OPINION– The Bitcoin has been around for a few years, but until last month very few of us had heard about it. This post outlines what the Bitcoin is, and discusses whether it could solve the e-payment challenges that exist in the Caribbean.
It is no secret that there is considerable difficulty in processing transactions and payments over the Internet in most Caribbean countries (see our post, Has e-commerce stalled in the Caribbean?). For the few local vendors who might have the requisite facility to do so, securing it would have been an onerous and expensive process, which has limited take-up and adoption across all sectors. More importantly, online sales are almost exclusively outbound – from the Caribbean to more developed markets, such as the United States, Canada and the United Kingdom – with virtually none occurring in the reversed direction.
Over the past two weeks, the “Bitcoin” has been gaining mainstream attention. Demand for it has escalated considerably, which experts have suggested has been due to the financial crisis in Cyprus. In a nutshell, the financial sector in Cyprus has collapsed and the country has been trying to secure a EUR 10 million bailout from the European Union and the International Monetary Fund. In order to get the funds, the Cypriot government will (reportedly) be seizing up to 60% of uninsured deposits to try to stabilise the economy, which in turn has resulted in considerable loss of confidence in the country’s banking and financial sectors. Moreover, it has also put a spotlight on the Bitcoin, which it has been suggested, offers an alternative to the traditional banking sector, and could offer solutions to Cyprus and its citizens. However, what is the Bitcoin, and could it offer the Caribbean a viable means of facilitating online payments? More