River Sergipe, Nova Atalaia, Barra Dos Coqueiros, Aracaju, Sergipe, Brazil. (Photo of: AGB photo library / universal images group via getty images)
AGB photo Library / Universal Images Group via Getty Images
Despite their obvious applicability, social currencies must still be fully explored in the context of the use of blockchain.
The latest Crypto cycle has experienced a variety of experimentation with the concept, but these attempts were adjusted to adjust the product and regulatory barriers, and therefore have not been mounted in the dominant consciousness.
Brazil manufacturers, however, think they have the right ingredients to deploy social currencies based on blockchain in the real world, especially in communities that already have a tradition of adoption of such alternatives
A new partnership between Chainlink, Plexos Institute and Edinheiro Insutute aims to provide greater financial services to the poorly served communities in the country by introducing a layer of blockchain in addition to these existing social currency networks.
Community currencies: as old as civilization
Social currencies exist as long as human civilization and are generally designed for acceptance and use by specific people for specific purposes within a specific geographic region or an online community.
Think of the “dollars of catering” issued to students as part of a meal plan, where students can buy back funds against meals on campus or in participating restaurants in the neighborhood, but cannot spend them in the next city.
However, although blockchain technology facilitates fraction, transfer and burns (anyone with basic skills can launch a new token on Ethereum or Solana), we have not seen too much experimentation with the real world vis-à-vis other types of blockchain applications.
The first social tokens platforms like Roll and Rally allow creators to launch their own tokens to reward followers and encourage commitment. Although these platforms succeeded, they did not take place due to regulatory problems and adjustment of the product market.
Other projects such as Friends With Benefits and Seed Club have also experienced social tokens with a community governance function.
Crypto Media Company Coindesk has experienced a social token on his own office in 2021-222. The token worked as a loyalty reward for participation in activities during Coindesk conferences, and could be bought against NFT and other types of swag and exclusive access.
Brazil as a prototype?
Can social tokens based on blockchain find a house in the “real world”? Local manufacturers in Brazil think so.
Indeed, Brazil already houses more than 180 experiences in social currencies that have continued in the past 30 years. These were facilitated by the Edinheiro Institute-a platform which allows communities to issue and exchange currencies with a legal framework of the shelter.
These currencies are used to distribute social assistance and social benefits, promote local trade, stimulate the local economies of the cash register and provide financial access to people and businesses on the sidelines of the traditional banking system.
Camila Rioja, president of the Plexos Institute, directs the initiative to introduce blockchain into these existing currency networks, which, above all, come with pre -existing consumers and merchants.
For his first experience, Plexos, alongside Chainlink and Edinheiro, creates a new social currency based on the blockchain called Artu In Indiaroba, a small community in the northeast region of Brazil.
Rioja told me that the concept of social currency made sense in this scenario because the model has already been proven locally:
“This is not a new start -up idea. It is an existing and functional ecosystem that has been working for over 30 years. Our work is not to reinvent the wheel. It is to bring transparency and modern governance to a proven model.”
Strengthen the local economy
Unlike speculative crypto tokens, Artu And the other social currencies of Brazil are set at 1: 1 of the Brazilian real, governed by local municipalities, supported by local banks, and designed with legal structures which prioritize community autonomy.
The income generated through transaction costs – generally 2 to 3% – are reinvested in local funds rather than global payment processors.
“It is money that remains in the community. It does not flow towards Visa or Mastercard, ”said Rioja.
“It circulates locally and strengthens everything, small stores to companies led by women such as Marisqueiras (Women involved in crustaceans harvesting) in Indiaroba. »»
Why the blockchain?
If the existing system works well, why introduce the blockchain into the equation?
The simple layer is that the blockchain adds new layers of transparency and efficiency. In this case, the ChainLink execution environment acts as a secure connective fabric which allows functionalities such as automated reports, compliance with Brazil laws on data protection and potentially new forms of community governance on how funds are distributed to the community.
Thomas Trepanier, head of Latam & Canada commercial development in Chainlink Labs, said in a statement that Chainlink is unique able to provide transparency, accessibility and connectivity to Brazil’s social currencies.
João Joaquim, coordinator of the Edinheiro Institute, echoes:
“By integrating the chain standard into the already proven System of Edinheiro, we show that advanced technology can strengthen what matters most: people and the solidarity economy.”
The addition of a layer of blockchain to these social money systems finally opens the door to more programmability and advanced products activated by smart contracts, Rioja explained:
Community currencies already distribute advantages such as housing support and food subsidies, but “with blockchain, we can follow these flows, validate them publicly and start thinking about new financial primitives: credit pools, microlaves or even real estate financing.”
Legal frameworks are currently dictating how funds are paid, however, so that all advanced use cases like these require legislative reforms, but the integration of blockchain is the first step towards these objectives.
