Redesigning Community Currencies: From One Tomato to 1,000 Wallets on Sarafu Network

Community Currencies News & Progress Updates March 3, 2019


Redesigning Community Currencies: From One Tomato to 1,000 Wallets on Sarafu Network

Blockchain-based community currencies show promise in Kenya.

Community currencies on the blockchain offer a new form of cash transfer for humanitarian aid — one which aims to spark resilient trade inside local economies, and keeps value flowing in spite of national currency shortages. (Photo credit: Bloomberg BusinessWeek)

A core mission of the Bprotocol Foundation (Bancor) is to lower the technical barriers to designing and deploying community currencies. Community currencies, which exist alongside and in support of national currencies, have been shown to improve cash flow and increase collaboration in local communities across the globe.

Bernard Lietaer, the well-known monetary reformer who co-designed the Euro and was Bprotocol Foundation Council President from 2017–2019, up until his passing last month, called on the world to “let a thousand currencies bloom”. He believed currency diversity was as crucial to the health of economies as natural diversity is to the health of ecosystems. We must therefore innovate towards allowing new forms of money to be safely and affordably managed by local groups, especially in cash-strapped communities where national currencies are often in short supply.

Following Bernard’s discovery of Bancor in 2017, his joining the Council shortly thereafter and his subsequent research and lectures on the protocol, numerous entrepreneurs and activists approached the Bprotocol Foundation for support in launching their own blockchain-based community currencies. One such organization, a Kenya-based non-profit named Grassroots Economics Foundation, expressed interest in using Bancor’s platform to create, distribute and manage their local currency system across villages in rural Kenya.

Impressed with Grassroots’ progress since its colorful paper currencies started appearing on the streets of Mombasa in 2010, the Foundation awarded a grant to Grassroots to deploy the Sarafu Network on the blockchain using Bancor. The Sarafu (or “currency” in Swahili) Network would serve as a transparent and decentralized local currency system made up of interconnected village-level tokens, creating closed loops of local commerce within villages connected to the network. The tokens act as basic income, and their circulation between consumers and local businesses is a new form of cash transfer for humanitarian aid — one which aims to spark resilient trade inside local economies, and keep value flowing regardless of national currency shortages.

From One Tomato to 1,000 Wallets

Sarafu Network began testing in August 2018, with the first-ever tomato traded on the blockchain. Roughly six months later, nine village-level tokens have been piloted, hundreds of businesses have been onboarded, and earlier this week, the pilots hit a major milestone: 1000 wallets on the network. These wallets are owned by locals who work as farmers, school teachers, retailers, healthcare providers and more. A farmer can now receive payment in village’s local currency, which she can then use to pay for her child’s school fees, and so on.

Grassroots Economics Foundation used Bancor to transform its paper community currencies (left) into blockchain-based community currencies. Villagers seamlessly trade and manage the currencies from a smartphone crypto wallet or via SMS on feature phones without Internet.

Bancor serves as the technology layer in the Sarafu Network. LocalCoin, core developer of the Bancor Protocol, built a platform that allows Grassroots to create tokens and distribute them to users, while also giving users the ability to seamlessly trade and manage their tokens via a smartphone crypto wallet or SMS on feature phones without Internet.

The Bancor Protocol ensures convertibility and liquidity for the tokens without needing a counter-party or an intermediary. That means commerce can be autonomously and securely processed on the blockchain without having to rely on a central authority like a bank or telecom to maintain the integrity of the network. Pricing and transactions occur through a secure set of auditable smart contracts integrated with the Bancor Protocol on the POA Network Ethereum side-chain, enabling instant transactions and minimizing transaction costs to a fraction of a cent.

A breakdown of spending in the Sarafu Network (February 2019). Food makes up 40% of the transactions.

Boots on the Ground

Researchers from Grassroots, LocalCoin and universities worldwide are now able to analyze, in real-time, the flow of liquid community currencies inside and across the villages, creating diverse and resilient channels of monetary links between locals. At this very early stage, the pilot is producing a wealth of insights on demurrage (negative interest or expiring money), price stabilizing techniques, currency velocity and much more, all of which are being used to improve the Sarafu Network and Bancor Protocol, so aid organizations and local groups across the globe can more easily deploy community currency systems.

Above all, we’ve learned that community currency innovation is driven not only by technical advancements, but by having actual boots on the groundto train and onboard users, stress-test the platform, spread awareness and chart a path forward with local regulators. This is one crucial reason why Bancor couldn’t be more thrilled to have found an experienced and dedicated local partner in Grassroots Economics.

A Grassroots Economics agent shows a local retailer in how to send/receive blockchain-based tokens via SMS.

The steady organic growth of the Sarafu Network reminds us that many of the goods and services in these villages are naturally occurring — they just need new forms of currency to become practically transferable. For example, when day-laborers bring fiat money back to the villages, they spend it on local goods and services like tomatoes, haircuts and school fees. But the labor is seasonal, and when it dries up, so too does the cash in the community. The tomatoes and teachers still exist, but the community simply lacks a way to trade them. People go hungry and children don’t go to school because they lack pieces of paper — despite the farms, teachers and entrepreneurs around them, who still have goods to sell and services to provide.

Ultimately, the vision for the Sarafu Network and Bancor is to create a common infrastructure for local commerce — a decentralized, public good which requires no fees, no central authority like a bank or telecom, and can be seamlessly and affordably operated and accessed by any community in the world — to turn scarcity into prosperity.

Based on the success thus far with our Kenyan partners across nine villages, Bancor is seeking to open and extend its community currency and token creation platform further, to allow for humanitarian aid, cash transfer and entrepreneurship to flourish in more places. Truly sustainable decentralized economies won’t build themselves, and we are eager to collaborate with those who want to deploy these new technologies in service of over three billion people living below $2 a day. Join us.

Are you an impact investor or aid organizaton? Interested in launching a community currency of your own, or researching the implications of blockchain-based currencies on local economies? Contact us at

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