Blockchain and the Unbanked: A Tale of Two ICOs – Kora & Access Network

March 2018
By Sam
Posted: Updated:

One thing which really gets me about blockchain projects and ICO’s at this point is the platitudes they reach when trying to define their projects in such an early stage. A startup team may have big ideas to change the world, but really, how effectively can you do it with just a few hundred USD in your bank and a staff of 5-10. The truth is that you can’t, but this in no means does not entail that you won’t eventually. It just may be that the scale of what you are trying to achieve is less than your original lofty goals. Furthermore, as an entrepreneur gains more experience, their dreams tend to get grounded in reality due to the natural limitations of their budget, managerial ability and the world around us. My belief is that change should come starting from a granular level, engaging with communities and understanding what effective solutions can be provided. Readers of Freakonomics will know that small, often unrelated changes can have huge effects on the world around us.

More so, technology is the great equalizer. What was once only available to kings, slowly is miniaturized, reduced in cost and made available for the poorest in society. Look how far our civilization has come in the past two hundred years since the dawn of the industrial revolution. A majority of the world has access to clean water, food delivered from around the world, financial services, transportation, medicine and other amenities. We are all kings now in the eyes of those who came before us. Though there are still advancements to be made in the developed and developing world to bring the poor out of poverty, we have made great strides to affecting massive change.

Thus, I value social impact projects by the granular impact they can have on a single group of people first, then the applications evolved from the original design to meet the needs of other similar people around the world. Social impact and change should start off as a niche product, built for a small group and solving one core issue. Once the use case is proven, it can be repackaged, grown and sent off to address the needs of others. It’s a learning process.

So when I read whitepapers and hear founders talking about how they want to “revolutionize,” ”disrupt,” or validate their early stage project with any buzzwords, I quickly get turned off. There is nothing worse than those who would seek to use the real plight of others for their own benefit. It’s extremely important that we as investors investigate, demand information and search for the truth of a matter before signing over millions of dollars to a startup.

Founders come in all shapes and sizes, but I look for two things mainly when it comes to investing, no matter the project.

  1. Does the founder(s) have the longest view in the room?
  2. How thoroughly have they defined the potential known risks (known unknowns) and prepared for black swans (unknown unknowns)?

The first aspect I learned from Sam Hinkie, who in his epic letter to the 76’ers basketball team after he was fired, detailed some of the best philosophy one needs to have to bring about change. Hinkie’s letter was defined by him taking “the longest view in the room,” being able to see the future in essence, by looking at the human processes we rationalize the world with and then conducting a thought experiment to see where that line of inquiry leads. He calls it “thinking about thinking” and breaks it down into a two part technique:

  1. First, what are the factors that really govern the interests involved, rationally considered?
  2. Second, what are the subconscious influences where the brain at a subconscious level is automatically doing these things—which by and large are useful, but which often malfunctions?”

When applied to real world problems, this means “divorc[ing] process from outcome.” Underserved and underbanked communities did not just appear overnight. They have not been given or have not integrated the tools of modern technology, as they are simply that, to facilitate improvement in their lives. Those lacking banking facilities are not disqualified from acquiring accounts, rather, the means for onboarding and providing services is not sufficient enough to enable continuous use. It makes more sense for a farmer to stash cash in their home rather than make the long trip to the bank or other money lending service. If the services were readily available, there would be little question the services would not be used.

We tend to think that human life and experience is somehow different than it was some centuries ago. Paintings may dramatize the life of our predecessors, but the essential qualities of what it is to be human have not changed. Our existence and the world around us is now “flattened.” We can learn what life is like across the world by searching Youtube or Google. With just a few clicks untold human stories from across the world highlight the global inequality and injustice suffered daily. This millennium marks the first time we are globally connected, without limits to each other. Borders cannot suppress information, nor class, race, or religion. Ancient walls fall every day to the growing power of the internet.

Grand change then is a matter of adjusting our processes, which is a matter of understanding what rational interests drive both investors, consumers, politicians and all affected parties. Lasting change and improvement comes when the interests of everyone are aligned under a single idea. The more granular the idea, the easier it will be to implement the policies and procedures. I keep mentioning granularity, because it commonly easier to attain agreement between fewer parties. Grand ideas usually are more disconnected from reality and require greater concessions to be brought about.

Communism, Maoism and other repressive governments rose to power through massive destabilization and revolution. Shock and awe was necessary to rapidly displace previous though processes with new ones. These centralized systems tried to disconnect from the traditional power structures previously ruling. But their shift came at a great cost to society, culture and humanity. Force was necessary to solidify their rule, but ultimately, they all succumbed to the natural forces of decentralization.

No centralized power structure remains forever though. Death takes away great unifying leaders, leaving only shadows of their former selves in power. True long-lasting power structures do no need a demagogue to lead. They are a multi-headed hydra spawning autonomously without any significant drain on resources and personnel. This is what makes blockchain technology so powerful, it’s the great equalizer. It cannot be killed, controlled or censored. Rather, it is the sum of its parts, manifested across thousands of computers, developers, traders, exchanges and evangelists. The technology is a result of our continued trust in centralized providers of services, who continue to succumb to corruption, cronyism, nepotism and general malaise. I believe the flock of people to the space, including myself, is a natural draw towards systems resistant to all of the vices governments and institutions have fallen to over centuries before.

The blockchain opens services to the bottom and the next few decades will breach the difficult task of connecting the two societies. Two of these projects seeking to bring about change in the developing world are Kora and Access Network. They are very similar projects attacking the lack of banking services for rural persons in the developing world. The people they are trying to serve have similar problems, mainly due to their distance from urban centers, as well as lack of cellular data and smartphone penetration. Each solution has been developed to meet the granular needs of the communities involved. Kora is testing its product with 300 Nigerian farmers, while Access has a network of 300 agents serving 17,000 clients. Both create mobile microbanks in the form of agents who build “credit” in the form of relationships and community.

While their implementation differs slightly due to the differences in cultures between the African states they are serving, at the heart of their mission is to bring those at the bottom into financial society. To build an inclusive company which betters the lives of the people it serves, while integrating cutting edge tech to do what other larger companies eschewed from. It’s a noble purpose and I fully support both projects. I love that the teams are committed to using blockchain technology as an enabler for their startup business. Banks are still needed for both of their businesses at some point, but distributed ledgers secure funds a bank never could.

Take time to check out both of these interesting projects. Much thought has been put into both and they are each special and well thought concerning how they plan to tackle the problems of poverty and being unbanked. They have chosen a path to bringing about a better life for the world, the same that I want for my family and you hopefully for yours.

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