Blockchain Revolution

A PIG IS NOT A PIGGY BANK
he Pacific coast of Nicaragua is one of the most beautiful landscapes in the
Americas, where verdant green forest meets endless blue waters. Its rolling hills
and stunning beaches make it a top destination for backpackers, sunbathers, and
ecotourists alike. Nicaragua is also one of the poorest and least developed countries in
the region. Sixty percent of the population lives below the poverty line. Those not
employed in its tourism industry survive on near-subsistence-level agriculture and
fishing. Nicaragua has the second-lowest nominal gross domestic product in the
Americas, with 10 percent of its entire GDP from remittances—money earned
overseas and repatriated by the Nicaraguan diaspora. Nineteen percent of Nicaraguans
have a formal bank account, but only 14 percent are able to borrow and only 8 percent
have formal savings.
1
Yet 93 percent have a mobile phone subscription, usually in the
form of prepaid access.
2
That is the reality that Joyce Kim faced when she took her team down to
Nicaragua. Kim is the executive director of the Stellar Development Foundation, a
not-for-profit blockchain technology organization (not to be confused with Stellar, the
large architecture and construction firm). A Nicaraguan microfinance operation
wanted to learn more about Stellar’s financial platform. The woefully underdeveloped
banking industry in Nicaragua keeps most people in an inescapable cycle of poverty
and exacerbates the plight of would-be entrepreneurs. They struggle to start new
businesses, register titles to their land and other assets, and resolve outstanding claims
from the Sandinista government’s mass land expropriation in the 1980s.
3
Stellar’s
platform would enable Nicaraguans to transfer, save, invest, borrow, and lend money.
Kim was both impressed and surprised by the local focus on microcredit. She
understood that access to credit was paramount to economic inclusion but believed
that savings, the ability to store value reliably and securely, was a prerequisite for

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almost all other financial services. When Kim asked about savings, she was told, “Oh,
savings is not a problem around here. People have pigs.”
4
Livestock makes up the vast majority of farmers’ net worth in many agrarian
economies because financial services are not widely available and individuals have a
tenuous right to their land. In Nicaragua that means people own pigs, and lots of them.
Kim was surprised at first, but quickly saw the age-old logic to it. “You walk out of a
meeting, and you look around and you see pigs are everywhere.”
5
Livestock has long
been an accepted, relatively useful form of savings. For those excluded from the
digital economy, animals are about as liquid an asset as you can own, even more so if
they produce milk, and they pay dividends in piglets, eggs, lambs, calves, and
sometimes cheese.
Prosperity is a relative concept. In Kenya, Masai tribesmen who own four to five
hundred head of goats are considered prosperous, but their lives can be rough, brutish,
and short. Livestock-based wealth is “highly localized, so that you can’t actually
transact with anybody unless they’re right there in front of you,” Kim said. “You run
the huge risks with your animals running away or getting sick or some blight coming
that could actually wipe out all of your savings.”
6
Credit was an even tougher nut to crack than savings. Kim got to know a local
Nicaraguan fisherman, a member of a cooperative, who explained that no one
fisherman ever has access to enough credit to outfit an entire rig. According to Kim,
“they form fishermen crews where one person will get a loan for the net, somebody
else will get a loan for the bait, somebody else gets a loan for the boat, somebody else
a loan for the motor, and then they come together and they form a crew.” No one
person is able to float his or her own venture (no pun intended) because access to
credit is so tight. The model works, but it involves as many middlemen as there are
fishermen.
The lifelong financial struggle of the Nicaraguan fishermen and farmers is the
story of most unbanked people, around two billion adults in the world today.
7
What
they lack—a store of value that won’t get mad cow disease or die of old age, or a
payment mechanism that extends beyond the village—we take for granted.
Financial inclusion is a prerequisite for economic inclusion. Its repercussions
extend beyond finance. Kim said, “I don’t consider financial access and financial
inclusion to be the end goal. It’s a path we all have to walk to get better education,
better health care, equal women’s rights, and economic development.”
8
In short,
financial inclusion is a fundamental right.
This chapter looks at opportunities for mobile and financial service providers and
other businesses to use blockchains to unleash the economic potential at the bottom of
the pyramid. We’re talking billions of new customers, entrepreneurs, and owners of

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assets, on the ground and ready to be deployed. Remember, blockchain transactions
can be tiny, fractions of pennies, and cost very little to complete. Anyone with the
smallest of assets—say, a talent for embroidery or music, spare water pails, a chicken
that lays eggs, a mobile phone that records data, audio, and images—could exchange
value. The new platform also eliminates the point-of-access barrier. If you can access
the Internet on a mobile device, then you can access assets with no forms to fill out
and very little literacy. These are seemingly small but incredibly important
breakthroughs. If we do this right, blockchain technology could unleash the biggest
untapped pool of human capital in history, bringing billions of engaged, prospering
entrepreneurs into the global economy.