• Albany Flores

Blockchain, an alternative for Honduras' digital economy

Updated: Apr 12

More than a hundred countries around the world are working on the creation of a digital currency with Blockchain technology, a computer tool that is emerging as a pillar of the fourth industrial revolution, just as coal and iron were for the first in the eighteenth century.

Since its appearance in 2009, Blockchain - a structure of encrypted data grouped in blocks - has revolutionized the economy with the creation of smart contracts and cryptocurrencies, two digital assets that are spreading around the world and are poised to lead the markets of the future.

It is the transition from the analog era to the digital era, just as, in other eras, we moved from the rudimentary to the mechanical, and from the mechanical to the analog.

Various states such as Japan, Estonia, Georgia, Brazil, El Salvador, the United States, Germany, Uruguay, the Bahamas, Sweden, Canada and others already have cryptocurrencies, and although many of them belong to the private sector, governments are already working on their own.

At the beginning of March, US President Joe Biden announced that he will present an executive order for the creation of the digital dollar, news that confirms his government's intention to strengthen the dollar's position as the world's hegemonic currency.

In its statement, the White House acknowledged that "the development of digital assets will allow the United States to strengthen its dominance in finance and technology, but also in consumer protection, financial stability, national security and the environment".

Days before Biden's announcement, the Indian government also revealed that it will create its own digital currency and tax existing cryptocurrencies in its economy. For their part, powers such as China, Germany and Switzerland are working hard on their currencies with a view to digital development.

According to the International Monetary Fund (IMF) report released in February this year, more than a hundred nations are looking to transition from physical money to virtual money.

In the words of the institution's managing director, Kristalina Georgieva, "if designed prudently, Central Bank Digital Currencies (CBDCs) can offer greater resilience, security and availability, as well as lower costs than other digital currencies".

If such "prudence" is achieved, one of the purposes of this new economy will be to reduce inequality through transactions without intermediaries, especially in countries like Honduras where most people do not have access to a bank account, but do have access to a mobile device.

To use bitcoin, for example, a person only needs a device connected to the internet and a digital wallet.

The problem with bitcoin is that it was created with the first version of Blockchain that did not allow smart contracts (a primitive Blockchain), so it is a slow cryptocurrency that only allows ten transactions per second, has no direct responsible parties, is volatile and difficult to access.

Perhaps because of these shortcomings, the Central Bank of Honduras (BCH) declined to adopt it as a national currency, and instead revealed the imminent creation of an official cryptocurrency regulated and protected by the public financial system and national legislation.

The BCH reiterated that it "considers the importance of technological innovation for the offering of payment and financial services", and that it "continues with the conceptual, technical and legal analysis to determine the feasibility of issuing a Central Bank Digital Currency (CBDC) that possesses the characteristics to be recognized as legal tender in the country".

The creation of the currency, however, would respond to global market demands, as well as the need to streamline the flow of remittances through decentralized platforms such as Blockchain that do not require intermediaries or excessive payments.

In its recent report, the BCH itself revealed that remittances are equivalent to 20% of Honduras' Gross Domestic Product (GDP) and that, in 2021 alone, they represented around $6,854.7 million for the national economy, an approximate 171,367.5 million lempiras.

Using Blockchain technology for sending and receiving remittances would allow an unprecedented economic incentive for the Honduran diaspora that sustains a large part of the national economy, while leaving a greater flow of cash.

At the same time, the Government's interest in creating a digital currency coincides with the launch in Honduras of the technological platform of DelNorte TerraVision (DTV), a global company specialized in the tokenization of real estate properties and the construction of digital structures with Blockchain technology.

Based on its projection and expertise, DelNorte can become an indispensable ally for governments, as its technology reduces costs, streamlines administrative procedures and improves levels of trust and transparency.

Its platform contributes to technological education, the digitization of movable and immovable assets, land use planning and the creation of digital currencies capable of meeting the financial needs of society and governments.

With the implementation of DelNorte's Blockchain technology, Honduras would have a unique tool to strengthen and update its educational systems, its markets and industries, its democracy, its national security and its role in the economies of the future.

Honduras, like the rest of the world, will move into the future hand in hand with Blockchain.

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