We continue with our brief survey of crypto and digital currency initiatives from around the globe, all of which are officially sanctioned to enhance national competitive advantage (in the event crypto overtakes the US dollar as the global reserve currency).  It is the cumulative adoption rate of state-sanctioned crypto and digital currency legalization and regulation that will propel this innovative system for value exchange as a global currency standard.

In previous posts, we provided an analysis of crypto and digital currency initiatives in China, El Salvador, Panama, Ukraine, India, Argentina, and Russia.  We also provided an analysis of the major central bank digital currency (CBDC) initiative in the U.S., Project Hamilton, which is a technical collaboration between the Federal Reserve Bank of Boston and The MIT Digital Currency Initiative.

We now set our sights on Colombia, a country that has aligned its blockchain deployment to address the recent painful, war-torn history fueled by the vagaries of land rights and ownership (which have an even longer historical precedent in the South American country).

Background

Fiscal policy in Colombia is, well, complicated:  “There’s never a great time to impose higher taxes on funeral services — but doing it in the middle of a raging pandemic is an especially bad move. Yet that was one of a number of measures that the Colombian government proposed [in May of 2021] in a controversial new tax bill that has provoked the country’s largest and most violent protests in decades. In the days [after the new tax bill was enacted], the finance minister…resigned, the tax reform has been pulled, and President Iván Duque has called for fresh dialogue with activists, union leaders, and opposition politicians. But demonstrations, vandalism, and deadly clashes with police have only intensified. Two dozen people are dead, 40 are missing, and the UN has criticized Colombian police for their heavy-handed response.

But these protests are about more than taxes. For several years, a large part of Colombian society has been upset about rising inequality, an epidemic of violence against human rights leaders, rising crime in the cities, and poor healthcare and education.  Just before the COVID crisis started, in late 2019, mass protests over these issues shook Bogotá for days. Today’s protests are in part a resurgence of grievances bottled up — and made worse — by the pandemic.

In 2022, Colombians elected a new president. Term limits kept Duque from running again [and the] social crisis…boosted the fortunes of Senator Gustavo Petro, a leftwing former mayor of Bogotá who got his start in political life as part of the M-19 urban guerrilla movement.  A [2021] poll showed Petro would get close to 40 percent of the vote if the ballot were held [in May 2021], an increase of 15 points since last fall (source in Spanish):  “That a leftwinger should be so popular is a sea change in Colombia, long a center-right country in which decades of war with Marxist-inspired militants — and the recent disaster next door in socialist-led Venezuela — had created a stigma around leftist politics at the national level.” (1)

In June 2022, Gustavo Petro defeated Rodolfo Hernández in the Colombian election for President:

• “During the presidential transition, Petro — notoriously a headstrong leader with a messianic sense of connection with “the people” — has softened his tone and built bridges with establishment politicians. He tapped an experienced centrist, José Antonio Ocampo, as his finance minister in a move meant to reassure foreign investors at least as much as domestic ones.
• Colombians are currently suffering the highest levels of inflation in more than 20 years. Unemployment is above 10%, and the pandemic pushed the poverty rate close to 40%. Although polls show Colombians are starting to feel more optimistic about the economic recovery, two-thirds still say things are moving in the wrong direction. With the US raising interest rates and the global economy in limbo, Petro isn’t going to get much help from abroad. But few things will determine perceptions of Petro’s success more than how ordinary Colombians feel about the economy.” (3)
• “Just a day after being sworn in, Colombia’s new President Gustavo Petro, the country’s first leftist head of state, unveiled a tax proposal to raise 25 trillion pesos (about $5.75 billion)…[Petro’s] expansive plans to reduce inequality will hinge on his ability to get this reform done: (2)  “Colombia has run deficits for years, and emergency spending during the pandemic made them worse. But Petro’s reform agenda envisions even more government outlays.  Petro – who has pledged not to blow up the budget – has an answer: a huge tax reform that would raise more than 10 billion dollars. He is hoping to limit tax increases only to big companies and the rich, but it remains to be seen whether he can avoid increasing the burden on ordinary Colombians as well. A botched but far smaller tax reform back in 2020 did just that and triggered massive street protests.” (3)

Ripple Labs Puts Colombian Land Deeds on Public XRPL Blockchain

It is in this climate of economic innovation spurred on by grassroots political pressure that “Colombia’s government has launched a partnership with Ripple Labs, the company behind the cryptocurrency XRP, to put land titles on the blockchain, part of a plan to rectify land distribution efforts so unfair they’ve led to decades of armed conflict. The project, built by blockchain development company Peersyst Technology and Ripple, will permanently store and authenticate property titles on XRPL—Ripple’s public blockchain.  This will help eliminate bureaucracy and hopefully make land distribution more equal…” (4)

 

📢 Thrilled to announce that after a year of development with @GobDigitalCO @Ministerio_TIC, we launched the first #NationalLandRegistry on top of #XRPL #Main #Blockchain for all Colombians!🇨🇴

Find more how @Peersyst worked with @Ripple to achieve it! 👇https://t.co/PuYncDB0qv

— Peersyst Technology (@Peersyst) July 1, 2022

As reported by Mat Di Salvo at decrypt.com:

•  “Land ownership in the South American country is among the most highly concentrated in the world.
• Colombia’s civil war, the longest-running war in the western hemisphere, from 1964 until a 2016 peace deal, was rooted in the unequal distribution of land, with leftist guerrilla groups taking up arms against the state.  ‘Land is everything in Colombia,’ Peersyst Technology CEO Ferran Prat told Decrypt. ‘This is what led to armed groups like the FARC starting a war with the government.  The point is that land is important in Colombia, so a system is needed that ensures land cannot be wrongfully taken,’ he added. ‘Putting the information into a public blockchain that cannot be changed or altered will help.’
• Many land owners in Colombia still don’t have papers to certify ownership over parcels they inhabit, Ripple Labs added. The project will start by certifying more than 100,000 land adjudications.
• ‘With the public blockchain, once the transaction is recorded, it can never be deleted.  That’s the most important part. If the government system is blown up, the owner of land will still be in a blockchain because it is held around the world in different nodes,’  added Antony Welfare, a senior adviser at Ripple Labs.” (4)

What Next?

1. “Ripple is a blockchain that seeks to compete with Ethereum. It was originally launched to help banks and other financial institutions move money fast and without fees (while being very green)—and it still does that—but developers are using it to build applications.  The company behind the blockchain, Ripple Labs, is controversial: In 2020, the SEC hit it with a $1.3 billion lawsuit, alleging it had raised that amount in unregistered securities offerings since 2013. The lawsuit is still ongoing.”  (4)

2. We will continue to track Colombia’s crypto and blockchain innovation marketplace, along with other countries’ efforts we have covered as part of our series of posts on Global Crypto and Digital Currency Initiatives.

3. And, of course, we gather as the OODA Community in October at OODAcon 2022 – The Future of Exponential Innovation & Disruption  – to discuss the topic as part of The Future of Money panel:  “Ten years ago, resilient cryptocurrencies did not exist, yet today the infrastructure to create them is available to anyone. The blockchain is often described as having the potential to be more disruptive than the Internet itself and the rules of finance are being rewritten every day. This session takes you through the good, bad, and the ugly of cryptocurrency and blockchain and highlights issues that will drive the next five years of blockchain. Are we in a period of Creative Destruction and what will emerge in the future?”

OODAcon 2022

To register for OODAcon, go to: OODAcon 2022 – The Future of Exponential Innovation & Disruption

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