The “sand dollar” of the Bahamas (sand dollar) has already completed its testing phase and will begin to connect the islands of the archipelago, through a digital payment system for its inhabitants. According to the plan of the Central Bank of the Bahamas, the national digital dollar could be ready in October.
Chaozhen Chen, Deputy Director of eSolutions at the bank, commented to Bloomberg that “many residents of the most remote islands do not have access to the infrastructure of digital payments or the banking infrastructure”, an obstacle to the development of an economy that depends on tourism. If the plan is implemented, the digital currency would have an impact on more than 400,000 inhabitants.
For now, the Bahamian monetary authority only has a balance of 48,000 sand dollars, which are equal to 1: 1 to the Bahamian dollar. Chen assured that the digital currency will only be minted as demand increases and paper money is withdrawn from the system, as they intend to prevent its issuance from affecting the country’s monetary policy.
In this sense, the digital currency of the Bahamas is just one way to represent fiat money issued by the monetary authority of the State.
The system proposed by the Central Bank will allow execute cash payments through smart phones or even without Internet connections. This is one of the main benefits of sand dollar from the Bahamas, according to Keith Davies, CEO of Kanoo, an islands payment service provider.
According to Davies, the transfer with sand dollar “It is final and irrevocable because it is fiat currency,” he told Bloomberg. “It is the essence of a settlement system.” And how suggests the Central Bank of the Bahamas, this solution should not be confused with cryptocurrencies such as Bitcoin or Ethereum.
The coexistence of sand dollar and cryptocurrencies in the Bahamas
The race for a national digital currency in the Bahamas began in 2018, but only until the end of 2019 the model was tested on the Exuma and Abaco islands, as we reported from CriptoNoticias.
This model had the advantage of connecting families and small entrepreneurs with the national payment system, but It had the obstacles typical of money administered by the State: exchange limits (up to USD 500) and the requirement of personal requirements or credit history to increase the limits.
Given the state of global economies, hit by the Covid-19 pandemic, alternatives to facilitate payments in areas where there are no adequate infrastructure could help. In countries that depend on tourism (60% of the BIP of the Bahamas), one of the economic sectors most affected during 2020, it can become vital as the means to revive international travel are opened.
However, there are more payment alternatives in the Bahamas. People who inhabit the islands that make up the archipelago have the option of making or receiving payments through P2P platforms such as LocalBitcoins, Paxful, Bitrefill or Coinbase, options that could offer less friction for international payments, exchanges without limits or banking requirements.
In addition, the inhabitants of the island have at least 3 ATMs of Bitcoin, as indicated by Coin ATM Radar, useful for those who already own cryptocurrencies and need to exchange them for local currency.