Digital currency platform Bancor announced its new blockchain service in Kenya on Monday. This new financial system that runs on community-run cryptocurrencies is designed to alleviate poverty and improve the local economy. The alternative financial system can help groups to create sustainable economic ecosystems and encourage them to increase production and purchases. The network will work with a local nonprofit entity to boost the adoption of new digital coins.
A Revolutionary New Concept
Bancor will provide the seed funding for the project from its $153 million ICO held in June last year. In the new blockchain-based system, anyone can create their own cryptocurrencies, given they hold one or more balances in a connected currency. This helps in creating an inbuilt currency exchange system and removes the need for a third party to regulate the system. Prices are calculated algorithmically, depending on supply and demand.
The pilot of this project will begin in the largest slums of the country — Kibera, and Kawangware. As more people adopt the currency, market capitalization will increase gradually, improving the users’ purchasing power and wealth. The open source Bancor Protocol will be used to enable users to buy and sell using their respective community currencies and engage in digital transactions via credit cards.
Bancor cofounder Galia Benartzi found immense possibilities in the system and said:
“We have seen the crypto world generate roughly $400 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.”
The company plans to create a “stabilized” parent cryptocurrency pegged to the Kenyan shilling (KES) that will act as a reserve and allow exchanges to calculate the prices of their local currencies. The Bancor Network currently processes more than $20 million worth of digital currency conversions.
An American Physicist Leads the Change
Will Ruddick, American-born physicist and founder of the nonprofit foundation Grassroots Economics, is also the Director of Community Currencies. Based in Nairobi for over a decade, he has helped create community currency programs in six locations, helping 20 schools and 1,000 local businesses. Its existing paper currency system will be migrated to a dedicated blockchain. He will also be responsible for bringing more users to the network, initially offering discounts and other offers.
“When communities have the same right as nations to create and manage currencies, they will unlock their full potential.”