Bitcoin: Biting a bit

Like all coins bitcoin has two sides: bitcoin is something positive for Dominica; bitcoin is toxic, avoid it. But bitcoin is not a real coin; it is internet money and it is coming to Dominica on March 14, 2015 at 9.26 am.

But according to information that The Sun has received, Prime Minister and Minister of Finance, Roosevelt Skerrit is being "cautious" and is playing "a waiting game" with the introduction of bitcoin. In the meantime bitcoin says it is ready for the proposed March 2015 massive launching.

Bitcoin is a "virtual currency" that is becoming increasingly popular among users to purchase goods and services, to transfer to another person, for personal use or to hold as an investment.

On its website, bitcoin claims that 70,000 residents living on the Caribbean nation of Dominica will be eligible to receive bitcoin as part of 'The Bit Drop' project, an upcoming collaboration between bitcoin businesses, interest groups and local government officials.

"This effort will turn Dominica and its more than 70,000 residents, into the most densely concentrated bitcoin community in the world," the website PanAm Post stated.

The Bit Drop is scheduled for March 14, 2015 will feature an island-wide party boasting 'celebrities, musicians and supporters of bitcoin', as well as education booths and free giveaways. The event will also coincide with Pi Day, an annual celebration of the mathematical constant.

Speaking on conditions of anonymity, because he were not authorized to speak on the matter, a local financial expert who is very familiar with the situation said: "Bitcoin is like PayPal and if we refuse to embrace it some other Caribbean island will run with it.

"Other countries from the region like Grenada are after them and if Bitcoin gets popular, the share value will increase significantly. They have met with government, with Dr. Kenneth Darroux as the point man; but Government has not taken any decision on the matter. It is not a political thing and the PM has not given the green light especially since his lawyers have not Okayed the matter."

The source added: "The people are genuine and want to make a significant investment and contribution to the economy but you must understand that since there are a number of "remittance agencies" the likes of Money Gram, Western Union, Wire Transfer and others will be affected, because it will be cheaper to remit monies from one point to another, so they are opposed."

Bitcoin officials believe that Dominica, with its relatively small population and Gross Domestic Product (GDP), proved an ideal location for the event.

The country's high mobile penetration rates, however, may have been the most compelling factor. Project manager Sarah Blincoe believes Dominica's smartphone users will be able to solve real-world problems using bitcoin.

The Bit Drop project plans to extend its support to Dominica even after the festivities next March. In particular, she said, it will provide Bitcoin point-of-sale (POS) systems to merchants and install Bitcoin ATMs on the island.

Meantime, a warning was issued on Thursday to the South African public about the risks associated with the use of "virtual currencies" such as bitcoin for either transactions or investments.

The warning was jointly issued by the National Treasury, the South African Reserve Bank, the Financial Services Board, the South African Revenue Service and the Financial Intelligence Centre. It says: "While there are benefits associated with this new technology, it is difficult to assess those benefits against the risks of something so novel, innovative and technologically sophisticated".

Users of virtual currencies can, therefore, become susceptible to fraudulent or any other criminal behaviour as they may be less circumspect than usual when faced with the promise of high-return investment opportunities, said the warning.

"Accordingly, we strongly advise users to consider the concomitant risks when evaluating undertakings involving virtual currencies. The relevant authorities will continue to monitor and assess the use of virtual currencies and consult with private sector stakeholders in this regard. Further guidance or regulations may be issued, should the need arise," the warning said.

A virtual currency is a unit of account that is digitally or electronically created and stored. Members of the virtual community agree to accept these units as a representation of value in the same way that currency is accepted. In contrast to traditional currencies, virtual currencies operate without the authority of central banks, and are therefore not regulated.

Bitcoin is software-based and uses peer-to-peer technology to operate without the involvement of the central bank or commercial banks.

When contacted for comments on the matter an official of the Financial Services Unit (FSU) of Dominica said the unit had no comments at this time.