Jamaica, let’s talk about Cryptocurrencies

Most people are familiar with the term Bitcoin (or BTC). They may not know exactly what it is, how it works, or most of the other details about it, but they are at least aware of the term and the fact that it’s on the internet and that it is very valuable. As of the writing of this blog article, one Bitcoin is valued at US$44,185 (JM$8.6M). Anyone who had the foresight (or luck) to have procured (and held) Bitcoins back when they were less than US$1 is doing VERY well right now. This exponential value growth has led to a proverbial gold rush over the years with more and more people getting involved in purchasing and trading Bitcoin for fiat currencies. It has also led to the development of other cryptocurrencies, namely Ether (or ETH) (current value: US$2250). Since Ether was developed, literally thousands of other cryptocurrencies and tokens have been created. This has led to an entirely online and international trading market where thousands of cryptocurrencies and tokens are traded on a variety of exchanges.

So why am I writing about this? There is no shortage of sources, be it blogs, YouTube videos, or entire websites that talk about cryptocurrencies, crypto trading, the underlying technologies, etc. However, no one is discussing this in the context of my country, Jamaica. I think that this is a problem. I think that it is important that we take a closer look at cryptocurrencies, and see how this new technology may be applied to specific use cases here. I also believe that, for the sake of Jamaicans, we should pay more attention to this evolving technology so that we can ride the crest of this wave instead of being late adopters. I believe that some significant opportunities may be exploited with this next evolution of the internet, but we need to understand it. That is my goal: to provide a source for Jamaicans to learn about crypto and its underlying technologies and to see how this may be applied within the context of our own country.

Who am I?

I’ve done a few things in my professional career. I’ve been a musician. I’ve worked in information technology. I’ve been a technical writer and have written for several technology companies. But I’m not a cryptocurrency expert. However, I am curious about it. Very.

The more I delve into cryptocurrency the more I realise that there is far more to it than Bitcoin, Ether, or cryptocurrencies themselves. Crypto is merely the tip of the iceberg. And this iceberg is growing and has the potential to significantly disrupt the way things are currently done online and offline. 

The new technologies being developed have the potential to significantly shift societies and economics and can play a major role in democratising power amongst people of the world. Am I being hyperbolic? Maybe, but I don’t think so. 

The Evolution of the Internet

To make the point, let’s take a brief look at the history of the internet. 

In the early nineties when the internet went public, it was composed of static websites. These were websites that provided information in text, audio or images (and maybe a few clips of short video) but you couldn’t interact with them. These websites were built on HTML and were mostly read-only. As such, this first iteration of the public internet, or Web 1.0, was referred to as the ‘Read Only’ internet. In this era, an entirely new industry was created: e-commerce. Companies could now advertise, offer, and sell their products over the Internet. Entrepreneurs realised that they no longer needed a physical storefront to sell goods and services. They could now run a successful retail business with far lower startup and operational costs. Some of the behemoths of this era, like Amazon, eBay, Google, and PayPal, are still around and stronger than ever. 

Around the turn of the century, new technologies such as Javascript, AJAX, and PHP allowed for more interactive websites. These led to websites where users were not merely consumers of content but, more importantly, they became the creators of content. And so social media was born. This new phase of the internet, Web 2.0, is known as the ‘Read and Write’ internet. Some of the biggest winners from this phase were websites like Facebook, YouTube, Instagram, Twitter (now X), and Snap, to name a few.

Despite having named some of the biggest winners from each era, they are by no means the only winners. There have been a slew of winners at different levels of success. While there have been many, many failures, there have been those who stayed the course, learned from their mistakes, evolved, and achieved success by riding the crest of the new/current wave. There are several Jamaicans who saw the utility of the internet and have established stores on sites like eBay and/or Amazon and have seen success selling locally sourced products and selling them retail to a worldwide market. There are those Jamaicans who saw the potential of social media and have established themselves as influencers and successfully earn a living from their online content and activities. Not to mention the small army of local developers who picked up on the trend and established themselves early as competent web developers.

We are now on the cusp of a new phase of the internet, Web3. It has appropriately been called the ‘Read, Write, and Own’ internet, and it was heralded by Bitcoin in 2009.

Bitcoin is the Tip of the Iceberg

In 2008, someone or some group under the pseudonym Satoshi Nakamoto wrote a whitepaper for a digital alternative currency that they dubbed “Bitcoin”. This new alternative currency was built on a relatively unknown technology called “Blockchain”, which used cryptography to process, certify, link and secure lists of transactions in segments called “blocks” (this, btw, is an extremely simplified description of a complex technology). Roughly one year later in 2009, they created or, more accurately, “minted” the first batch of Bitcoins. At this point, Bitcoin was merely a novelty that was experimented with within the cryptography community. There is a commonly known story of an individual who bought and paid for a pizza by transferring 10,000 BTC to the seller. Slowly, more and more individuals and groups began using and experimenting with Bitcoin. The resultant effect was that the value of Bitcoin slowly grew, but this was still very early days, and the value of Bitcoin was still well below US$1.

