On Tuesday, the government of Bermuda announced that they would initiate a pilot program for a digital stimulus token. They are partnering with Stablehouse, a local payments platform, for this program and it will provide initial feedback regarding the viability of digital tokens for purchasing essential products and services. The country began developing a blockchain-based digital ID system in 2019 and announced to the public that they could use USDC stablecoins to pay their taxes. Bermuda has always supported the idea of adoption of digital currencies adoption and the stimulus token’s development kicked off later in the year, as part of their initiative to develop a comprehensive cryptosystem.
As per a statement, the plans regarding the token were accelerated due to the COVID-19 pandemic, which created the need for distributing financial aid quickly to the population. The potential advantages and drawbacks of blockchain-based payments systems are being evaluated by national governments all over the world, whether it is a central bank digital currency (CBDC) or something similar. China has made the most progress for introducing its own blockchain-based currency. In fact, they have gone as far as softly launching a wallet service last weekend, even though it was taken down quickly.
Chief fintech adviser to Bermuda’s Premier, Denis Pitcher said that their ultimate goal was to bring a wallet on every phone in the country. According to him, the government of the country had to encounter a lot of challenges in distributing unemployment checks to people when they had to go into rapid lockdown. It highlighted the need for getting the funds quickly to the unbanked population. He also said that Bermuda was a great place for testing digital payments on a small scale because of its high technology penetration. 99% of the country’s population are active internet users while 87% of the total population used mobile internet last year, not to forget that they have a population of a little over 71,000 people.
In Pitcher’s opinion, the island also has the infrastructure for backing it up. The U.S. and British had established their bases on the island after World War II and they developed essential infrastructure, from hospitals and airports to power infrastructure. Pitcher said that this is the perfect environment to determine how to ensure mainstream adoption and improve user experiences. Blockstream’s Liquid blockchain protocol is used for the pilot token whereas a point-of-sale terminal has been provided by Stablehouse to enable payments through the Greenwallet app. Testing of the token is ongoing in three locations with a select group of merchants and consumers and they have plans of expanding testing.
When the pandemic prompted the U.S. government to think about the digitization of the U.S. dollar as a quicker way of delivering funds to the public, Bermuda had been inspired by the idea. They wanted to be amongst the first in the world in offering financial aid to their people in the form of tokens. But, since then, the discussion about tokenizing the U.S. dollar has become synonymous with launching a CBDC. However, according to Pitcher, Bermuda is not interested in it.