Unchained - How the Caribbean Got on the Road to Central Bank Digital Currencies - Ep.127

Episode Date: July 9, 2019

Gabriel Abed, founder of Bitt.com and Vice President of the board of directors, describes how he went from mining Bitcoin to persuading governors of central banks to not quash Bitt's goal to create central bank digital currencies in the Caribbean and getting the Eastern Caribbean Central Bank to pilot one starting next year. He tells the tale of how Overstock came to invest in Bitt, how he brought on a new CEO to take over the company he founded, and how he teamed up with Polymath to create a new company that became the single largest shareholder of the Barbados Stock Exchange. He also describes Digital Asset Capital Management, an investment firm he launched, and why he's still a Bitcoin maximalist despite working on and investing in other types of cryptocurrencies.  Virtues of the Crypto Revolution retreat with Meltem Demirors of CoinShares and Jalak Jobanputra of Future Perfect Ventures: https://www.eomega.org/workshops/virtues-of-the-crypto-revolution Thank you to our sponsors! Crypto.com: https://www.crypto.com Kraken: https://www.kraken.com/ CipherTrace: http://ciphertrace.com/unchained Episode links: Bitt.com: https://www.bitt.com/ Gabriel Abed: https://www.linkedin.com/in/gabrielabed/ mMoney in Barbados: https://www.mmoneybb.com/ Digital Asset Capital Management: https://dacm.io/ Overstock announces $4 million investment in Bitt.com, to total $16 million over time: https://bitcoinmagazine.com/articles/overstock-invests-in-bitt-to-launch-official-digital-currencies-in-the-caribbean-islands-1459961581 Second Overstock investment in Bitt.com of $3 million: https://www.coindesk.com/overstock-venture-arm-invests-3-million-in-blockchain-payments-startup CoinDesk on the meaning of Bitt's work with the Barbadian digital dollar: https://www.coindesk.com/how-a-tiny-island-could-give-cryptocurrency-a-big-boost Bitt’s pilot with Eastern Caribbean Central Bank: https://www.coindesk.com/eastern-caribbean-central-bank-takes-step-toward-digital-currency-roll-out Partnership with Centrale Bank van Curaçao en Sint Maarten (CBCS) to look into issuing a central bank-backed digital currency for Curaçao and Sint Maarten: https://www.coindesk.com/bitt-partners-with-dutch-caribbean-islands-to-explore-central-bank-crypto Bitt's identity work: https://www.coindesk.com/bitt-reveals-big-plans-blockchain-powered-caribbean-settlement-network Crypto activity in Bermuda and the Caribbean:  https://www.nytimes.com/2018/07/29/technology/cryptocurrency-bermuda-malta-gibraltar.html Bermuda's crypto regulatory framework:  https://finance.yahoo.com/news/why-bermuda-is-going-crypto-with-new-regulatory-framework-130512103.html Unchained interview with CZ of Binance: https://unchainedpodcast.com/how-binance-became-the-most-popular-crypto-exchange-in-5-months-ep-84/ Unchained interview with Bitfury: https://unchainedpodcast.com/bitfury-on-the-ways-it-collaborates-with-governments-and-why-its-partnered-with-a-public-company/ Unchained interview with Sandra Ro: https://unchainedpodcast.com/what-is-one-of-the-worlds-largest-derivatives-exchanges-doing-with-bitcoin/ Unconfirmed interview with Dante Disparte: https://unchainedpodcast.com/libras-dante-disparte-on-why-we-should-trust-a-financial-system-designed-by-facebook/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin. It's not easy keeping up on all the news. If you want a short and quick look at what I think are the top stories in crypto every week, sign up for my weekly newsletter. Just go to Unchainedpodcast.com and enter your email address into the box right on the homepage. Sign up today. Interested in the crypto weekend retreat, I'm teaching with Milton Dmyrs of Coin shares and Jal and Jobomfutra of Future Perfect Ventures in September. If so, be sure to check out the show notes for the link to sign up. Also, Unchained is now on YouTube. You can find the most recent episodes there every week on the Unchained podcast channel. Grow your crypto and earn up to 8% per year with Crypto.com.

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to monitor compliance. My guest today is Gabriel Abed, founder of Bit.com and vice president of the board of directors. Welcome, Gabriel. Thank you, Laura, for having me on the show. The company you founded, Bid, is working with central banks in the Caribbean to launch central bank digital currencies. And some of those might launch potentially as early as next year. But before we get into that, I'd actually like you to tell your story from the beginning of how you got into Bitcoin in the first place. Okay. Well, I was a student at Ontario Tech University in Canada.

I enrolled in the program in 2006, and the exact program was a Bachelor of Information Technology majoring in network security with honors. And in 2006, I entered the program in Canada, left the island of Barbados, relocated to Canada, and in 2010, I completed my degree. But in the final year, one of the particular cryptography courses had a buzzword floating around the students, and that buzzword was Bitcoin. And back then, it wasn't anything major. A lot of us didn't know what was happening. But myself and a few of my classmates were mining Bitcoin on our school laptops, exploring the technology, and not really knowing much about where.

it can go or what it represented at the time. But once I finished my degree in the middle of 2010, I relocated to the island of Barbados and I launched a company called BitHedge Technologies in November 2010. And BitHedge Technologies primary focus was building software applications for companies. One of the software applications that we wanted to focus on as an organization was blockchain-based technology, but really didn't understand the technology that much. It was just a huge fan of what it could potentially represent, especially after reading the white paper by Satoshi Nakamoto. And it wasn't until 2013 that I started taking Bitcoin and blockchain technology very seriously.

Because in 2011, I tried to apply to do a master's of philosophy at the University of West Indies in Barbados. and I had emailed a couple of the deans and professors, but unfortunately in 2011, there was no one that could shepherd the program. And during that two-year period of 2011 to 2013, I just did some mining on a computer in my office, and I wasn't really taking the technology seriously. And it was only until 2013 that I started discussing the topic with one of my very close friends, a guy named Oliver Gale. and we discussed the idea of blockchain technology and Bitcoin and what it could represent. And I had been trying to launch a Bitcoin exchange with my team in Barbados. And I had mentioned this to Oliver. And he took a very serious interest in the technology.

