
In Part I, published on 26 August, we looked at a defined problem facing small Caribbean content creators who are attempting to monetise opportunities on the global stage, but are left with the headache of resorting to tradition payment infrastructure to actually receive payment. We also looked at some of the pitfalls of the traditional payment and remittance systems which they are forced to rely upon and the opportunity created by these inadequate systems for new digital currency based services.
In this article, we explore the response of authorities to the phenomenon of digital currencies in the context of Caribbean entrepreneurs willing create products and services in the space and the global context of nations willing to evaluate risks and opportunities in the space.
Encouraging Growth Of Caribbean Digital Currency Service
My own efforts to stimulate discussion on the topic with financial authorities in Trinidad and Tobago have been unremarkable and in the meetings I have had, I sense more unwarranted fear of this financial disruptive innovation than a willingness to objectively evaluate risk and opportunities. The Koblitz Group describes itself as offering Caribbean based crypto currency digital exchange services, wholesale mining facilities and digital currency ATM services. However after several months their digital currency exchange website still indicates formal launch as being imminent. Generally speaking, to launch such services there may be various obstacles to overcome such as; seeking clarity on how operations may be perceived and classified under the Financial Institution Act, 2008 (as in the case of Trinidad and Tobago), obtaining necessary bank accounts to facilitate operations and currency trading and obtaining facilities to allow for the mining of digital currencies. I am yet to see any clear statement or even signs from any Caribbean Government which can be deemed as supportive of digital currency entrepreneurs.
Koblitz Group co-founder, Oliver Gale, offered the following quote as a summation of the roadblocks they have faced in trying to get established in certain Caribbean nations:
“Regulators are very slow to respond and educate themselves on digital currency technology. Whilst other small economies around the world respond proactively to this emerging technology (See Isle of Man) to establish themselves as forerunners in a new age of finance we have found Caribbean government bodies resistant to change. This is a shame because not only do our economies need stimulation, but our people need help in entering the age of e-commerce and m-commerce.”
How is this different from what is taking place globally? The UK Treasury will soon be embarking towards understand the risks and opportunities posed by digital currencies while in the state of New York in the US has extended the period of comment on their proposed controversial regulatory framework for the virtual currency industry. Closer to home in Latin America, some see Argentina’s debt default and Venezuela’s high inflation and foreign currency controls, as making these nations more likely to adopt Bitcoin. It is encouraging that mobile money solutions have been developed in some Caribbean nations including Guyana, Jamaica, Dominica Republic and Haiti. In an article where Mr. Kosta Peric, Deputy Director for the Financial Services for the Poor at the Bill & Melinda Gates Foundation, espouses the virtues of “financial inclusion” and outlines his mission to reach the “un-bankable”, we get a possible glimpse of the future role of digital currencies (e.g. Bitcoin), payment protocols (e.g. Ripple) and the role of new actors (e.g telcos) in achieving such a mission. Do we have the courage to consider digital currencies as possibly augmenting mobile money solutions?
Getting back to the initial problem highlighted by Ms. Golden; post CIGF meeting, I asked her for further comments on the problem and her thoughts on how new payment infrastructure can assist small Caribbean content creators:
“There is a great need for more education on what payment options are available for entrepreneurs to make use of in the region. While Paypal is an option many would like it is not available for receiving payments in quite a few Caribbean jurisdictions. The high costs of opening merchant credit card accounts is also a further barrier. It would be necessary to see more promotion on the potential of Bitcoins and other virtual currencies as an alternative that entrepreneurs can use. Banks should also be encouraged to find new ways of facilitating the needs of businesses who function primarily online”
So if we are serious about encouraging participation in the Internet Economy, there is a necessary first step of clear direction from respective Caribbean governments to have authorities objectively analyze the potential benefits of digital currencies and then place necessary policies and measures in place to deal with the risks whilst ensuring that innovation to create the payment systems which small Caribbean content creators need and other services are not stifled.
Image credit: antanacoins (flickr)
Shiva Bissessar, B.Sc.(Hons.) MBA, M.Sc. With over 17 years of industry experience, Shiva Bissessar currently offers corporate entities and public institutions consultancy on strategic matters of ICT and Information Security. Of late he has been focusing on bringing awareness to cutting edge issues within the Information Security domain including areas digital currencies, cyber security and cloud (security and privacy).