Bermuda’s Fintech Advisor Envisions a Crypto-Enabled Future

Denis Pitcher, the chief fintech advisor to Premier David Burt of Bermuda, has big dreams for building a crypto and Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term ecosystem in the tiny island nation. According to a recent interview he conducted with CoinDesk, Mr. Pitcher believes that the creation of this ecosystem could bridge Bermuda's economy with the rest of the world.

Mr. Pitcher's comments focused around the implications of the fact that the government of Bermuda announced late last year that it would be accepting digital currency payments in USD-backed digital currencies that are licensed by the Bermuda Monetary Authority.

"By allowing the government to accept it, it provides an opportunity for merchants to start saying, 'Well, I can look at accepting digital dollars,'" he told CoinDesk.

He believes that this could eventually cause merchants to start using digital currency as well: if the government accepts digital currency Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonly the basis of exchange involves fiat currency or legal tender, be it in the form of cash, credit or bank transfers, debit, or checks. While typically associated with cash transfers, payments can also be made in anything of perceived value, be it stock or bartering – though this is far more limited today than it has been in the past.The Largest Players in the Payments IndustryFor most individuals, the payments industry is dominated currently by card companies such as Visa or Mastercard, which facilitate the use of credit or debit expenditures. More recently, this industry has seen the rise of Peer-to-Peer (P2P) payments services, which have gained tremendous traction in Europe, the United States, and Asia, among other continents.One of the biggest parameters for payments is timing, which looms as a crucial element for execution. By this metric, consumer demand incentivizes technology that prioritizes the fastest payment execution.This can help explain the preference for debit and credit payments overtaking check or money orders, which in previous decades were much more commonly utilized. A multi-billion-dollar industry, the payments space has seen some of the most innovation and advances in recent years as companies look to push contactless technology with faster execution times. Read this Term, then "taxi operators, tourism operators, commercial businesses have a place to actually spend, which means that you're not going to have to fall back to the traditional financial system," he explained.

"We don't have access to PayPal, Revolut or Square"

This, he hopes, will eventually act as a pathway into the global economy, which Bermuda has remained somewhat isolated from: "our history allows us to really understand financial services," he said.

"But the challenge that comes from this is that when it comes to access to financial services, Bermudians are largely excluded. We don't have access to PayPal, Revolut or Square, and in order to actually get access to the Apple App Store, we buy credit or gift cards."

Bermuda has been moving toward the blockchain industry since 2017

Bermuda put itself on the map as one of a string of microstates that were taking big steps toward the cryptocurrency industry in 2017, when it launched a blockchain task force in conjunction with the Bermuda Business Development Agency in late 2017.

Then, in 2018, the country announced a comprehensive regulatory framework for crypto. Because Bermuda's population is roughly 60,000 people (and its government is accordingly small), the country was able to move quickly to create legislation for cryptocurrency.

The move prompted a $15 million investment agreement with cryptocurrency exchange Binance in April of 2018. A month later, Premier David Burt told CoinDesk that "we believe over the last nine months that our government has shown that not only are we open for business, but we mean business."

We just launched Nakamoto, Ltd., a captive insurance company licensed in Bermuda. @Gemini Custody™ now has the most insurance coverage of any crypto custodian in the world! ? https://t.co/U0JtXtHVWk

— Tyler Winklevoss (@tylerwinklevoss) January 16, 2020

Last month, Winklevoss-founded crypto exchange and custodian, the Gemini Trust Company, launched Nakamoto Ltd., captive insurance company licensed by the Bermuda Monetary Authority (BMA) to insure Gemini Custody.