The Libra reading written by The Verge really hit home with me this week. As someone that is extremely passionate about financial inclusion, the “banking the unbanked” mission has always struck a cord – what IS the best way to achieve this? Through my professional and academic experience I have actually vetted investments in many companies that were making the same claim as Libra, and the same arguments came up in the boardroom…So if someone doesn’t have a bank account how do they get initial access to the system? Also is crypto a better alternative to other mobile banking solutions that exist on the ground today? Taking these points into consideration, I have thought about how might we circumvent this? There might be a business idea here; a platform that would allow an individual to turn time worked (time share, volunteer based work) into crypto stablecoins. These coins could then be transferred to platforms like Libra OR existing mobile banking platforms like Mercado Libre where they can be transferred to the currency of choice. This platform would only support stablecoins because then the transfer to Libra or other fiat based mobile banking currencies would be easy to calculate. Would love to get general thoughts on this idea…especially considering stablecoins are likely to be the first successful use case globally with all the noise around central bank projects in different countries today.
The other reading that stood out to me was coindesk’s coverage of PoolTogether. Something that I wrote about in my applications to grad school was a concept of bringing community based financial solutions such as savings circles/ROSCAs to the digital currency world. Something that would still rely on community trust and savings, but also provide a way to increase the buffer that the circle has by increasing return on savings and putting the money to “work”. The concept of savings is nice until a member faces a financial shock that sets them back so far, that it is difficult to make up the difference. A proposed business idea could look like the following:
Identity management and asset protection: Blockchain technology could be leveraged to create a self-sovereign identity that is fully controlled and maintained personally by the individual. It is difficult to steal such an identity from an individual, which could prevent significant identity fraud, and users would not have to rely on anyone else for access to these rights.
Secure digital transfer of funds: in traditional ROSCAs, funds are distributed in person using cash, which often means that ROSCA members are at the mercy of the ROSCA leader and are often required to meet in person. Leveraging online payment rails (similar to what Rosca Finance and Tanda are doing) increases efficiency and ensures that funds are transferred securely, preventing potential theft of cash that is often held at the ROSCA leader’s home
Credit building capabilities: Traditional ROSCA systems do to not help users build credit. We envision creating a platform that enables users to build their credit scores based on historical transactions within the ROSCA. Being able to attach a formal score to the infrastructure that already exists will give users a path to the financial, labor and housing markets. This score will also be detached from any unjust financial records that may count against middle class individuals
Wealth creation: The platform would allow users to grow their wealth overtime by having a checking / savings account feature along with the ability to invest in an ETF portfolio. Leveraging tax-efficient ETF/index portfolios through robo-advisor technology, assets from the blockchain can be transferred into savings and investment accounts for the group, which can help boost the amount of disposable income over time. This will solve the problem of funding immediacy for middle class families when a large financial emergency arises.