He had a finance background. And later on in that month, we end up building out a couple of commercial miners, which we end up taking to the island of Trinidad. into Bagel. And we started mining Bitcoin commercially using GPUs. Back then, FPGAs and A6 were only now coming online. They weren't really on the market per se. And we continued mining for the better part of the 2013 period and into 2014. But simultaneously, we had focused on building out this company that was called B.I.T. We wanted to build a cryptocurrency exchange for the Caribbean region. And we had started building out this solution and launched it in late 2013, early 2014. And unfortunately, we could not

finance both the mining operation and B.I.T.T. So in I think it was March or April 2014, we wound down the mining operation and put our full-time focus into bi.tt. And fortunately for us, this gentleman named Peter George, who's now today our chairman of the board, heard about us and he met with me in Trinidad. And I explained my understanding of Bitcoin and what it represented for the world of financial inclusion and the empowerment of people from a social and financial economic perspective. And he loved it.

And he said, Gabriel, my group and I, we wanted back you, and we like the project. And he backed us. And the very first thing I did was I used some of the money to buy bit.com. So we transitioned from bi.t.t.com. And in building out this solution, we started to gain a lot of traction in the Caribbean market, specifically that of Barbados. And one of the big problems we were trying to solve was remittance. Because you see, Laura, moving money into the Caribbean is extremely expensive.

It can range anywhere from 8 to 18% on average. And that's a very big cost in developing nations, especially when it's typically the poorest that are trying to complete a remittance transaction. And losing 8 to 18% of your money. is it's not favorable. And we believed that using Bitcoin technology and Bitcoin itself as a value asset system, we could complete this transaction for a very small cost, dramatically less and was out there on the market. However, the commercial banks were not willing to bank us, and they were not willing to integrate into our system. And we could not have a seamless system of allowance.

allowing a consumer to access their bank account on the completion of this remittance. We could not complete the last mile problem, which was when money enters into our jurisdiction, how do you get that money into the end user's hand? And funnily enough, we started looking more in depth at the blockchain-based side of the Bitcoin technology. So remember, Bitcoin has two sides of it, is the value asset commodity side. and then it's the technological innovation that is the blockchain itself. And we happen to be using or looking at both. And I remember one day I started looking into central banking and commercial banking

to try to get a better understanding of how they worked. And I stumbled upon what I thought was a pretty novel idea of, well, why is it that commercial banks were deciding the payment network and the payment ecosystem? when it should have been the central bank creating and designing a network for everyone within their local society. And I proposed the notion of using the blockchain technology to create a digital version of the Barbadian dollar. And I had suggested this to my partners. And at first I got resistance, but after some thinking, I end up getting full buy-in. And I remember we went to the Central Bank of Barbados, and I sat in front Dr. Delao Whirl,

who was at the time the governor of the Central Bank of Barbados. And I explained the concept of creating a national dollar on the blockchain and representing it digitally. And of course, the feedback was not favorable. I was escorted out the office. And I won't say what I was told, but I was escorted out the office. and of course feeling defeated as a young entrepreneur, but having grid and resilience, the team and myself from Bit continued to build

because we believed that this would be a superior solution for a local ecosystem of payments. We believe that we were on to something and we were right. So it took us a couple of months and we built out a full team of compliance, financial operators and experts, more programmers, and we really built a solid team that came together and addressed all of the issues and all of the potential risks that may surround a national digital dollar.

And we kept going back to the central bank meeting after meeting after meeting. And it became a massive issue for us because obviously with a limited cash budget and an uphill budget. and an uphill battle, we needed to have a breakthrough. And I remember I finally got so frustrated that, you know, the central bank of Barbados was talking about they want to support innovation and entrepreneurship and they want to uplift Barbados. And I got frustrated and I went to Dr. World and I said, look, you want to support innovation. That's what we're building here.

You want to support entrepreneurship. That's what you're looking at. And you want to uplift Barbados. This is going to put us on the front of the global stage if we do this. And right now, you're the only thing standing in our way. And he looked at me, he said, Gabriel, I won't put my neck on a line for this business or for you. But I can see the merits in what you're building. So I will give you a nod of approval from a wait and see perspective.

Pursue what you're doing, continue to build out, and I won't hinder you. Well, we continued to build and we ran straight to the press. We held the press conference and we launched a beta version of the Barbados dollar. Remembering, Laura, this wasn't legal tender and it's not legal tender at the time. It was just a representation of the Barbados dollar digitally, very similar to Tether, except our operational policies and mandates would be designed around those of the monetary expansion policies of a central bank, but run by a private company until the central bank gave us the full approval and authorized this as legal tender. And in doing that news article and doing that press release,

we end up getting a news article published on CoinDess. Now, I believe this was late 2015, early 2016, I had been fortunate enough to battle my way into Satoshi Roundtable. Now, Satoshi Roundtable is like this very exclusive private event of the who's who alphas of the crypto industry. And I had really done a lobbying effort to get Bruce Fenton, who's the organizer, to allow me to attend. Because at first he had said, no, sorry, there's no room for you there. And I said, look, we're doing a digital dollar that's going to be used by central banks. I really do think this is the future. Please allow me to attend.

And he said, fine, Gabriel, you can come for one day. So I flew up to Miami and I rented a car and I drove to Port St. Louis where this conference was held. And I arrived late, of course, because of delays on the planes. And flying out of the Caribbean is a headache. and I arrive late, and I arrived just in time for the dinner hall where everyone's meeting for dinner. And I remember I was sitting down with a friend of mine there, and I'm preparing to eat my food, and I notice this lady, she walks past me, and she's giving me this serious look. And then she hustles off, and she goes and whispers into this guy's air.

And then this guy just comes straight over to me, and he says, excuse me, young man, or are you Gabriel a best, from bit.com. I said, yes, I'm Gabriel. It says, well, let me tell you, I'm your biggest fan. And what you're attempting to do for central banks is turning back the dials of control, and I believe this is the future.

