When Marco Polo visited China in the late 13th century, he was astonished by the dominance of paper money. He wrote about the notes, issued by China’s Mongol Emperor Kublai Khan, as “something resembling sheets of paper, but black” and noted that “nobody, however important he may think himself, dares to refuse them on pain of death.”
If Kublai Khan was living today, he would need to issue a lot of death sentences. Just as paper money once revolutionised ancient societies, innovations in technology and finance have led to a move away from physical cash and towards digital payments instead.
Annual payments data from U.K. Finance showed that cash payments fell by 35% in 2020, accounting for just under one-fifth of all payments. This is a pattern across much of Europe and the United States.
There are many benefits that come with online transactions, including speed and reduced vulnerability to theft. But there are some countries where cash is still king. In Latin America and the Caribbean just 54% of adults have a bank account, meaning many still rely on cash.
Antigua and Barbuda, in the Eastern Caribbean, is one such country suffering from a lack of access. I headed to the island paradise to find out how financial exclusion impacts everyday life and to see what solutions are on the horizon.
Antiguan businesswoman and shop owner Zoe Abbott explains that “banking is difficult here so just doing anything with the bank, going in, having cards, the transaction fees, a lot of that is very time consuming and expensive and people get frustrated.”
She’s right. Long queues outside ATMs are a common sight in Antigua’s capital, St. John’s. Indeed, when paying for a PCR test before my flight home, I had to drive 7 miles to find a working ATM to get cash out. The doctor couldn’t process international payments.
It’s clear to see that this dependence on cash makes everyday life difficult. Transactions that we make with ease, like buying groceries or paying foreign bank accounts can be a big hassle.
A lack of digitalisation is just one problem facing countries like Antigua, where reliance on tourism, high unemployment and low productivity are common. The pandemic has only exposed these inherent vulnerabilities with Latin America and the Caribbean the most affected region in socio-economic terms.
But this is something that the Prime Minister of Antigua and Barbuda, Gaston Browne, is fighting to change. He told me that he wants to build an “ecosystem to facilitate the digitalised transformation of our country’s economy as we seek to diversify away from tourism, which has dominated our economic space for many decades.”
One way he hopes to achieve this is by establishing a legal framework that will guide the country’s infrastructure. The Digital Assets Business Bill which passed into law in 2020, will help create a regulatory framework for digital asset businesses that want to set up on the island.
“We are creating an opportunity for technology to flourish. We want to make sure at the same time that we operate within a well-regulated space,” the Prime Minister said.
Browne hopes that by building a safe and inviting space for digital currency businesses, he will encourage technology companies to set up shop on the island. The idea is that the more companies come, the more diversified the country’s workforce will be and the more future generations of Antiguans will be inspired to develop the skills needed for employment in the tech sector.
He’s already seeing the fruits of his labour with several digital currency businesses choosing the tropical paradise as a home. One example is the Bayesian Group (Fabriik), a collective of companies operating in the fintech and digital asset market.
Another company based in Antigua is venture capital firm, Ayre Ventures. Paul Rajchgod, Managing Director of Ayre Ventures, told me that government legislation has “created a framework here that companies can take advantage of.”
But it’s not just enterprises that are seeing the benefits of diversification. Paul points out that “when companies set up shop here, such as we have, it ripples throughout the whole economy.”
Indeed, investment into a developing economy has been shown to provide many benefits, including increased productivity, development of human capital and a more competitive market.
It’s no wonder then that the Prime Minister is thrilled about the $40 million investment into the Antiguan economy that is Canada Place. The state-of-the-art building was opened in 2019 by tech entrepreneur and Special Economic Envoy to Antigua and Barbuda, Calvin Ayre. It serves as the location of the Ayre Group’s global head office as well as being home to various other technology companies, with space for up to 600 employees.
“It’s iconic and I’m quite sure that it will inspire higher levels of achievement among our youth,” says Browne.
The Prime Minister is right to be optimistic for the next generation. The introduction of the internet and the invention of digital currencies have been important instruments of financial inclusion for developing countries like Antigua.
World Bank statistics show that Antiguan citizens have the fourth highest number of mobile phone subscriptions per person in the world, at 1.92 subscriptions per person.
While this does not account for citizens who may have more than one mobile phone, it does show that many Antiguans have access to the internet. This means that while the doors to traditional financial services might be closed, locals can easily use digital currencies like Bitcoin, on their smartphones.
Digital currencies are cheaper and less bureaucratic for locals than old-fashioned methods. It’s easy to transfer Bitcoin to friends who may not have bank accounts and it offers an alternative to traditional remittance channels like Western Union which can be offputtingly expensive.
Samori Joseph, a young Antiguan who works in the media industry, told me that he’s excited by the opportunities Bitcoin presents. But he has some doubts about its utility due to its slowness and high transaction fees.
While this is a problem with BTC, it’s not the case with the original Bitcoin, BSV. Because there is no limit on block sizes within the BSV network, it can process up to 50,000 transactions per second at extremely low costs (the median transaction fee on the BSV network in 2020 was less than 1/50th of a U.S. cent.)
In the crazy, “crypto”-obsessed world that we live in, it’s easy to forget that the original Bitcoin protocol, as outlined in Craig Wright’s white paper, was a truly revolutionary invention built to disrupt the legacy banking system and foster financial inclusion.
But spending time in the developing world, where Bitcoin SV could genuinely improve the lives of ordinary people, casts a much clearer light on the value of the innovative technology.
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