THERE IS A COMMON IDEA that cash is the easiest and cheapest way to make payments. But this could not be farther from the truth.
Barbados incurs a high cost to print cash, to ship the cash, to transport cash between banks and businesses. You need to employ people just to secure cash; to count it and to look over the shoulder of the counters to prevent theft. There is nothing easy and cheap about cash in business.
You have all heard of Bitcoin by now, and would have heard the bad news of security breaches, theft and black market activity, but in fact Bitcoin is not the culprit here: cash is the largest vehicle of illegal activity and credit cards are the most often compromised financial instrument. There is therefore an unbelievable opportunity to generate revenue by replacing cash. And this is what we are doing at Bitt. Our team has spent three years building towards this moment where we present a new form of money, not bitcoin, but built on the pillars of it.
Bitt has engineered, for the first time in the Caribbean and Americas, a distributed ledger peer-to-peer mobile money system. We call it the digital dollar. The Barbadian digital dollar is easy to send to anyone, anywhere with a few gestures on your mobile device. Commerce can be done with less friction, payments can be made instantly, auditors can cryptographically verify the signatures with unparalleled security. Cash cannot do this. With the bitt mobile wallet you can hold your assets, your own money securely on a device, you can view your transaction with ease, you can send to your peers using addresses or simple aliases and all of this costs you nothing. Cash cannot do this.
For too long in the Caribbean there has been stagnancy in the financial sector. The lines in any bank will show you this, the fees on your statement will bear it out, the lack of online marketplaces are a cold, hard reminder of the cost of remaining still whilst the world around us moves forward.
We consider ourselves pioneers at Bitt, rebellious enough to know the truth when we see it no matter what others say. Mobile money, backed by distributed ledger systems is better for everyone. This free application is the first step in what is a financial paradigm shift that benefits all people.
Why is this the case? Firstly, 60 per cent of people in the Caribbean are unbanked or under-banked. Secondly, online merchant processing services are expensive, difficult to obtain and therefore scarcely used. These are the problems Bitt is solving.
As easily as I will be able to pay for a snack box, I will be able to pay for goods and services online. As importantly, as easily as I can access a Bitt mobile wallet as an end user by downloading apps in the app store, I can become an online merchant.
This value proposition will finally end the well documented e-commerce inertia we face. At this point some of you are thinking that credit cards are better than cash so why use Bitt? Aside from the fact that 70 per cent of Barbadians don’t have credit cards, here is the answer: credit cards are absurdly expensive and technology outdated, predating the floppy disk by a year, if you can even remember the floppy disk days.
Thirteen million Americans were victims of credit card fraud costing US$6 billion last year. Just [last] week there were reports of foreigners coming to Barbados to commit credit card fraud at ATMs, thieving and leaving, if you will.
The issue with using payment monopolies is that a monopoly has the power to extort its users. Everything credit cards can do, Bitt does cheaper. People of the Caribbean diaspora can now send home money to their loved ones guided by Bitt’s faster, cheaper and smarter money transfer corridor. With typical FinTech remittance solutions, a popular one being Mpesa in Kenya, there is the problem of people having to get cash out of the mobile money system in order to spend at most merchants. This only perpetuates the need for cash in society.
Bitt has designed financial architecture where persons do not need to “cash out” but can instead spend cash anywhere. This creates an easier, cheaper and faster network.
Already you can see Bitt’s vision is bold on the consumer end of the market. But distributed ledger technology is set to assist the banking system on a whole. Correspondent banking and settlement systems in CARICOM are without a doubt inefficient at best. Taking days to transfer and settle between banks means greater costs. Not only in dollar costs but also in risk.
Since 2011 anti-money laundering-related fines have ballooned to billions of dollars. As a result banks are reducing their exposure. Some have closed down hundreds of accounts of companies that handle money transfer operations, others like HSBC have pulled out of the money transfer sector entirely. In the Caribbean this affects the people in the greatest need of help, those who rely on money being sent home to survive and feed their families.
Distributed ledger technology is poised to replace the archaic system. All the large banks know this; JP Morgan, Goldman Sachs, Santander and many others have invested in blockchain companies like Bitt to design settlement systems for them. The Bank of England recently stated it is looking to use distributed ledger technology to be the new heart of the British payment system. Bitt is positioned to become the new heart of the Caribbean financial system. There is no need for the Caribbean to play catchup in this full sector disruption. There is no need for bank-centric finance to be the only view of finance. The world is changing and to draw on a quote that is often heard echoing down the halls of Bitt: “There is nothing so powerful as an idea whose time has come”. That time has come.
Oliver Gale is co-founder and chief financial officer of Bitt. He made these remarks last week when Bitt officially launched its digital money and mobile dollars at Buzo Osteria Italiana, Hastings, Christ Church.