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Could Crypto Fill the Cash Gap in Kenya?
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2019 has been a good year. Bitcoin is slowly dragging itself out of a bear market, institutional investment is on the rise, innovation abounds, and Liquid has launched a range of new products and features. The crypto community has every reason to be optimistic.
But it may come as a surprise that crypto is gaining traction not just among hedge funds and banks, but also with an unlikely demographic that is embracing this relatively new technology with surprising enthusiasm.
In 11 rural and urban slum communities across Kenya, people are now using cryptocurrencies as a new form of money.
One of the Liquid team, Rebecca Mqamelo, recently got involved with a nonprofit that has been making big news with crypto in Kenya.
Grassroots Economics launched its community currency program nearly a decade ago with the aim of stimulating the flow of money within local economies. Last year, they went 100% digital on the blockchain.
In regions where cash is scarce and opportunities virtually non-existent, economies tend to stagnate. Any money that gets injected into the community moves quickly out again as it gets spent elsewhere due to a lack of goods and services.
Food insecurity and poverty are rife because people simply don’t have the means to utilize the resources sitting dormant all around them – whether that be local labour or agricultural production.
How does crypto change that?
The original Bitcoin whitepaper envisions a world of peer-to-peer economies, where money is independent of government control and functions as a stable unit of account, store of value and medium of exchange.
When we think “crypto community” we tend to think of people connected through their ownership or support of a particular digital currency, but communities in Kenya are demonstrating that crypto is applicable in other contexts, even without the Internet.
Using simple USSD codes, users of Grassroots Economics’ “Sarafu” network (meaning “currency" in Kiswahili) are able to trade digital tokens. Using basic incentives like demurrage (negative interest rates) and rewards, the organization is able to stimulate robust local economies that not only improve people’s real incomes but also drive business growth and opportunities.
Since the program’s launch, more than 1 million trackable blockchain tokens have been issued and more than 2,500 businesses, schools and community organizations have joined the network, with 61% of users reporting an increase in sales revenue.
Grassroots Economics is the first program of its kind to implement user-generated currencies in a developmental context. There are numerous projects around the world trying to deploy blockchain technology in such a way that benefits the unbanked.
For most people, cryptocurrencies are synonymous with trading and investments, but it’s promising to see the “crypto wave” spilling over to all areas in society.
The more we see this industry grow, the more likely we are to see other examples of how cryptocurrencies are driving innovation for financial inclusion. This is a clear path towards financial inclusion.