I was like, wow. And I had never heard that before, so I'm taken back. And I don't know who this guy is. And then he says, oh, well, allow me to introduce myself. I'm Dr. Patrick Byrne of Overstock.com. And of course, at that time, overstock was the first billion dollar company to accept Bitcoin as a payment method. They single-handedly caused Bitcoin to rise significantly in value by their acceptance.

So I was already a massive fan of this guy. And I was like, wow, okay, I definitely know you are, Dr. Byrne. Well, this is such an honor. And he said, can I join you for dinner? And he sat down with his team, Dr. Ali Al-Husani. and they spent the next couple of minutes picking my brain and discussing it. And then he disappeared with an entourage of people following him and everyone wanting to talk to him. And once again, I felt like I would never have the opportunity to properly discuss what we're building with this guy.

I just knew he was a fan. And at this resort, I think it was ClubMed. It's massive. And by Barbadian standards, huge. and I remember it was around 11 or 12 o'clock at night. And I didn't really know much people there. And I was feeling fairly lost. I knew that there was an event and a gathering happening at the Net Key House or apartment.

And I could not find this place. And I was walking around mindlessly looking for it. And I'm feeling pretty upset and depressed. And in the distance walking towards me, it's this dark, tall figure. and as it gets closer, I realize it's Dr. Byrne. He says, oh, Gabriel, I'm lost and I can't find where everyone is. And do you perhaps want to join me on a walk back to my room? And I have a meeting starting in my room.

And maybe you can give me the five-minute elevator pitch on the way back to the room. And when we get back to the room, you know, you can excuse yourself. And I join him on this walk. And, you know, I spent those five minutes pouring my heart and my soul out to this guy on what I believe we can do for the people of this world from a financial inclusion perspective, from an empowerment of the Caribbean people perspective, and how we can really change the face of finance. And well, we got back to his room and he said, you know, Gabriel, I'm going to cancel my other meeting. Why don't you join me on my balcony

and let's discuss. I want to know who you are. I want to know about your background. Let's try to become friends. And I think we spent until 6 or 7 a.m. that morning going back on forth. He, you know, he educated me on the Austrian School of Economics. I educated him on my beliefs of central bank digital currencies and how they should operate. And we really spent some time getting to know each other. And I had, you know, bragged a little bit and told this guy, you know, I knew, I knew heads of governments in the Caribbean and I have access to ministers of finance. And And I know the central bankers, and I believe that I'll be successful in the Caribbean region. And the Caribbean was the perfect place to build this because they needed it, because they have trade agreements amongst each other, because they had been for too long oppressed by the global financial network.

And I had believed to be the perfect litmus test or the perfect petri dish testing ground for this type of innovation. And this guy called my bluff. He said, okay, well, if you have all these connections in network, prove it. My jet is being, my private jets being fueled up, and in three hours, we're going to board it, and we're going to fly into Jamaica for starters. I was like, well, okay, this guy is serious. So I remember I called my team back in Barberos, and I called Oliver and Simon. I said, guys, as it's happening, you know, let's try to get the troops together.

Can we get Dr. Damien King in Jamaica and Chris Tufton in Jamaica? and the Jamaica Stock Exchange ready for a meeting, I'm going to be flying into Jamaica in less than two hours. And well, we flew into Jamaica, and Dr. King was there. He was there to pick us up. He took us straight into the meetings with the heads of the Jamaica Stock Exchange, and then we met the ministers of Jamaica.

And then Patrick turned to me after the meetings, which went very well and were very successful. He said, okay, now do the same in Barbados. I want to meet your central bank. I want to meet the head of your bankers association. I want to meet your minister of finance. We'll be flying into Barbados in the next hour or two. Well, I did that again.

I called back Barbados. Oliver, we're flying into Barbados. We need to have all of these meetings. Like, now, this is happening? And, of course, my team, they couldn't believe it. They thought I was, you know, crazy or joking. But no, I wasn't crazy or joking. This was happening.

And by the way, I'm running on zero hours of sleep. And, well, we arrive in Barbados, and I remember my partner, Simon, he came up to me and he saw that I had broken. And I bawled out and tears to this guy's arms. And, well, we ran into the meetings. And Dr. Byrne met with our central bank, and then he met with the Bankers Association. He met with the Invest Barbados, which are the investment arm of the Barbados government that helps foreign investors. set up and guide them. And then he met with the Minister of Finance. And I remember he told the Minister of Finance, I'm about to invest millions of dollars into these young men. And I want to know

that if I invest in them, that the powers that be won't stop them because you're going to protect them. And I want to know that if I invest in these young men, and we put Barbados on the front and the center of the global age of central bank digital currencies that we have your support. And of course, they said yes. And needless to say, two months later, you know, we're sitting in a press conference announcing overstocks mega deal with bit.com, the largest ever technology investment to a startup that the Caribbean had ever seen. and we use that capital to continue to build out the evolution of what would become bit.com today.

I can expand on that a little bit more if you would like, Laura. Wow. Yeah, let's do that. But first, I actually want to fill in a little bit of detail in that story. Initially, when you were meeting with the governors of the central banks, like, what was the pitch that you were making to them? Was it to solve the remittance issue that, you know, you could use your platform to do the reminences? And then with the digital dollar, that would be a way where people could turn that into local currency? Or what, like, what was the reason that you were saying that this would be a good idea? Well, to be honest with you, Laura, I was just flying into countries on my own and walking right into the offices of central banks going straight. to the receptionist and saying to a receptionist, I would like to meet your governor.

I have a proposal that I'd like to make to him or her, depending on the country. And a lot of the times I got through. I actually got it meeting on, in some cases, the same day or a couple of days later, because I would say I'm in the country for X amount of days. And I did this in Trinidad and Tobago. I did this in Jamaica. I did this in several different Caribbean islands, and I would then sit in front the governors or the deputy governors

or whichever team they would put me in front of, and I would pitch them on the following. I would like to create, my team and I, our company, would like to create a solution that would digitize your national base, your M0 and your M1, you have coinage and notes, your paper money, and we would like to digitize that. And in digitizing it, we can create. We can increase your seniorage, which is the difference between the cost of printing money and the cost of issuance of money.

