by Pierre Gancel
Promoting a digital Community Currency (CC) platform can boost local trade for the 700m Africans to be connected by 2020. This figure is based on the GSMA estimated 54% penetration rate of unique internet subscribers combined with Wolfram 1,29 billion population estimation in Africa the same year.
This post demonstrates that CC can improve standards of living through the case of Bengla-Pesa in Kenya, then suggests two ways to adapt CC with the constraints of mobile to scale up. It suggests modernizing front-office by integrating with messaging platforms, then demonstrates how using a Blockchain-based database can enhance back-office security.
Bangla-Pesa is a CC used by 200 small businesses since May 2013 in Mombasa to trade goods and services. Based on a ‘mutual credit’ model similar to the Wir Franc, this system provides local business with a means to exchange their excess capacity. Allotment of vouchers is based on a survey to assess the productive capacity of a participant, backed by four other members in case of default. One week after launching the currency, 83% of respondents reported sales increases with 22% of daily trades done with Bangla-Pesa. For 89% of the network, Bangla-Pesa exchanges did not replace trades in Kenyan shillings but represented separate additional transactions. The presence of Bangla-Pesa in the community may also reduce volatility as people have access to a means of exchange even in times of market instability. Indeed sales can range from 3-15 euros per day! Two more programs have been launched since then in Kenya. Estimates are that each CC increases local trade by USD100,000 each year fueling growth that does not rely on large donors, banks or governments.
There are thousands of CC worldwide, most now use software rather than physical bookkeeping. Free open solutions provided by groups such as Community Forge are aiding their uptake. Yet they are burdened with complex user experience and outdated design. To provide a viable alternative to cash, users need a seamless experience when exchanging CC via mobile. The best interface being no interface, such platforms should almost be invisible. Sending value through a messaging platforms is increasingly popular. In November 2015, WeChat reached 200M users on its payments service, while two weeks ago Facebook Messenger started accepting native payments without sending users to an external website. There is as a result a huge opportunity to plug CC front-end into a conversational BOT to boost user engagement.
According to Richard Logie, 90% of digital CC systems fail to scale due to lack of transparency and governance risk in the process of allocating vouchers. Using Blockain-based solutions would prevent such flaws. Indeed private Blockchains produce a transparent record of account balances that does not rely on a central authority. These programmable trust-less ledgers create an independently verifiable record of user identities and transactions thus solving the accountability issue. Bryan Young designed an innovative CC use case through SlackCoin. Combining Slack messaging platform and Monax open-source Blockchain i.e. eris:db.
Since usage determines the core leverage of today’s economy, developing active digital CC networks is bound to yield great value. Backing up the promises of these disruptive tools Colu raised $9.6m in June 2016 to promote their Blockchain-based solutions for creating local currencies.