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After two years of planning and development, Bitt—the Caribbean’s first bitcoin and digital exchange company— will be launched on March 30. This means that people across the region will soon have access to a software platform for buying and selling cryptocurrencies and digital commodities with traditional banking integration.
Bitt co-founders Gabriel Abed and Oliver Gale say their plan is to have digital currencies stand side by side with traditional currencies throughout the Caribbean in the not too distant future. Following the company’s official launch, bitcoin, the world’s first decentralised digital currency, will become accessible to citizens across the region, including the estimated 60 per cent who are currently unbanked, or under banked.
“We serve the international market but are focused and centred on the Caribbean offering the core services of mobile digital wallets, international remittances and e-commerce merchant solutions utilising new software called bitcoin and blockchain,” Gale, the company’s CFO said.
Bitt, which is based in Hastings, Barbados, is offering a system that is completely branded, built, designed and managed in the Caribbean. The company provides high tech systems at a fraction of the cost of the money transfer systems currently used in the region.
Gale and Abed, the company’s CEO, are of the view that traditional legacy financial systems are outdated.
“They have huge buildings and many employees. They have paper systems, centralised management ledgers,” Gale said.
Abed explained: “Everything you can pay for in cash, I can pay for in bitcoin.”
Abed’s involvement in the world of digital currency was a natural progression from his educational pursuits. A graduate of the University of Ontario, Institute of Technology with a Bachelors degree in Information Technology majoring in Network Security, his professional qualifications cover cryptography, software development and intrusion detection systems.
Abed was introduced to cryptocurrencies in early 2010 during his undergrad studies but over the past 12 years, he has been leading software development innovations in the region as part of a team of dedicated developers.
His business partner, Gale, followed a different academic route, earning an honours degree in accounting and management from the University of Bristol. He was introduced to Bitcoin in 2012 and immediately immersed himself in the field,combining his knowledge of traditional finance with a growing knowledge of digital finance.
At present, Bitt is run by an eight-member team, headed by Abed and Gale, as well as three advisers: Peter Tod, Barry Gale QC and Jeremy Stephen. Once the company is fully implemented, users will be able to sign up to log on to bitt.com, follow the instructions and immediately start accepting bitcoin from anyone around the world.
The system is being introduced in response to the need for a better payment systems in the region to reduce the high costs and red-tape associated with traditional electronic payment systems.
According to a recent ECLAC (Economic Commission of Latin America and the Caribbean) report, the Caribbean needs to lower the cost of remittance services. Digital currencies represent a potential option for doing just that.
Abed and Gale were in Port-of-Spain last week for a meeting organised by ECLAC involving regulators and representatives of digital currency companies. The talks were aimed at developing a framework for regulation of the system.
At the meeting, held at ECLAC’s sub-regional headquarters for the Caribbean on March 12, Caribbean experts in the field of digital currency reviewed the opportunities and risks associated with that type of currency.
They also addressed the potential impact digital currencies may have on sectors such as banking, e-commerce and remittance and whether its use can enable improvements to electronic and mobile-based payment systems and low-cost remittance services.
ECLAC plans to review national policies in anticipation of the use of cryptocurrencies like bitcoin, as well as technologies in the field of digital payments, to determine how they will impact the region.
Gale and Abed said there are some challenges in the implementation of the system, including lack of e-commerce-supporting legislation, inadequate technical capability and difficulties working with some local banks, but they are determined to get over those hurdles. In T&T, the enabling legislation is relatively new, and is primarily focused on electronic payments for government systems.
However, widespread use of mobile-phones in the region and easy availability to facilitate financial payments or transactions through short message service (SMS) messages and other widely available systems, means there is scope for acceptance and use of digital currencies within a relatively short space of time.
Bitcoin uses cryptography-based block-chain technology. At the core of the system is a ledger that can be used to transfer title of ownership to units of digital currency. It is largely self regulating, with features built into the protocol that provide consumer protection and traceability.
The Bitt co-founders are optimistic that within a matter of months consumers in several parts of the region will be accessing bitcoin’s fully automated, transferable management ledger.
“We are riding a technology wave with finance that is cutting costs, making it faster, making it cheaper, making it possible for people outside of the banking systems to control their money using their mobile phones,” said Abed.
“Our company will provide a regulated environment for these global services in a compliant way.”
What is bitcoin?
Bitcoin is an online payment system invented by Satoshi Nakamoto, who published his invention in 2008, and released it as open-source software in 2009.
The system is peer-to-peer; users can transact directly without needing an intermediary. Transactions are verified by network nodes and recorded in a public distributed ledger called the block chain. The ledger uses its own unit of account, also called bitcoin.
The system works without a central repository or single administrator, which has led the US Treasury to categorise it as a decentralised virtual currency. Bitcoin is often called the first cryptocurrency, although prior proposals existed. Bitcoin is more correctly described as the first decentralised digital currency. It is the largest of its kind in terms of total market value.
Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into the public ledger.
This activity is called mining and is rewarded by transaction fees and newly created bitcoins. Besides mining, bitcoins can be obtained in exchange for fiat money, products, and services.
Users can send and receive bitcoins for an optional transaction fee.
Bitcoin as a form of payment for products and services has grown, and merchants have an incentive to accept it because fees are lower than the two to three per cent typically imposed by credit card processors.
Despite a big increase in the number of merchants accepting bitcoin, the cryptocurrency doesn’t have much momentum in retail transactions. Unlike credit cards, any fees are paid by the purchaser, not the vendor.
The European Banking Authority and other sources have warned that bitcoin users are not protected by refund rights or chargebacks.
The use of bitcoin by criminals has attracted the attention of financial regulators,legislative bodies, law enforcement, and media.
They listed money laundering, financing of illicit activities, theft, fraud, tax evasion, and use in black markets as possible.
As of 2013, the criminal activities centered around theft and black markets. Officials in countries such as the United States also recognised that bitcoin can provide legitimate financial services to customers.