I first wrote about this topic in July, after prolonged investigation of the blockchain protocol and Bitcoin, the cryptography-based currency that makes main use of this protocol.
Since then, there has been a veritable explosion of news related to both the currency and the protocol. Gabriel Abed, founder of Bitt.com and Websites.bb, was part of an open panel discussion during Barbados' International Business Week (IBW). Additionally, Abed and Deloitte principal, Eric Piscini, held segments on digital currencies and practical applications of blockchain protocol at the annual Barbados IBW conference.
Worldwide, many large banks and financial services firms have begun to develop blockchain applications to power stock exchanges, tackle online music piracy and fight human trafficking. Even the mighty Nasdaq has made motions to patent its own implementation of blockchain technology for use on its exchange.
Meanwhile, legal turmoils continue around the financial nature of Bitcoin; is it a poker chip, a share or a fungible asset like cash? In light of patenting attempts on blockchain applications and a number of key cases on the legality of Bitcoin, forward-thinking lawyers have already assembled a team to defend the technology and its financial application.
On the technical front, the Bitcoin core developer group faces many allegations that early limitations on the size of Bitcoin's blocks are hampering the original blockchain's ability to process large quantities of transactions as quickly as possible. This argument persists in the face of the core group's attempts to investigate other methods of ramping up transactions.
Nevertheless, the technology and its principles have few critics. Alternative currencies such as Litecoin are being created, tested and funded continuously, using a myriad of new cryptography algorithms, distribution and programming languages. Those cryptocurrencies that do not focus solely on transaction speed and anonymity instead look at ways to decentralise the Internet or government processes once more through the development and funding of decentralised applications (DAPPs).
Countries such as Russia and China, which have neglected or even frowned on Bitcoin since its emergence, have shown signs of rolling out national cryptocurrencies in response. Meanwhile, countries such as Japan and Singapore are still analysing how the technology rivals the extensive adoption of diverse electronic payment options. The Federal Reserve of the U.S.A. is expected to issue statements on digital currencies at its December 2016 meeting, even as individual states with notable technology industries, such as California and North Carolina, begin to embrace the phenomenon.
Potential uses for Bitcoin and blockchain protocol currently focus tightly on two main areas: payment processing/remittance and asset management, i.e. recording and transfer of assets; record-keeping. My last article explained the potential use of Bitcoin for remittances and fiat money exchanges. Case studies now show how blockchains have been implemented to assist in the process of land titling and registration in multiple developing countries. There is also increasing evidence that microfinance agencies and crowdfunding platforms in the developing world may be able to make very efficient use of Bitcoin to fund small enterprise and encourage creative efforts.
Logically, then, Bitcoin use can be extended to cultural finance structures such as the meeting turn or sousou in these developing regions. Use of multi-signature wallets and simple smart contracts would reduce the need to trust the consistent moral integrity of meeting turn organisers; every member would have a copy of the ledger of deposits and withdrawals and/or have a vote on whether someone should receive the 'jackpot' at a particular point in time. Such new robustness in asset managment could allow for a resurgence in these structures to further extend credit options to poorer or unbanked citizens, rather than depending on the banks.
Another financial structure that may be a prime candidate for Bitcoin and/or blockchain implementation is the credit union, which has seen a renaissance as global trust in large, multinational banks has dwindled. Credit unions usually utilise known lines of association (whether a trade group, labour union or professional association) and require the purchase of shares to initiate membership, a status that comes with voting power and dividend returns instead of interest. With the ability to offer members more transparency regarding their assets and investments, the credit unions could increase operational efficiency and ability to scale up services, including management of membership-only services.
One final application of Bitcoin in the Caribbean may not be directly associated finance, but rubs shoulders with our strongest monopolies/duopolies - telecommunications companies. Pay-as-you-go mobile phones offer vital communication options and significant control for the average persons in our communities. As a result, these prepaid plans and cards have such reliable rates of exchange and necessity that they or the minutes they represent often serve as unofficial conduits of payment and asset storage that rival cash.
Rather than turning our telecommunication companies into banks to regulate these fund stashes, the use of Bitcoin, particularly with electronic wallets loaded on mobile devices, can be offered as a better solution. Mobile companies can pre-install wallets onto cheaper mobile devices in an effort to revert their minutes back to tokens of communication, rather than its current quasi-existence as a financial instrument.