Jamaica's digital currency 'more secure than Bitcoin'Sunday, August 22, 2021
Founder and chief executive officer (CEO) of eCurrency, Jonathan Dharmapalan, has given the assurance that Jamaica's digital currency will not be a security headache. In an exclusive interview on Taking Stock with Kalilah Reynolds, Dharmapalan noted that the technology being used to run the Central Bank Digital Currency (CBDC) will ensure the digital funds cannot be counterfeited or compromised.
Recently the Bank of Jamaica minted the first J$230 million in CBDC which will be issued to deposit-taking institutions and authorised payment service providers during the pilot which ends in December.
Kalilah Reynolds Media witnessed the process, along with BOJ Governor Richard Byles, Finance Minister Dr Nigel Clarke, and others. However, no video or audio recordings were allowed for security reasons.
The minting equipment was provided to the Bank of Jamaica (BOJ) by eCurrency. According to Dharmapalan, while eCurrency does not conduct the minting itself, they will continue to provide background support until the central bank takes over full control of the process. “We provided the bank with a cryptographic engine that can go through that process and to ensure that it cannot be counterfeited,” said Dharmapalan who noted that the security of the currency comes in three layers.
In addition to the security of the currency, he said there's also security of the people using that currency, as things such as privacy and personal information have to be protected. The third security layer relates to the 'sovereign' security typically associated with national currencies. In other words, it has become legal tender by being backed by the BOJ.
“It all starts with the security process enacted at the minting ceremony and that security process cannot be enabled by any one person [or] department; it has to be done through a particular management process,” he said.
Additionally, Dharmapalan said Jamaica's CBDC provides more security than cryptocurrencies, especially as there's no use of blockchain technology which runs several of those currencies including Bitcoin. “Blockchain has some very intricate features but it is quite rudimentary. It uses a relatively vulnerable security mechanism for cryptography. It is necessary but not sufficient. We believe multiple levels of security have to be applied simultaneously to make sure that the three forms of security are met and those cannot be achieved by using relatively simple blockchain technology,” he said.
eCurrency will be responsible for providing any new features or long-term capabilities that the central bank may require for the CBDC process. eCurrency was announced back in March as the selected provider for the pilot and roll out of the Jamaican digital dollar following a competitive bidding process.
Discussions about a Central Bank Digital Currency started between eCurrency and BOJ more than two years ago and the company has been in talks about similar currencies with at least 80 other central banks; however, Jamaica has become its first client. “Many of those other central banks viewed CBDC as Star Wars, something out of the future and they were right but the work had to be done to sort of meet that future and here we are,” reasoned Dharmapalan.
Meanwhile BOJ Deputy Governor Natalie Haynes said there was a scientific reason behind the J$230 million in CBDC recently minted. It's actually five per cent of the currency that the BOJ issues to National Commercial Bank (NCB), the first financial institution partner in the pilot, as well as a second institution that will be coming onboard in November.
Haynes said stakeholders have discussed considering the CBDC a success if a five per cent switch between physical and digital cash should be realised every year. “So it's scientific and it's expected to last until the end of the pilot,” she said, while noting that the BOJ will start issuing CBDC to NCB in September. She said interested persons can contact the bank to create their mobile wallet and participate in the pilot. “What we want to do is test real transactions so we would want NCB to partner with us in not just getting users but merchants of CBDC to see if it actually works,” she said.
She also noted that when the time comes, the unbanked can also contact a bank or authorised payment provider to use the digital dollars. She said a few payment providers are now testing their solutions in the BOJ's regulatory sandbox. The list includes Alliance Financial Services and GraceKennedy.
All commercial banks are expected to be a part of the programme once the full roll-out starts in the first quarter of 2022.
“The expectation is that all Jamaicans, including the unbanked, will see CBDC as the choice of payment for their transitions. It is much safer than cash and, of course, it can be used anywhere, anytime by just your phone so we are expecting that it will be appealing to them,” said Haynes.
In the meantime, the public will soon learn of the unique name, tagline, logo and image design for Jamaica's CBDC. According to Haynes, the judging process for the recent public contest for proposals has been completed and the winners are being notified.
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