We can increase the accountability of your national dollar. We can make it more efficient to account, to count, to transport, to secure. It's cleaner and safer with less bacteria. So I had a full pitch on the benefits that this system could bring. and their reception was usually positive until I got to the blockchain part. And when you got to the blockchain part, you immediately got the hairs on their back standing up. And I would have to argue that, look, digital systems are great and technology is important. But blockchain is to superior solution because of the accountability that the technology brings in its transparency and its integrity.

and it took us several years to convince central banks of that. So my main pitch was around the inefficiencies that we can solve. It was around the fact that we can bolster our regional trade because in the Caribbean, we have what's called the Revised Treaty of Shagoramas, which creates a union amongst our member islands, very similar to that of the European Union. The Caribbean has one of the strongest trade unions in the world. but it's being underutilized. We don't have our own grassroots custom design payment network.

There is no multilateral clearing facility within our region. And the advent of this technology not only allowed you to create a national digital dollar, but a regional trading system that bolstered and supported our interregional trade. And that was usually my pitch. And it's still to this day my pitch. So it's sort of like a B to B. not B2B, but like this will make your back end efficient kind of pitch? This would make your entire economy efficient. This would make your entire central bank settlement system efficient. This would allow direct currency swaps, multilateral clearing facilities, trade weighted index currencies, benchmark index currencies.

You name the economic model you want to create amongst your member states. This technology made it possible. And that was where we tried to focus. focus with it on them. But the more important part was your citizens need to be empowered. You have over 50% in some cases of people within these islands and these countries that don't have access to modern banking facilities. They're underbanked and unbanked. And that is madness in the 21st century. So being able to come at this from a technological perspective with a superior technology, it can solve these problems. And it can make our region really shine. And it can allow us to really use these regional trade agreements to allow us to really rally the goal of a one Caribbean while independently having our sovereign identities. And that was really the Holy Grail. And then was the pitch sort of like an M-Pesa kind of pitch where it's like people don't have bank accounts, but they have phones? And we can bank them

Because, yes, because some of the islands bolster over a hundred percent mobile penetration rate, where the average Caribbean person in some jurisdictions have more than one smartphone. So the notion was not necessarily an M-Pesa, Laura, because while M-Pesa is a great solution for Kenya and the African jurisdiction, it faced one major problem. It was controlled by a private organization. and in the case of Kenya, more than 50% of the country's transactions go through a private organization. What we had designed with central bank digital currencies was an open payment system, not a closed payment system, one that was mandated by the monetary authority, one that was not controlled by a private company, but by the organization or the entity that had set the fiscal rules and policies. They had now been able to, with our technology and our solution, create an open e public money system, setting the standard and uniformity for all financial institutions, whether you were a bank, a fintech, a credit union, or just a developer.

You had the same level of access across the board, but the standard was set by a central bank. That's the main difference from Mpesa. Bit.com wasn't creating a payment system that would be controlled by Bit.com. Bit was creating a payment system that was controlled by the central bank so that the standards of payments and this network would be open and accessible to all citizens and all corporations and entities within that local jurisdiction and beyond. So how did that work exactly? Because you said that you didn't necessarily have the blessing of, the central bank, but they wouldn't stop you either. So because in that regard, you know, it wasn't exactly a partnership. How did it function more like a central bank digital currency as opposed to like, you know, you mentioned the comparison to tether, as opposed to something

like tether, which is managed by a private company? Well, that's an interesting question. So in Barbados, we had functioned very much like an M-Pesa, where we were a private company you would give us your dollars, we would store those dollars in a one-to-one format with a commercial banking entity. And what would end up happening was you give me, let's just say an example, you would give the company 100 physical Barbadian dollars. We would store that 100 Barbadian dollars with a financial institution. And turning around, we would make a counterparty 100 digital Barbados dollars noting this was full reserve one to one not fractional so in doing that we had created an impesa type model but this wasn't our goal now in i believe 20 late 2016 at a conference in

washington tc that was being hosted by the cc i was giving a speech on the advent of central bank digital currencies. And I met one of our younger governors of a central bank, Dr. Timothy Antoine. And I had spoken to him briefly on the phone, but in seeing him in person, I had been able to give him the concept of what a central bank digital currency should look like, how it would work, and I had explained to him that no central bank had signed up with us. Now, in sometime 2017, Laura, we were realizing that central banks, you know, they're very serious organization. They're very conservative. As a matter of fact, they're probably the most conservative entities in the world.

We weren't getting much traction from them. Some of them were saying, well, you know, you're from Barbados. Why isn't your central bank doing this as yet? Or we'll wait for you to get one central bank first before we take you seriously. Or we see this and we'll wait for another large organization. organization, maybe like the Bank of International settlements to give full sanction of this. Well, that wasn't really working out quite well. And in meeting Dr. Timothy Antoine of the Eastern Caribbean Central Bank, when I had told

him about this technology, he went and did his homework. And one of the key things that he said was, I would not be the governor that allows fair to hold us back. We want to ensure that our people are empowered. And I'm paraphrasing. I don't remember exactly what it was that he said, but it was along the lines of fear will not be the factor that holds us back. We will ensure we need to do what we need to do for the empowerment of our people. And in 2017, I met this gentleman named Rodden Adams.

And Rodden Adams was a gentleman who had a level of pedigree. a son of the soil of Barbados. And his grandfather and father were very important characters to the evolution of the Barbados political and business fair, along with that of the Caribbean. Our central bank is the Tom Adams Financial Center. The airport that you land in in Barbados is the Grantley Adams International Airport.

