Bermuda hopes to be among the first places in the world to roll out a digital stimulus token that is aimed at benefiting residents and vendors.
The Bermuda Government is working in collaboration with the company Stablehouse on a pilot digital token programme that is being tested on the island.
The idea started last year, but the Covid-19 pandemic created added impetus and accelerated it to a pilot scheme.
In essence it is way for the Government to distribute payments to those who qualify for financial aid, by way of digital tokens. The tokens are sent to a digital wallet on a recipient’s phone and can be used to pay for goods and services at participating vendors.
The tokens are spent at a retailer or vendor by scanning a QR code on a small point-of-sale device.
The vendor can later press a redeem button and the tokens are transferred to a Stablehouse government account, and then a cash wire transfer for the value of the tokens goes from the government to the vendor.
The token has been developed by Stablehouse, a payment and foreign exchange platform for stablecoins. Stablecoins are a class of cryptocurrencies that attempt to offer price stability and are backed by a reserve asset. The stimulus token is backed one-for-one to the dollar.
Stablehouse is based in Bermuda and holds a Digital Asset Business Licence from the Bermuda Monetary Authority.
The pilot scheme aims to show how blockchain technology can increase access to digital payments, while solving some of the inherent challenges with stimulus programmes.
It intends to demonstrate the use of digital tokens to enable the purchase of food and essential products and services through participating on-island merchants and retailers.
The pilot programme has begun with a select group of consumers and merchants to provide initial feedback and validation on the use of a stimulus token for in-person payments.
The project has been in development since last year as part of the Government’s initiative to support the adoption of digital currencies on island. Those plans were put on fast-forward due to the Covid-19 outbreak as a possible solution to the need for fast and efficient distribution of financial aid.
Philippe Bekhazi, chief executive officer of Stablehouse, told The Royal Gazette: “A stimulus token is providing people in need with emergency money. The problem is it has been difficult for people to receive their cheques, or bank transfers that are slow or with details are not up to date, or people not banked.
“What we are proposing is bypassing all the middle men, bypassing the banks, and airdrop what is basically an IOU from the government to the people.”
He explained: “You will go to a website and register your ID, and the Government will airdrop to you a certain amount of money. It will be immediate and you will have it on your phone wallet.
“You can then go to all the participating merchants on the island, scan a QR code and pay for food, groceries, taxis — any product or service that is using this Stablehouse payment infrastructure.”