Bahamas plans to launch digital currency

The Bahamian central bank unveiled plans to pilot a blockchain-based digital currency, as the Bahamas joins a growing list of governments experimenting with their own cryptocurrencies, including Ecuador, Venezuela, Singapore and China.

In contrast to other governments developing their own fiat blockchain currencies, the Bahamas pegs its local currency, the Bahamian dollar, 1:1 to the US dollar, meaning the creation of a digital currency might allow for a truly native dollar.

Speaking at the recent 2018 Bahamas Blockchain and Cryptocurrency Conference, Bahamas deputy prime minister K. Peter Turnquest briefed attendees on the plans, expressing his hopes that Grand Bahama becomes the "digital paradise" of the region, according to state news agency Bahamas Information Services (BIS).

"The production of a modern fully digital payment service is the way forward for this era of governance. A digital Bahamian currency is especially important for the many family islands as they have seen many commercial banks downsize and pull out of their communities, leaving them without banking services," said the minister. "As an island nation, where transportation can be an inconvenience for many, especially the elderly, and costly, we must offer financial services digitally and securely."

"Digitization of our government and financial services complements both our ease of doing business initiatives and our digital Bahamas framework. As a first step in our ease of doing business initiative, we would have moved to a new online interface for start-up companies registering their business for the first time in the Bahamas," added Turnquest.

According to Turnquest, the government would soon begin a blockchain certification process in coordination with the National Training Agency.

"Even though it is at a very preliminary form, the government is looking to see other ways in which certificates such as business licenses, passports, national insurance can make use of blockchain technology to enable persons to maintain their data and share it in a secure and verifiable way."

Turnquest added the government sought to employ blockchain-type technology to be more efficient, lower costs and root out government corruption.

Crypto community reaction

The announcement by the central bank churned the debate within the crypto community over whether governments developing their own blockchain currencies qualify as true cryptocurrencies, in the spirit of the so-called blockchain revolution.

Some valuable points to consider found on Reddit include those that describe such programs as electronic ledgers of fiat, bringing with it many of the problems that non-fiat cryptos were created to escape - specifically taxation, volatility, seizure of assets, surveillance, transaction fees, seigniorage and the potential for politically motivated government manipulation.

Counterarguments suggest there is room for both fiat and non-fiat blockchain currencies in the future, with governments using homegrown digital coins to cut costs, increase fund transfer speeds (particularly cross-border), improve efficiency and transparency and potentially better manage volatility.