The Bancor Network has announced plans to launch a network of blockchain-based community currencies in Kenya. The launch of community cryptocurrencies is meant to help curb poverty through the stimulation of both local and regional commerce as well as increased peer-to-peer collaboration.

This new project will enable communities within the East African nation to create and manage their own digital tokens, through the utilisation of blockchain technology, thereby, closing the barriers that have historically existed to prevent the use of community currencies.

Will Ruddick, Bancor’s new Director of Community Currencies, will manage the project from Nairobi where he has lived for over a decade. He also runs a non-profit foundation known as Grassroots Economics, which oversees community currency programs in six different locations in Kenya that serves more than 1,000 local businesses and 20 schools. Ruddick, together with his team, will make use of the Bancor Protocol to expand Grassroots’ existing paper currency system into a blockchain-based network that intends to decrease poverty and build stable markets through the use of local currencies. Ruddick said:

“When communities have the same right as nations to create and manage currencies, they will unlock their full potential.”

Co-founder of Bancor, Galia Benartzi, said in a press release: “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.”

Bancor’s Project Plans

Bancor will be seeding its first currencies by donating some of the capital it raised during its $153 million token sale in June 2017. The Bancor Network enables anyone to create digital currencies that contain one or more balances in a connected currency. This allows integrated currencies to be replaced with one another without the need for a counterparty. The currencies also have built-in mechanisms that are built to algorithmically calculate prices based on the supply of the currency and adjusts effectively to its use.

The Bancor Network is already being utilised daily to process more than $20 million conversions in digital currencies and is now set to be rolled out to disadvantaged communities across Kenya.

Plans for the launch of the project include:

First pilots in the two largest slums in Kenya: Kibera and Kawangware.

Grassroots will leverage its network of local businesses network to circulate the currency by giving discounts and additional benefits to customers who use it in their transactions.

As more people buy and hold the local currency, its market cap is expected to increase, hence create wealth and purchasing power for its holders.

Anyone will be able to buy and sell the community currencies (including community members) using other digital currencies or major credit cards with transactions processed via the open source Bancor Protocol, enabling users worldwide to support the communities from afar.

A balance in a stabilised “parent” cryptocurrency still under development will – at the start – be pegged to the Kenyan Shilling (KES) and allow for exchanges between the network of local currencies at algorithmically calculated prices.

Impact Investing Tools

In an attempt to build an alternative Grassroots Economics community currency network in Kenya about eight years ago known as “Bangla-Pesa”, Ruddick, an American-born physicist, was jailed by the Kenyan authorities. He would later relaunch the community currency network in partnership with the government of Kenya. Both he and the Bancor team have been vocal on the potential of community currencies to curb global poverty using a bottom-up approach for sustainable economic development.

This project is part of growing efforts from a wave of blockchain startups to use blockchain technology, smart contracts, and cryptocurrencies to build the next generation of aid and impact investing tools.