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Digital Economies Digital Economies

“Digital cash management should be as simple as having and the steep learning curve in the use of Bitcoin or block-
a digital wallet on your mobile phone,” said Kofe. “So with chain technology in general means that each country must do
the incoming Internet and mobile access for all islands by its own research.
2022, a government supported wallet may be recommended “There are many private companies now that can help an
from which ordinary Tuvaluans could simply pay for things economy use Bitcoin or any other crypto currency, so help to
using something similar to a QR code. This wallet may also be get started is available,” said Emmanuel Narokobi, founder of
connected to e-government services, bringing a new level of Masalai Communications in Papua New Guinea and one of the
identification, access, and convenience. A tap-and-go ap- few pioneers of blockchain technology in the Pacific region.
proach for everyday purchases would be the ideal outcome, “However the interests of the users or the population of a
but it will of course take time for people to make the be- country must still be paramount. It is no different to a PIC en-
havioural switch from physical to digital cash. It’s more than gaging in a mining venture or tuna fishing agreements, in the
doable since many other countries have proven to be able to sense that you have to decide what the country needs, who
make a similar switch over time as well. Physical cash may are the players and at what level in the industry.”
still be present, but it may just become less and less used.” For starters, he said, when looking at blockchain in a coun-
try, several general levels of engagement may be considered:
Cryptocurrency concerns • Individuals or businesses that want to use local banks
Should Tuvalu choose to adopt the BSV cryptocurrency, it and cards to pay for cryptos as an investment or to use
will follow in the footsteps of the Republic of Marshall Islands, in ecommerce transactions;
whose SOV coin project, now nearing Initial Coin Offering • Local Banks that want to offer crypto exchanges for
(ICO) stage, is on track to fulfilling claims by its developers converting the local fiat into a crypto and vice versa;
that it will be the world’s first “real” cryptocurrency issued by • Individuals or businesses that want to use blockchain for
a sovereign nation. applications outside of finance;
Although the two projects are fundamentally different in • Government use of cryptos and blockchain technology.
that Marshall Islands is creating its own private SOV block-
chain while Tuvalu will use one that is already in the market, “Out of the four examples, Governments can easily pass
they underscore a very real possibility that more countries in legislation to manage the top three. However, the fourth must
the Pacific may head that way in the very near future. take a higher level of due diligence and research and most
But with insufficient research available to inform govern- importantly, a clear understanding by the Government of the
ments of their options and the noticeable absence of any problems they want to solve,” said Narokobi.
regional voice on cryptocurrency, the risks carried by these “So a Government has to ask: does it want a private com-
nations as willing guinea pigs in digital cash experiments are pany managing its country’s currency? How much is that going
as yet unknown and the benefits are only theoretical. to cost? What exact problem is it trying to solve?”
The Pacific Islands Forum Secretariat (PIFS) has told Islands In the end, he added, the proof of concept for blockchain
Business that cryptocurrency is on its radar, although more can only be measured by the success or failure of eCom-
as “an innovation that has the potential to garner significant merce.
economic returns and reshape the economic order.” “Meaning that if you have the fastest, cheapest Internet
“It’s too early to determine a regional position on the mat- in your country and a well-educated population, then your
ter, noting the experimental and evolving nature of cryp- economy will immediately improve due to digital transforma-
tocurrencies as well as its high volatility,” said Zarak Khan, tion effects.
Programmes and Initiatives Director at PIFS. “If that immediately improves your economy and trade with
“Our Economic Governance team will be undertaking the rest of the world then maybe you don’t necessarily need
further research on cryptocurrencies in the near future to a new currency just yet or if at all. If however you are hoping
identify inherent risks as well as tangible opportunities. We that by changing your currency you can immediately increase
urge Member States to adopt a cautionary approach towards Foreign Direct Investment so that it can be used to start the
cryptocurrencies whilst these broader issues are being consid- digital transformation exercise, then maybe changing your
ered,” Khan added. currency to bitcoin could be useful.
The Fiji-based regional organisation is the administrative “Ultimately in the face of any new technology that comes
centre for 18 member states in the Pacific region (although your way, whether the effects of engaging with it is good or
five Micronesian members have indicated they are withdraw- bad will always start with understanding what you need first.
ing), including Australia and New Zealand. Tuvalu and Marshall If you do not understand your own needs or wants first, then
Islands are among its Pacific member countries, with Marshall you are open to allowing others to make decisions for you.
Islands amongst those that have begun the process of leaving How much in the long run will that cost you? So absolutely,
the body. research is key,” said Narokobi.

To each country, its own editor@islandsbusiness.com
To the blockchain practitioner however, no one size fits all

Islands Business, March 2021 13