By DENISE MAYCOCK
Tribune Freeport Reporter
The Bahamas and wider Caribbean were yesterday described by a blockchain specialist as a perfect testing ground for technology that eliminates obstacles to capital movement.
Michael Casey, a leading author on the subject, said the region's many independent currencies create massive inefficiencies in payments and trade.
"I am fascinated by the role that crypto could play in this part of the world," he said. "You got capital controls in place that are a source of friction, and an impediment to movement of funds and innovation, etc."
Mr Casey added that while financial institutions or banks have done well for some time in the Caribbean, a lot of their functions will go away because of the new technology.
"The technology is making [some banking functions] redundant, and it's not just blockchain but artificial intelligence (AI), and everything else is really eating into the business model of banks. So, there is a threat," he said.
Mr Casey added that blockchain could play a huge role in terms of energy transmission and distribution (T&D) systems. "The horrible hurricanes exposed the vulnerability of centralised energy systems; there has to be more focus on a more resilient distributive system," he said.
"I am doing something in Puerto Rico that is aimed at building decentralised distributive microgrids, where communities can transact with each other. The idea being that rather than relying on the price that is being set by a central authority in Puerto Rico, the price is now set on a local level - it is what I am calling energy democracy."
Mr Casey explained that blockchain it is a ledger-keeping system that removes the need for utilities to invoice customers. "If you place the ledge keeper in the middle it would not need a utility invoicing everybody, checking the meter," he explained.
With blockchain, Mr Casey said there was capacit to have communities form transactive grids. "Will it work? We don't know, but we think the idea of pushing this model of microgrids and decentralised energy (could be beneficial)," he said. "These are the kinds of ideas that this technology allows us to confront. It's all about empowering people at the bottom."
Mr Casey said bitcoin and blockchain serve as an "immutable ledger", adding: "You can't go back and change it. It is an append-only ledger, and to have to change that ledger it would cost all the money."
"So rather than a ledger that resides centralised in one single third-party control model siloed, each reconciling with each other, it is a distributive ledger. Everybody gets to update it in real time together based upon this process that bitcoin is managing, and therefore all these other blockchains are working on as well, Mr Casey said.
He added that Bitcoin has been in existence for nine years and is worth $100 billion. "There is a huge incentive to hack this system, but the bitcoin network itself, unlike the dollar system which collapsed in 2008, has not ever been brought down, despite the fact there is no one in charge and it's worth a lot of money," Mr Casey said.
While admitting that certain blockchains have been hacked, Mr Casey believes the bitcoin model shows what is possible because every single transaction is tied to all the other entries in the past and builds an ongoing chain.
He said that going back and changing one decimal point on one transaction from seven years ago would change that entire structure of that ledger.
"It is kind of like the whole exploding dye solution, when banks would put these things next to cash in the vaults and the robber gets dye that explodes in the face, and the evidence is clear that someone broke in - it makes it immutable," Mr Casey said.
"It has not happened to bitcoin. And this is really a big idea; we have a record in history that cannot be changed. We never had that before."