As the cryptocurrency travels around the world, its enthusiasm came to Haiti in the form of nascent donations and projects. In this series, The Haitian Times takes a look at some of the players and the pros and cons of digital currencies taking root in Haiti. For definitions of certain terms used, see this glossary.
WISCONSIN – “It’s worthless. It’s not based on anything. There’s no underlying asset that acts as a security anchor.” This was stated by the President of the European Central Bank, Christine Lagarde, on the value of cryptocurrencies, during a television interview on May 12, as the cryptocurrency market plummeted.
Although the cryptocurrency market has plummeted the economic sector, Haitian yam sellers, who appear in the visions of some advocates, have continued to sell their vegetables. Few of these sellers have access to financial services, a place to put their savings, a way to get a loan. Some proponents of financial system reform in Haiti view cryptocurrency as the technological and financial revolution that can bring about that change.
But is cryptocurrency or the technology behind it – blockchains – the right solution and at what cost? These are the questions that divide the proponents and opponents of cryptocurrency in Haiti into divergent fields.
“A blockchain network,” said Iwa Salami, co-director of the Center for FinTech at the University of East London, “is very useful for any financial system, especially if we look at investors’ fear of investing.”
“For example, in foreign direct investment, in countries like Haiti, the lack of transparency is often a problem for many investors. So the adoption of blockchain technology and a financial system like this really have the potential to reassure They will be able to see where the investments are going and how the investments are being used. “
Cryptocurrency and blockchain technology
To fully assess the potential of cryptocurrency in Haiti, it helps to understand that cryptocurrency is built on a chain of blocks: a series of books or databases, timed and linked together. A network of computers manages a blockchain, not a blockchain single centralized system as in a database. Like using a Google document or other collaborative document, everyone can see what’s happening in a blockchain.
“Some blockchains don’t have cryptocurrency,” said Raul Zambrano, an international development expert who researches innovation and technologies that can improve access to public information.
Hyperledger, for example, is a blockchain platform used by companies such as IBM and Walmart.
“They don’t want to get involved in cryptographic stuff. It’s too complicated, it’s too risky, because of the prices and the expectations,” he said.
Blockchain has also been used successfully in Haiti in some cases. A mango supply chain project, overseen by the World Bank-funded Haitian Ministry of Commerce and Industry, illustrated that products grown and processed in Haiti can be sold and shipped to the US. The agricultural project was declared a success when the participating farmers earned 7.5 times more than before.
In particular, participants were paid in gourdes, not in cryptocurrency.
“You can really implement blockchain in Haiti without crypto,” Zambrano said. “You can have a chain of blocks for farmers who want to track the country’s food to the table. That’s blockchain. You don’t need crypto for that.
Cryptographic systems require energy, much more than other systems
Concerns about the use of cryptocurrency revolve around transactions: how long they take, the cost, and the amount of energy they consume.
Using Bitcoin, the average transaction takes 10 minutes, although that rate can vary greatly. The average cost of a Bitcoin transaction on May 23 was $ 115.52. Meanwhile, every Bitcoin transaction, even buying a latte, consumes more than $ 100 in electricity, according to Fortune magazine.
“You have a Visa. [It] can make 10 million [transactions] per second, and they don’t spend energy, “Zambrano said.” Not as much as Bitcoin. “
“The great computing power needed to create, or undermine, new bitcoins has pushed up energy bills for residents and businesses,” he directed a September article in Chicago’s Booth Review.
Researchers at the University of California at Berkeley analyzed public records of electricity prices and usage, as well as Bitcoin prices. Their study showed that due to the energy use of Bitcoin mining, households paid an additional $ 165 million a year in energy costs, while businesses paid an additional $ 79 million.
Because their transactions are so costly, unless cryptocurrencies move to a different method of transaction processing, Zambrano said, cryptography will simply be a financial asset, not something to address services such as buyer-seller transactions or remittances, in Haiti.
“We don’t have unlimited resources when it comes to energy,” Zambrano said. “In the age of climate change, you can’t just bet on people spending millions of kilowatts to approve 1,000 transactions. That doesn’t make sense to me.”
Potential for rampant abuse
Dash is another cryptocurrency that is being introduced for potential use in Haiti. It was designed to improve the flaws perceived by Bitcoin.
“Dash has positioned itself as a digital whole, the store of value,” said Ryan Taylor, financial advisor to the Dash Investment Foundation. This means it is focused on being digital money used for real transactions, he noted.
“It means being scalable. It means being cheap,” Taylor said. “Dash network transactions are done in about 1.4 seconds.”
Dash, in terms of energy, has mixed elements designed to make it more energy efficient, according to Taylor, and to give it security and speed.
However, in Bit Degree’s “DASH Cryptocurrency: Complete Guide,” an online educational platform focused on digital skills for the workplace, a section discusses how abuse can take place. According to the guide, it is easier to evade taxes if the government does not know who is carrying out each transaction.
“Because Dash’s cryptocurrency transactions are anonymous and untraceable, it has become a preferred currency for illegal trades,” the guide says.
The technology is still too budding for complex uses
Overall, current platforms, including Hyperledger, still have limitations. The blockchain is similar to artificial intelligence in the 1950s, Zambrano said.
“AI was basically nothing in the 50’s. It took 60 years for AI to become what we see it today, because AI ideas were ahead of their time,” he explained. “I’m looking forward to the next generation of blockchains, so they can be more scalable, more efficient, use a different protocol to approve transactions.”
Look for the next installment on the pros and cons of bringing cryptocurrencies to Haitians.