29 June, 2018
As blockchain becomes more widely used in developed countries, it can be easy to forget about other regions of the world where the technology can be implemented for positive impact—such as to help fight poverty. The World Bank reports that 3 billion people around the world are underbanked, which leaves a great window of opportunity for blockchain.
Bancor, a self-described “decentralized liquidity network,” has announced it will soon launch a network of blockchain-based community currencies in Kenya. To fund the project, the company will use proceeds from the $153 million it raised in token sales last year, in addition to financial support from other donors.
Implementing the new system in Kenya
Bancor will be partnering with Grassroots Economics, a non-profit foundation with experience developing community currency programs across Kenya. Grassroots founder Will Ruddick plans to oversee the launch from Nairobi as his team uses the Bancor Protocol to expand the paper currency system that is currently in place.
As Ruddick puts it, when “communities have the same right as nations to create and manage currencies, they will unlock their full potential.”
Bancor believes that as more citizens buy and hold the new local currencies, the market cap will also increase and give the holders more purchasing power in their local economy. The currencies can be bought and sold through the open-source Bancor Protocol using any major credit card or popular cryptocurrency.
Bancor relies solely on smart contracts and atomic swaps to trade, meaning there’s no need for a middleman or third-party entity to hold funds for anyone who chooses to trade through the firm’s service. Bancor’s system works by using multiple contracts involving a token converter and an ERC-20 compliant SmartToken. Users can automate their transactions using a smart contract while holding one or more cryptocurrencies in reserve.
The community currency project is planned to launch in Kawangware and Kibera, two of Kenya’s most economically disenfranchised areas.
Image via Wikimedia Commons.