Digital money comes up in everyday conversations in Jamaica and around the world, but people don’t always mean the same thing when they use the phrase. Before you decide how much further to explore it, it helps to know the difference between Jamaica’s official digital currency and cryptocurrencies.
JAM-DEX and cryptocurrency aren’t the same thing
JAM-DEX isn’t just a proposal. The Bank of Jamaica has issued Jamaica’s central bank digital currency, and it’s legal tender. The Bank describes a CBDC as money it issues in digital form, exchangeable one-for-one with Jamaican banknotes and coins. In other words, JAM-DEX is a digital form of the Jamaican dollar, not a decentralized cryptocurrency. The Bank of Jamaica’s JAM-DEX and CBDC FAQs explain the distinction in the Bank’s own words.
Bitcoin and Ethereum are different: neither is issued or backed by a central bank. Their designs, networks, governance and risks also differ from those of a CBDC. Using a digital wallet or making a transaction online doesn’t, by itself, make something a cryptocurrency. Ordinary bank balances and CBDCs are digital too.
Why look into crypto in the first place?
You might be curious about blockchain technology, interested in digital payments, or trying to understand where crypto fits into global markets. Those are all things worth investigating, but none comes with a guaranteed benefit. Using crypto doesn’t automatically give you access to financial services, make a remittance cheaper or faster, or earn you an investment gain. What happens depends on the asset, the service, fees, exchange rates, access and your other circumstances.
A limited supply or a history of rising prices isn’t proof that a cryptocurrency will protect your savings from inflation, either. Prices can drop sharply, and you could lose some or all of the money you put at risk. Think about your own circumstances and take time to understand how price swings, custody arrangements, scams and technology failures could affect you.
Questions to ask before you get involved
- Do I understand what this asset is, how it works, and what could change its value or my ability to access it?
- What will it cost in total, including transaction, conversion, withdrawal and network fees?
- How will I protect my account access and recovery information? What happens if the platform or wallet is compromised or becomes unavailable?
- Can I afford to lose the amount I’m considering? Don’t rely on promises of guaranteed returns or let anyone pressure you to act quickly.
Take time to learn before you act
Start with the basic concepts, and check the claims you come across against reliable sources. My book, A Beginner’s Guide to Buying Crypto: Your First Steps into the World of Digital Currency, is available on the Kindle book page. There’s also the free step-by-step beginner guide, which covers wallets, security habits and buying decisions.
Availability and protections vary between crypto platforms and services. Check the current details for yourself instead of relying on a list of suggested exchanges or assuming a service will suit you. Keep your account credentials and recovery phrases private, watch for impersonation and giveaway scams, and don’t share sensitive information with strangers.
Disclaimer: This article is for educational purposes only, not financial, legal or tax advice. Cryptocurrency is risky, and you may lose some or all of the money you use. Research independently and consult appropriately qualified professionals for advice about your circumstances.