So the Adams family had done well to put Barbados and the Caribbean on the map. I believe his grandfather was the chairman of the West Indies Federation, which today is CARICOM, the same CARICOM that I spoke about earlier on our call. And when I met Rod and Adams, I got super excited because this was a gentleman that understood financial technology. He had worked in the arena of finance. He was a son of our soil.

and he understood fully the problems that we were facing in the Caribbean. And I remember we were at the time looking for our Eric Schmidt. You know, Google had Sergei Brennan and Larry Page, and they brought on what they were calling a gray hair, someone more seasoned than experienced to guide the company forward. Well, we were looking for our gray hair a bit. And at the time I was a CEO, and we had interviewed some guys in Utah and some guys around the world,

and they weren't really understanding the Caribbean problem. They weren't really appreciative of the Caribbean issues. And the unfortunate part is we weren't finding someone in the Caribbean that were understanding the international issues and the problems around global monetary authorities. Well, Rod and Adams checked all the boxes. And after going to dinner with this guy, I remember calling Dr. Byrne and Peter George

and the rest of my partners and saying, guys, I found my replacement. And I really want you guys to consider this guy. I want everyone to meet him. You know, I really do believe that this could be our leader. You know, I would like to hand off my company to someone, our company, to somebody that I believed would do justice by it. And, well, a couple weeks later, You know, Dr. Byrne and Peter and everyone was flying into the island and meeting this guy. And lo and behold, Rodden Adams was hired and he took over my reigns as CEO of Bit.com.

And one of his first orders of business was to champion this governor, Dr. Timothy Antoine, in the direction of central bank digital currencies. and in February of 2018, Laura, Bit.com and the Eastern Caribbean Central Bank, the Eastern Caribbean Central Bank, which, by the way, is the Central Bank for eight Caribbean islands, and it's the currency union for eight islands, signed a contract with bit.com to move down the road towards building a legal. tender and a digital version of the Eastern Caribbean dollar. The entire dream that we had dreamed was now coming to light. And now this e-public money system was no longer a dream but becoming a

reality. Great. We're going to discuss more about what that looks like after the break. But first a quick word from our fabulous sponsors. Will the world follow France and advocate banning privacy coins? Will government-backed stable coins become the new fiat? Are distributed and peer-to-peer exchanges just a flash in the pan? The answer is maybe. Virtual currencies can flourish and create a new, private, and more versatile economy. But that grand vision can't happen without keeping crypto clean. And that requires support of governments and accountability for bad actors. Privacy enhanced compliance using cryptographic controls has the potential to preserve anonymity without compromising legitimate investigations. CypherTrace is working on this vision of the future.

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And also then do you definitely need a blockchain for that rather than just a database? Well, Laura, so let's go back a little bit here. when we originally designed the notion of a central bank digital currency, we had used the overlay protocol of Bitcoin, Bitcoin's blockchain, and we used a specific flavor called the Color Coin Protocol. And that was back in 2014. Unfortunately, not taking into account the Lightning Network, the Bitcoin Protocol is quite cumbersome for value placement on its overlay protocol.

And it was quite costly per transactions and for the storage issuance and the revocation. Now, you can't empower an entire nation of people from a financial perspective if every transaction they're sending has an extremely heavy cost. So we started looking at other technologies such as Ethereum, light coin as well. we started looking at a hyperledger by IBM and what it really boils down to Laura is this is a collaborative effort between BIT and the relevant central bank

to making a decision that best fits them and one of the superior things that you can use is a decentralized blockchain-based technology for many reasons, the security aspect, the trust aspect, the transparency aspect, the integrity aspect, the open source movement aspect and the global development aspect. So it really boils down to that of a choice that the central bank needs to make and it will be made on a per case-by-case basis. While, you know, I may have my own

opinions and while BIT may have a preference of a technology they would like to build on, it is a collaborative effort between that of our organization and that of the central bank. And now, while I'm not up privy to discuss the solutions that we're building on top of, you can bet that it's based on a blockchain-based technology. So let's say that you end up working with several different central bank systems in the area. And as you talked about, like, efficiency and interoperability, or just, I guess, regional trade was kind of one of the goals there. So then I guess interoperability would be important, right?

So then shouldn't it all beyond kind of the same system as opposed to different? No, well, you see, you can't, you know, some central banks that I have spoken to have a preference to one blockchain or maybe someone within their IT department that's quite smart, has done their own research and has a preference of another blockchain. Maybe a large organization like IBM has done a really good job of positioning themselves, and that might be a choice. What it really boils down to, and this is a great question because this is one of our current problems that we're solving, is ensuring that you create a digital dollar standard. So what's really cool and happening right now that's being led in Barbados and in the Caribbean, it's called the Caribbean Settlement Network. and it's being led by our chief economist, Marla D'Cran, in collaboration with the Caribbean Development Bank. The Caribbean Development Bank is the largest loading bank of the Caribbean governments, and they have taken under their wing the Caribbean Settlement Network as an initiative

to building out this network of dissimilar technology-based solutions. And one of the main mandates they have is to design and design, and create what they're calling the digital dollar standard. And the digital dollar standard would explore the common denominators that a central bank's digital dollar should follow from a reference implementation, from a code implementation, from a public, private key pair encryption mechanism perspective, on how these various mechanisms,

whether they're similar or not, should function together for interoperability. So the beautiful part is, no matter what technology a central bank uses, as long as they follow these reference implementations, there will be interoperability. And that is one of the key takeaways here, is that we understand that no one blockchain technology is going to win

and that no central bank or all central banks will not use the same blockchain technology. and we have to understand that, and we have to appreciate that that's the future of where things are going. But where we can make sure we're positioned and where the Caribbean Development Bank wishes to see the positioning happening is that interoperability is key. And therefore, this Caribbean settlement network is focusing on building the legal and the technological frameworks to ensure that these dissimilar systems are interconnected. that they function with each other. So that is a massive problem that's currently being solved as we speak. And let's also talk about with this product that you have called M Money, which I believe is in Barbados. So how does that relate to the Barbados digital dollar? And what is M Money? What does it do?

And how does it work? Great question. So in lieu of not having full sanction by the Central Bank of Barbados to create a legal tender and a digital version of the Barbadian dollar. We were fortunate enough that we entered into a regulatory sandbox that was designed specifically with us in mind by the Financial Services Commission of the Barbadian government and the FSC and the Ministry of Finance and the Central Bank have joined the sandbox initiative to oversee and money deployment within our local country.