In 2013, Canadian developer Vitalik Buterin, seeing the potential of blockchain technology but frustrated with the limitations of the Bitcoin blockchain, developed another blockchain technology and dubbed it the Ethereum Blockchain. The native cryptocurrency of this blockchain is the aforementioned Ether. However, Ethereum possessed far greater functionality than simply being the base layer for a cryptocurrency. The Ethereum blockchain facilitated the creation of other new cryptocurrencies, except instead of being referred to as coins, these cryptocurrencies were referred to as tokens. Tokens could be created for any number of purposes or use cases and led to an explosion of new cryptocurrencies, all based and hosted on the Ethereum blockchain.

The Ethereum blockchain also facilitates the creation and hosting of Smart Contracts. These are pieces of code that run on the blockchain and perform specific functions once pre-determined conditions are met.

Ok. So what? Different tech, same internet. That’s how I felt as well, at first. However, some fundamental aspects of blockchain technology make this a completely different animal.

Several aspects of blockchain technology that make it special are:

• Pseudoanonymonity
  • You do not need any proof of identity to make transfers. All you need are your wallet address and the wallet address of the person you are sending crypto to.
• Trustlessness and Permissionlessness
  • Blockchains are secured by cryptographic processes and several other security measures that ensure that transactions happen as intended or do not happen at all.
• Decentralization
  • The blockchain is not supported or built on any central server that is controlled by any singular person or entity. Instead, it is hosted on millions of computers in a worldwide distributed network that anyone can participate in but is extremely difficult to hack.
• Ownership
  • Crypto and other blockchain artefacts, like NFTs (Non-Fungible Tokens), are cryptographically signed to indicate and secure ownership based on crypto wallet addresses.

Blockchain technology has led to a quiet avalanche of new technologies such as the aforementioned tokens and NFTs, but also 

• DAOs
  • Decentralised Autonomous Organisations. These are governing bodies that are set up and hosted on the blockchain. They are used to form democratically governed and managed projects with voting and finances handled on the blockchain.
• CBDCs
  • Central Bank Digital Currencies. These are digital currencies that are created and managed by a government’s central bank. The purpose and use cases for these cryptocurrencies is usually to be a “stablecoin” tied to the local currency.
• DeFi
  • Decentralized Finance. This is an exciting new industry of finance in which decentralized financial institutions are set up, run and operate on the blockchain instead of a traditional centralised financial institution.
• GameFi
  • Games that run on the blockchain where players may also earn crypto by playing, creating the new “Play to Earn” model.

Blockchain and cryptocurrencies are the basis of the new phase of the internet, Web3, and we are still in the early days. New technologies are rapidly being developed but adoption is still relatively low. The wave is rising. So how can Jamaica get in on this?

Web3 and Jamaica

Investment Opportunities

On the face of it, the most obvious opportunity for some Jamaicans would be to consider cryptocurrencies in their investment strategies. There are many ways to do this. Once they’ve gotten some crypto they can buy it and

• hold it to benefit from the projected (potential) rise in the value of Bitcoin and other cryptocurrencies over the next few years, 
• trade it for other cryptos over the various exchanges,
• “stake it”, or deposit it into a liquidity pool.

However, I’m not a financial advisor so I’m not necessarily encouraging any of these. While the potential to make great returns is there, there is also the chance of losing much of your investment. As they say in the crypto-space, DYOR (Do Your Own Research). All I am presenting in these blog articles is information and options.

CBDC

Our own central bank, Bank of Jamaica, has already taken steps to keep up with this growing trend by creating its own CBDC, the Jam-Dex. (A bit of a naming faux pas if you ask me but they never consulted me when they were deciding on the name.) One of the use cases of this token is integrating non-banked persons into the formal economy. Ok, but in that case, why stop at the Jam-Dex? Why not integrate other more popular cryptos into the mix? I’ll go more in-depth on this new token and surrounding issues in a future article. 

Crypto-mining

Jamaica is a sunny place. Solar power makes sense here. One of the major issues with crypto-mining is power consumption. Traditionally, crypto-mining wouldn’t make sense in Jamaica, given that we have the 5th highest power generation costs in the world. It would cost more to power the miners than the value of the coins they might generate. However, if you add renewable energy into the mix then maybe it could work. We’ll take a closer look at this in a future article.

Decentralised Finance

Web3, and more specifically DeFi, offers the potential for more people to democratically and fairly participate in providing financial services to others, as well as benefiting from financial services. Wealth distribution, credit, and other finance issues may be better facilitated by Web3 DeFi technologies. Maybe there are some opportunities there. We’ll take a look at that too.

Etcetera

As far as I can see, a quiet shift is happening. One that many individuals could benefit from. Developers, entrepreneurs, industrialists, investors, legal professionals, the common citizen. I don’t know the totality of what Web3 will bring but I think that the more we know, the better we’ll be equipped to harness it for Jamaica, and the Caribbean region as a whole.

Where to From Here?

I will be writing about the evolving Web3 industry every week, looking at the newly developing technologies, keeping you abreast of the latest news within and without the region, including governmental policies and regulations, and highlighting how these may apply to Jamaica and the Caribbean.

I’ll explore different ideas and use cases for how this new suite of technologies can be applied at home as well as take a look at how it’s already being applied now.

I hope you’re as curious as I am.

If there’s anything you’d like me to write about or explore more in depth, feel free to leave a comment.

 Next week we’ll take a look at BoJ’s new CBDC, the Jam-Dex.

Up!