Long before the Bitcoin bubble, businessman and restaurateur Peter George started accepting the cryptocurrencies at his establishments.
“It’s completely decentralised. Bitcoin is the most perfect form of money I have ever encountered,” George recently told Business Day.
Now, he’s once again proving to be not just an early adopter but a regional leader in financial technology (fintech) as the chairman of Bitt Inc, a Barbados-based alternative to traditional banking.
“Bitt is bringing about, among may other things, financial opportunity through financial inclusion. Access to financial services is now very much like access to oxygen or access to water. People should not be shut out of it simply because 'it is not profitable' for banks, which is often the case now,” he said.
Bitt uses blockchain technology as its foundation. A blockchain is a continuously growing list of records (data structures) that are linked and secured through cryptography (codes). The setup is designed to be inherently resistant to modification in data, so transactions can be recorded and verified in a permanent way. That is, once it has been recorded, the data in any set (block) cannot be retroactively altered without altering all subsequent blocks, since the blockchain is typically managed by a peer-to-peer network, where tasks are equally distributed and each entity is equally powerful with equal privilege to the application. No change can happen within the blockchain unless there is collusion among the majority, making the network secure by design, since no entity has more privilege than another. Blockchains were originally designed for cryptocurrency transactions, specifically Bitcoin, the most popular form of this type of currency. Cryptocurrency as a medium of exchange is not regulated by central banks and as such differs from fiat currency, whose intrinsic value is usually determined by law.
“Much like what email did to the postman, blockchain has the capacity to dramatically increase the efficiency and integrity of financial transactions whilst making it exceptionally less costly for consumers,” George said.
Bitt’s fintech solutions are intended to achieve universal financial inclusion digitally, enable digital transactions, and thereby empower the people of the Caribbean, George said. They can also be helpful to the established financial services sector by facilitating digital currency issuance at central banks, to know your customer/anti-money-laundering (KYC/AML) compliance software at banks and credit unions, to digital wallet and merchant applications for much cheaper than traditional techniques.
The company has already rolled out its mMoney mobile wallet and point of sale options with merchants and customers in Barbados, and eventually will do so in the rest of the region. The emphasis will be on countries with lower financial inclusion for greatest impact among the population, and also those countries where the financial regulators are most cooperative.
It’s efficient, secure and affordable financial service that can have positive implications for poverty alleviation and living standards, he said, allowing for universal financial inclusion — an important pre-requisite for sustainable development. “The work we are doing is important from a socio-economic development standpoint. This is not making corporate social responsibility a business model. This is a business model that capitalises on the weaknesses of existing business models — traditional commercial banking and high levels of physical cash creation and usage,” he said.
Unsurprisingly, George said a big challenge to the company’s models come from established financial institutions.
“The resistance from legacy banks, which is understandable, has hampered our development speed. In most instances these are regulatory but sometimes the banks are protecting their hegemonic positions. You cannot stop the technology, though,” he said. That being said, he said banks themselves have made their own, often massive, investments into blockchain technology. “They recognise the innovation as well as the threat from the innovation to their models and have been scrambling to find integration so whether conservative or not the facts are that blockchain is a potential extinction event.”
But the biggest challenge comes from outdated regulation. The company has therefore spent a lot of time and effort to engage with regulators — including the Central Bank of TT — as well as educating stakeholders. Just last week, Bitt hosted its second annual Central Bank Meets Blockchain conference in Barbados.
The company has also signed memoranda of understanding with two currency unions in the Caribbean — the Eastern Caribbean Currency Union, and the Central Bank of Curacao and Sint Maarten — and at least 14 other entities, including the Caribbean Tourism Organisation and PriceWaterhouseCoopers
“So based on this I would say that the reception is improving. Like with anything new, there has been scepticism, but it is subsiding. We are in discussions with the authorities and private sector entities in many Caribbean jurisdictions and beyond. Momentum is building and the value of our solution is being recognised.”