Bancor in partnership with non-profit foundation Grassroots Economics is launching blockchain-based community currencies in Kenya saying this is aimed at fighting poverty.
In a statement, the company said the pilot project will enable “Kenyan communities to create and manage their own digital tokens” while exploiting blockchain technologies.
Bancor, a decentralised blockchain network with built-in liquidity, allows users to convert between any two tokens with no counterparty. These tokens, known as smart tokens, depend on smart contracts to automate currency conversions.
Bancor will seed the first currencies by contributing the funds from its $153 million token sale last year in June.
Grassroots Economics focuses on community development through community currency programs and economic empowerment in Kenya. Will Ruddick will oversee the project in Nairobi as the Director of Community Currencies.
Ruddick and his team will use the Bancor protocol to scale Grassroots’ current paper currency system. Additionally, Grassroots will use its business network to circulate the currency by offering benefits such as discounts to customers who use it to transact. As more people purchase and hold the currency, its market cap will increase thereby creating wealth and buying power for its holders.
Bancor Co-founder Galia Benartzi said: “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.”
According to Bancor’s press release, “supporters of the initiative will be able to buy and sell the local currencies using popular 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.”
The first pilots will be launched in Kibera and Kawangware.