So what it is, it's everything that you can imagine a digital dollar is from the aspect of a user being able to pay for their coffee or the merchant being able to accept a payment privately using a proprietary solution designed by bit. Now, it's not a full blockchain, Laura, but we are transitioning to that. and with our work with the Eastern Caribbean Central Bank and other central banks, we will eventually transition that to a full decentralized blockchain solution. However, in the interim, and while waiting for this to become a full legal tender, we have been regulated under the Financial Services Commission's regulatory sandbox,

where they can test, where they can pilot, where they can allow them to observe everything that we're doing, from an issuance perspective, from a payment perspective, from the sending, the receiving. We currently have thousands of users in Barbados and hundreds of merchants across the island utilizing this platform. So it's only a matter of time before we exit this sandbox

with full regulatory approval. And hopefully our central bank sees the merits of this solution. Hopefully they understand the advent of central bank digital currencies. And they then champion this to make MBron. money, the M-Money product, specifically the Barbadian digital dollar, a full legal tender on the island of Barbados. So what M-M-Money is, it's the representation of the utility that a central bank digital currency would look like.

Because, Laura, let's look at it. A central bank goes and issues a digital dollar. Well, that's great. They've been innovative, but what happens now? Who's accepting it? How's it being spent? What does it look like in a local economy? Who's receiving it?

What does that look like from accounting perspective, from a security perspective, from an auditing perspective? Well, that has to be designed. And M Money steps in and fills that gap perfectly by allowing us to show the full utility of a central bank digital currency. And it allows us to prove the viability of digital systems and digital payments within a small island development. state. And how are you getting that into people's hands? And like, is it, is it just like normal brick and mortar merchants or is it, you know, kind of like websites or or mobile apps where, uh, that are adopting it where people can spend it? Oh, yes, it's, it's all of the above. It's local brick and mortar merchants, whether it's a grocery store, you can go into

A1, uh, supermarket in Barbados and buy your milk, your food and your, and your, you're, and your drinks and your meats and your toiletries, all using the mobile app. Or you can, in addition, use the teller functionality. So some merchants, merchants can opt to be either merchants who just receive digital dollar payments or they can opt to be both merchants and tellers. And the functionality of a teller, teller, T-E-L-L-L-E-R, the functionality of a teller is to allow a consumer to move between the digital world and the digital world and the analog world. And what that means is that I can bring my physical paper money to that teller,

deposit that paper money to that teller, and that teller would give me the counterpart of digital dollars, maybe for a fee, or maybe for free, an encouragement for you to spend and shop at their local store. So on the island, we have dozens of merchants and tellers, hundreds of merchants of tellers around the island currently allowing consumers to move between the analog and the digital world. And we have thousands of consumers using the platform for their digital shopping. And of course, Laura, as you question, does this work on websites? Yes, there's APIs that integrate into e-commerce and there's the ability to integrate this into your apps and your digital platforms. So we cover both the brick and mortar and we cover the digital world.

And is there anything in it for the consumer where they feel that this is definitely superior to what they're using? And what kind of, it sounds like maybe volumes are low since it's still kind of in this testing phase, I guess. And you say it's just, you know, thousands of people. So maybe it's not, it's not very widespread yet. Like, how do you get wider adoption? Like, what is the motivation for them? Remember, Barbados is a small island with under 280,000 people. So thousands of consumers is, by Barbados' measurement, quite large in the grand scheme of things.

I guess if you were looking from an American perspective with a population of around 40 million, thousands isn't really anything to scream about. But let's also remember this is a chicken before the egg, a horse before the carriage kind of deal. We're talking about a cash dominant society now moving towards a digital place. platform. This is a long play here that we're going after. So while we don't imagine we're going to convert the whole island overnight, it's a matter of time before this superior system takes place because for the consumer, it means no standing in bank lines, no bank charges for the monthly service charges, the per transaction charges, consumers don't have to pay to send or receive, which is one of our core principles and money and bit. No sending and receiving. No sending and

receiving fees for the consumer because we don't believe that's fair. We don't believe that's right. It's a human right to be able to participate in a financial system. And when you add taxes or fees to that, you're being very unfair. So for the consumer, it's nothing but a win. Because now you can sit at the convenience of your home, pay all of your expenses. Now, from the horse and carriage perspective, we need to convince merchants to accept it. But the merchants will say, well, you know, where the consumers coming from and then you need to convince consumers and then the consumers will say, well, where can I spend it? So it is, you know, it is quite the battle, but it's one that we're prepared to take on and have been taking on over the last year. It's a matter of time before we get

more utility into the app, you know, adding more functionality, making it more user-friendly, adding government taxation payment services, being able to pay your national insurance and being able to receive your national bursaries. These are things that are coming. These are things that we're working on. And the unfortunate part is we're building from the ground up. We're building from scratch. No one's coming in and giving us to software. No one's coming in and giving us the clients. No one's coming in and giving us the merchants. We have to build an entire ecosystem here. We have to create this from nothing. And we've been doing that. So it's right now not as widespread as, you know, we would like it to be.

But we understand that this is the long play. And we're in this for the long haul. We have been doing this for the last six years, and there are zero intentions to stop. And if you're not charging the consumers in any way, then how does BIT make money? Well, when we provide a solution, when we enter into a central bank or a monetary,

authority. We're giving them the entire stack of technology all three layers of the money supply chain to empower them to move from paper money to digital money overnight, saving their economy in some cases millions and millions and millions and millions of dollars. So when we offer them all three levels of the supply chain in the form of ready to go software and of course every central Bank needs to be customized, the central bank themselves are the ones that will finance and pay for this product. And it's the commercial banks and the merchants that would also have auxiliary fees attached to it. So for us, our main focus is central banks, and there's around 186 central banks around the world that allow us to save them billions of dollars if you were to collectively look

at what they're losing from poor inefficiencies within their local economies. The fact alone is printing paper money is expensive, Laura. You know that paper, plastic, linen dollar? That cost a lot of money to print. So stepping in and saying, hey, we could make this 99.999% more efficient and cost effective, well, almost every central bank in the world will see this as a no-brainer to pay for this type of system. And we are seeing that currently. And I believe there's also an identity component to the system. So how is that being used and could it eventually be used for other sorts of purposes? Because as you know, in the blockchain space, everybody's saying that this technology could be the underpinnings for some sort of identification system for governments

