Bhutan Embraces Digital Identity, Payments with NDI
In a bold move towards financial inclusion, Bhutan has launched its National Digital Identity (NDI) system, leveraging blockchain technology to verify electronic payments. The initiative aims to bring the country’s rural and uneducated population into the digital fold.
Decentralized Approach
The DHI, Bhutan’s national ID authority, is working tirelessly to educate farmers and other rural residents about the basics of bank accounts and connecting to financial services. The goal is to empower them with the ability to run their own shops using digital payments.
Key Features
- Decentralization: giving individual users control over their data, making it more private and secure than alternative systems
- Trust layer: utilizing blockchain technology to verify credentials and digital signatures on legally binding contracts
Unique Approach
Bhutan’s unique approach stands out in comparison to other countries with national ID projects. Unlike India’s Aadhaar biometric database, Bhutan’s NDI system puts the individual at the center of data control, making it more secure and less vulnerable to hacking.
Regulatory Oversight
The government has established an independent regulator to oversee digital identity, ensuring that the system remains free from government or single authority interference. The regulator operates like a non-profit organization, developing software for NDI and licensing its technology abroad.
Future Plans
To facilitate financial transactions, the government is exploring the introduction of a central-bank digital currency (CBDC) and a stablecoin pegged to the ngultrum. The latter is already being tested within the DHI group, allowing citizens to use tokens for government-related services.
Challenges
- Commercial banks are hesitant about the long-term impact of stablecoins and CBDCs on their business models
- The government aims to balance automation with job preservation by retraining or replacing jobs that may be displaced by technology
Roadmap
The monarch, King Jigme Khesar Namgyel Wangchuck, has set a goal of rolling out NDI within the next 12 months, with the aim of making Bhutan a model for digital identity and finance not just for developing countries but also for advanced economies.
Conclusion
Bhutan’s innovative approach to digital identity and payments has the potential to bring significant benefits to its citizens. By prioritizing decentralization, security, and job preservation, the country is poised to set an example for others to follow.