Red Cross Develops Blockchain Credit System To Boost Disaster-Prone Communitiesbr>
Red Cross, an international humanitarian movement with approximately 97 million volunteers, members and staff worldwide, is developing a blockchain-based currency to enhance aid delivery and boost local economies.
Thomas Reuters Foundation reported on Tuesday that the Red Cross societies of Norway, Denmark and Kenya have launched a two-year effort to replace fiat currencies with a blockchain-based “local currencies.” The project reportedly aims to improve the use of $1 billion a year in aid distributed as cash and vouchers by the Red Cross.
The blockchain currency project, which has already been tested in parts of Kenya and Ethiopia, will allow slum-dwellers or villagers to be paid for their labor and spend the credits they earn on local goods and services via a mobile phone app.
Adam Bornstein, who works on alternative financing for the Danish Red Cross, said that the new system works much like Kenya’s popular M-Pesa mobile money transfer system, but users do not need to hold Kenyan shillings.
“Tested in parts of Kenya and Ethiopia, it has boosted economies in poor communities by enabling credits created from work, sales or aid infusions to be traded multiple times and spent locally,” Bornstein said.
The new program will be expanded across Kenya and in the future could be rolled out in Malawi, Myanmar, Zimbabwe, Cameroon and Papua New Guinea, with a target set to onboard 320,000 users within two years.
Will Ruddick, founder of Grassroots Economics, a foundation that develops community currencies including for the Red Cross project, said the blockchain-backed exchange systems could reshape how spending for development and resilience-building was directed around the world.
“The system lets 25 women with (simple) feature phones create their own credit and savings pool using totally automated systems,” Ruddick said. “It is also relatively cheap to run, at about $40,000 a year for servers and support to cover all of Kenya, following more than $1 million in initial start-up funding from Norway and other donors.”