or a decentralized identity solution? Well, we aren't an identity company, but we do work with several. We work with identity mind. We work with NetKee and we work with Shift. And there's several other components and offerings out there. And our main objective is when we approach a central bank with a central bank digital currency, our identity partners do come full toll with us, because you did rightfully say there is an identity component here, which helps central banks provide a level of oversight that they would need to understand what's happening within their local economy. It helps provide things along the lines of suspicious activity reporting. It helps battle things like money laundering and terrorism financing. It really does empower an

entire country with that. And combining digital dollars with identity provides a superior solution for economic oversight and empowerment. You also founded Polly Abed, which is now the single largest shareholder of the Barbados Stock Exchange. How did that happen? And what do you intend to do with that position? Okay. This is an interesting segue. This is, by the way, completely, this is completely separate from Bit.com and my own private ventures. So I met the Polymath team in Canada, and I was quite intrigued by what they were trying to bill for the securities market. And I found that they could really be a massive solution to benefit regulated stock exchanges in moving them towards the digital world of stock issuance. And I overheard through the grapevine that KPMG and EY,

were looking to sell their shares in the Barbados stock exchange. Yes, they were shareholders. And it had something to do with a conflict of interest, and they were looking to exit their positions. And I approached Polymaf at the time, and I had made the suggestion that we should look at partnering in a joint venture agreement to acquire these shares. And the vision that I saw was being able to take

a small island developing state, regulated stock exchange with 40 years of reputation and history and trust and evolve them to a much more efficient book-based system and in doing that allow a potential network to be formed with other stock exchanges around the world. The polymath guys, Chris and Trevor and the other partners, considered it and thought it was quite a brilliant approach because it can empower the Polymath platform and it can empower a small island developing state. And Polymath, by the way, is headquartered in Barbados. And, well, we made the offer and we were, it took a very long time from a regulation perspective

because obviously when you're dealing with highly regulated businesses, one doesn't just get transfer of shares overnight. It requires regulatory approval, a lot of due diligence on the characters involved, and a very large process with a lot of due diligence. And it took us about a year and a half, but we were able to acquire KPMG and EY share position to allow Pauly Abed, which is a joint venture of Gabriel Abed, myself and Polymath, to become the single largest shareholders of the Barbados Stock Exchange. Mind you, it's not majority. We are not the majority or major shareholders, but combined, we are the single largest shareholders. And that gave us a voice within the organization. And it allowed

us to work closer with the CEO of the Barbados Stock Exchange, Marlon Yard, who is quite a progressive thinker. And in recent months, the Barbados Stock Exchange has made announcements that they are moving down the road of building out a blockchain-based securities and equities environment with a full digital orderbook system to allow the local and international companies that are domiciled in Barbados to have a new platform that would allow them to list digitally, trade digitally, and of course it will all be based on blockchain-based technology. So another advancement and another great maneuver for the Barbadian populace. You've also been serving a special technology advisor to David Burr,

the Premier of Bermuda. And that was one of the earliest countries to pass a series of crypto-friendly regulations. Why do you think Bermuda has been so welcoming of the industry? Interesting question. So I am the Special Technology Advisor directly to Premier David Burt. And I met him at the World Economic Forum in Davos. And when I met Premier Burt, he had indicated he wanted to do everything and anything needed to create stability, to further the stability of his local economy, create more jobs for his local people, create economic growth,

and encourage foreign direct investment. And of course, Laura, I pitched him on blockchain technology. And there was a couple of others of us from the Global Blockchain Business Council, I think George from Bitfury and Sandra from GBBC, A couple of us were there. Sandra Roe.

Yeah, Sandra Roe, that's right. And I think Dante as well, Dante Desperate, who I believe was one of your guests very recently. Which, I think they've all done on the show. Brilliant. Well, with that kind of lobbying effort and that kind of brainpower, talking to a leader of a country, he was very intrigued.

And he said, you know, if you're serious about blockchain technology, and this could be an avenue to create economic growth, foreign direct investment and jobs for my people, then I'm interested. See yourself on my shores. Well, a week later, I was in Bermuda. And I was working with the Premier on an advice perspective of looking at their local laws.

And there was a couple of us, so it wasn't just me, but I'm the only one that's his direct advisor on blockchain and technology. and, you know, I had never, I made a promise to him. We both made a promise to each other. The promise I made to him was I would serve Premier Burt for free without charging a cent, and I will be his advisor if he promised to be the leader that our industry had needed. Because at that time, we didn't have a single leader in the world that was serious about this technology willing to pass any laws to create a home for us.

We didn't have a home, Lara. We didn't have a home that mandated the right type of legal frameworks. And we made that agreement with each other. And Premier Bert proved that he was one of the first politicians in history that I have ever met that honored his word and worked day and night with his ministries and his team and his government to become the first government to create what's being called today, the Bermuda stack of technology, which is a series of new legislations that passed the lower house,

the upper house, and the Senate in a very little amount of time. I have never seen a government move this quickly, Laura, ever in my life. And within three to four months, this leader had all of these laws passed. And all of a sudden, you know, well, he did what he promised to do. and after promising that we entered in a contractual agreement where every year premier bert pays me one cent for my services and now this guy is leading a country that has the most forward-thinking laws as it relates to blockchain-based technology and now tons of companies are flocking to their shores to establish on their shores i remember i reached out to shang peng zao of binaat cz and i said Hey, at the time, CISI wasn't where it is today, and they were having some regulatory issues. And I said, look, why don't you come and meet Premier Burt?

I'll meet you in Bermuda. And Cisi flew over to Bermuda. I met him there. And next thing you know, Premier Burt and him are working side by side. And they've entered into agreements on launching Bynast from Bermuda. Don't remember, Binance's position in so many different countries. Their whole goal is to make sure that they're not. not seen as headquartered in one country, but many.

But the point is, the industry leaders from Dr. Patrick Byrne to CZ, to you name it, have all flocked to the Bermuda to create economic growth, foreign direct investment, and job creation for the people of Bermuda. Premier Burt has done and is doing his job. Yeah, and people should listen to the episode with CZ if they haven't already. And I do know that Premier Bert has said that just as Bermuda has become a leader in the insurance industry, he sought an opportunity again, you know, for a small country like his to to become a leader in another burgeoning industry. And so I think that was kind of the appeal for him with blockchain technology. So you also launched a fund, digital capital asset management.

