BOJ not using blockchain for CBDC could have far-reaching implicationsSunday, September 12, 2021
The Caribbean Blockchain Alliance (CBA) has cautioned the Jamaican authorities that not using blockchain technology in the planned Central Bank Digital Currency (CBDC) could have far-reaching implications.
Speaking on Taking Stock with Kalilah Reynolds, president of the CBA, Stefen Deleveaux, defended the technology which was labelled as having a vulnerable security mechanism by eCurrency's Chief Executive Officer (CEO) Johnathon Dharmapalan on a previous episode.
eCurrency won the bid to run Jamaica's digital currency and has provided its own minting technology to Jamaica's central bank which the CEO also said was “more secure than Bitcoin”.
In reiterating that those comments were false, Deleveaux added that Bitcoin's blockchain technology, in particular, remains one of the most robust and most secure in the world, pointing to the fact that the trillion-dollar platform has not been hacked, even though it's thought that many have tried to.
“Comparing anything to it is a complete misrepresentation in our opinion,” he said.
Deleveaux also explained that there are two categories of the digital infrastructure — the fully open blockchain technology where anyone can use it and the more private version which affords more control over who can use it or see it.
He argued that blockchain also has different layers of security, provides levels of interaction and can be customised, as evidenced in its use in the Bahamas Sand Dollar and the Eastern Caribbean's D-Cash.
Blockchain technology will also be powering the eNaira, the most recent Central Bank Digital Currency to be announced by Nigeria which will become publicly available to a segment of that country's population later this year. Global fintech company Bitt Inc won the contract to partner with Nigeria to roll out the solution.
The CBA president said while eCurrency's technology has not been made public for the association to compare it to blockchain, the centralised nature of it makes it more of a security risk for Jamaica.
“If you have a centralised infrastructure; and centralised infrastructures get hacked all the time; and you're basing your entire monetary base off of it, anything that could potentially go wrong could go wrong…and that could raise serious issued and disrupt the lives of potentially everybody in the country, so the possibility for negative effects is there and if there are any it would be far-reaching,” he said.
He admitted that eCurrency's technology may still have some level of verifiability but not at the level that blockchain technology allows.
“It's very important for people to know that blockchain is the superior infrastructure to use for these platforms as we've seen all over the world,” he said.
In it's LinkedIn post, the CBA had urged the Jamaican authorities to rethink the current methodology and engage experts in the region. Deleveaux explained that the position was not to infringe on the free marketplace but rather to protect the more exposed nations like Jamaica.
“As countries that are more vulnerable to the elements in all forms, we have to make sure that we use the strongest and most robust systems at all times ,” he added.
In the meantime, the CBA president said the association continues to push for the use of blockchain technology across the region which can elevate the Caribbean into the “next level of internet infrastructure”.
He said integrating the technology into systems across the regional territories will help to improve integration as well as outdated systems dealing with transactions and trades.
“We're caught up with the banks and Western Union . If I [in The Bahamas] want to send money to Jamaica I have to send it through New York and that takes time, which adds money . Now if we had the systems where we can build currencies tied to the national currency in all of our countries that just makes it so much easier and secure,” he said.
With blockchain technology you are not only transacting and broadcasting information, but you're also broadcasting value,” he said.
The CBA president said while he nor the association has no claim to the development of any of the CBDCs in the region, the 180-member strong association has been interacting in the space with blockchain and cyber security experts as well as regulators and regional governments.
Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at https://bit.ly/epaper-login