Bancor, the world’s largest decentralized network for digital currencies, announced today it is launching a network of blockchain-based community currencies in Kenya aimed at combating poverty through stimulation of local and regional commerce and peer-to-peer collaboration. The new project — which enables Kenyan communities to create and manage their own digital tokens — will utilize blockchain technologies to break down barriers that have historically hindered the use of community currencies worldwide, despite their documented benefits to community members.
The launch will be overseen from Nairobi by Bancor’s new Director of Community Currencies, Will Ruddick, whose non-profit foundation, Grassroots Economics, operates community currency programs in six locations across Kenya, serving more than 20 schools and 1,000 local businesses. Ruddick and his team will utilize the Bancor Protocol to expand Grassroots’ existing paper currency system into a blockchain-based network that aims to reduce poverty and create stable markets through the use and appreciation of local currencies.
Bancor is seeding the initial currencies by contributing capital generated from its $153 million token sale in June 2017. The Bancor Network allows anyone to create digital currencies that hold one or more balances in a connected currency. This enables integrated currencies to be interchangeable for one another, without the need for a counterparty. The currencies also feature built-in mechanisms to algorithmically calculate prices based on the currency’s supply, which adjusts dynamically to its use. These unique innovations are already being used to process over $20 million daily in digital currency conversions via the Bancor Network, and are now being rolled out to disadvantaged communities across Kenya. Project plans include:
- First pilots to launch in Kawangware and Kibera, the two largest slums in Kenya.
- Grassroots will tap its network of local businesses to circulate the currency by offering discounts and other benefits to customers who use it to transact.
- As more people buy and hold the local currency, its market cap will increase, creating wealth and purchasing power for its holders.
- Supporters or anyone (including community members) can buy and sell the community currencies, with transactions processed via the open-source Bancor Protocol, using other cryptocurrencies or a major credit card, allowing users globally to support the communities from afar.
- A balance in a stabilized “parent” cryptocurrency that is under development will be initially pegged to the National Currency (the Kenyan Shilling) and enable convertibility between the network of local currencies at algorithmically calculated prices.
Ruddick, an American-born physicist who has lived in Kenya over a decade, was previously jailed by authorities while building Grassroots Economics’ community currency network, which he later relaunched in partnership with the Kenyan government. Both he and the Bancor team have been outspoken on the potential of community currencies to combat global poverty using a bottom-up approach to sustainable economic development. Their efforts are part of a recent wave of groups which aim to use blockchain and smart contracts to build the next generation of aid and impact investing tools. Ruddick and other members of the Bancor team recently attended an international summit of blockchain, economic and non-profit leaders in Zurich, sponsored by UBS and Stanford University, to design “smart” impact bond instruments that bridge into the crypto-economic mechanisms of blockchain technologies.
Bancor’s founding team previously launched a community currency pilot in Israel serving local mothers. At its peak, the pilot processed over 1,000 transactions per day, though activity eventually tapered off due to the currency not being transferable outside the community of mothers -- a problem that Bancor’s technology aims to solve.
“We have seen the crypto world generate roughly $300 billion for new currencies, and we believe the same mechanics can be applied to help communities create wealth on a local level through the use of blockchain-based community currencies that fill regional trade gaps, enable basic income and food security, and promote thriving local and interconnected global markets,” says Galia Benartzi, Co-founder of Bancor.
Added Ruddick, “When communities have the same right as nations to create and manage currencies, they will unlock their full potential.”