How big is the fund? and what do you invest in? Well, I'm not privy to discuss the assets under management. The fund has only been around for just under two years. And our main focus is protocols, math-based protocols. That is our mandate, and that's why we design digital asset fund. And the fund came about because I met this gentleman on a random, on a random conversation named Richard Galvin,

who had over 20 years experience in the banking world from J.P. Morgan and Goldman and Sachs. And at the time, he was looking for something more innovative and something that invigorated its soul and matched who he was as a character. And I told him, you know, Richard, I want to start a fund. I have a few dollars. Maybe we could look at doing something together.

And I do not have any experience with fund management. I do not know how these things would operate. I just know blockchain technology like the back of my hand. And the two of us partnered with a couple of others. And we built out this fund. And it's called Digital Asset Capital Management, which is the management group. And now it has three funds under it. But the main one is called Digital Asset Fund.

And our whole objective as a fund is to invest in math-based protocols. And that's what we do, and that's our whole mandate. And the fund has performed beautifully this year. And I'm very, and to be honest, Laura, I can't take any credit for it. While I do help with deal flow and I do identify the blockchain projects and I help with the vetting process, you know, Richard is, he's just such a boss. You know, like, if the crypto winter saw so many funds fold up, so much. many funds didn't make it through and so many funds lost massive money for their clients.

But Richard was just, you know, so having someone of that pedigree from the banking world, step into the new world of blockchain, he's just been a godsend to the fund world, to the blockchain fund world. And, and, you know, I remember I was freaking out during crypto winter and this guy wasn't even phased. He was just so stable and so mature and professional and brilliant with how he managed every aspect of the fund, even all the way down to cutting out his salary in some cases to ensure our fund continue to perform. And, you know, we rallied through the crypto winter and now we're seeing the fruits of our labor. And I got to give Jack his jacket.

Richard Galvin is quite an OG. So from talking with you, especially from the early part of your story, you seem to be a true bitcoiner. And yet most bitcoins are against centralized anything, or I don't know about most, but a lot of them. And yet you're kind of working on these central bank digital currencies, which are by nature centralized. So why do you think that's an important step? And how does that fit into kind of how you see this technology playing out and becoming adopted? So that's a very loaded question, Laura. Thank you for asking it. I didn't expect to get easy questions on your show. You're known for being a tough one. But look, I'm a maximalist when it

comes to Bitcoin. I, and this is my personal opinion, this should not reflect that of bit.com. I just want to remind. Or your fund where you're investing in other things than Bitcoin. Yes, yes. Well, we're investing in math-based protocols, which are pretty important because Bitcoin does some things very right, but doesn't do everything right. But I believe in, I believe in proof of work. And I believe in the security. and the immutability of that, the inability to edit, forge, destroy, or tamper with a record. It's why we are here. It's the exact reason we are all here today is that single word, immutability.

Nothing beats that because of the proof of work security behind Bitcoin. There is no displacement for the energy computational output of a consensus-driven ledger technology like Bitcoin. So let's start there. That's my personal opinion. But I'm also well aware that like the newspaper and the internet, not everyone is going to champion to go and read a blog. You're still going to have people that believe in their paperback newspaper. Similarly with a central bank, you're not going to be able to convince a nation or a body or an entire globe that Bitcoin is a superior system, nor does it necessarily meet their needs in their daily transactional purposes. You won't be able to get everyone convinced, nor does it meet their needs.

So, you know, looking at the technology, I realized that Bitcoin for me was great, but it wasn't going to suit the poor guy on the street who needed something stable, who believed in his sovereign dollar and who didn't even understand technology. And in looking at that, I realized we had to build something that was a transition from the old world to the new world. And we had to ensure that what we were building was going to create a smooth transition. Because look, we're not going to see a break overnight where dollars just die and Bitcoin takes over or whatever the next monetary evolution is. We're never going to see that. It's going to be a slow transition.

In addition to that, we're not going to be able to convince the world that this is a better solution. In addition to that, we need to appreciate and understand the laws of a sovereign nation and the job of a central bank to create stability and trust in their national dollar. And in looking at this technology, I believed that this allowed central banks to meet in the middle of decentralized digital systems. it allowed them to issue their national dollar on this immutable ledger system to allow them to have the benefits of the security of immutability, the trust of this type of solution, the transparency in their issuance, and at the same time allowed them to maintain their control as a central bank. Because remember, the central banks and the monetary authorities are, the ones after all that create an issue and control the money supply of their local economies. And I believed that in building a central bank digital currency, this would be the natural

evolution of where a central bank or a society needed to go before we even began to discuss a future of where an entire country moved towards a different type of solution. So to answer your question, I believed that this to be the natural evolution of central banks. All right. Well, we'll see how it plays out. Where can people learn more about you and bit.com? Well, if you want to learn about bit.com, it's www. bI. Sorry, I was about to say our old website, bI.tt, which I believe is still alive. but it's www. B-I-T-T-T-com, Bit with 2-T's.

You can learn all about us. We have our central bank white papers, why do we believe in central bank digital currencies. You can learn all about the company,

the M-Money product, and learn more about our team. As for myself, you can find me on LinkedIn. My name is Gabriel, like the Archangel. And my last name's Abed, A-B-B-E-D,

Alpha Bravo, Echo Delta. I'm on LinkedIn, and I post and engage the community quite often. Great. Well, thanks for coming on Unchained. Thank you for having me, Laura. This is very fun. Thanks so much for joining us today. To learn more about Gabriel and Bit, check out the show notes inside your podcast player. If you're not yet subscribed to my other podcast Unconfirmed, which is shorter and a bit newsier, be sure to check that out. Also, find out what I think are the top crypto stories every week by signing up for my weekly newsletter at Unchained Podcast.com. You can sign up right on the homepage. Unchained is produced by me, Laura Shin, with help from factual recording, Anthony Youne, Daniel Nuss, and Rich Struffolito. Thanks for listening.