The Red Cross societies of Norway, Denmark, and Kenya recently announced the launch of a two-year plan to solve the crisis of hard cash replacing them with digital currencies for effortless trading and economic growth.
Red Cross, every year, donates $1 billion to help the affected living in disaster-prone areas. The initiative is a drive to further enhance the use of the funding and provide slum dwellers an opportunity to earn digital credits for the work put in. The credits gained could then be bartered for goods and services. The new digital currency would function on a credit system that could be easily transferred through mobile devices.
Easy Exchange of Credits for Goods
Adam Bornstein, a Danish Red Cross representative on alternative financing stated that the blockchain system would work on the same model as the M-Pesa, a Kenyan money transfer application. Unlike M-Pesa, the Red Cross digital currency would not need the transfer to be backed by the national currency.
The program which has already been tested out in certain parts of Kenya and Ethiopia has received favorable reviews. It has helped in speeding up the economic sector of the communities in concern by allowing the credits earned from labor to be exchanged for local goods.
Red Cross plans on increasing the user base to reach 320,000 in the coming two years with further plans of expansion in Kenya, Myanmar, Zimbabwe, Cameroon, and Papua New Guinea and Malawi.
Will Ruddick, the founder of Grassroots Economics, expressed his approval, stating that the blockchain-based exchange program would cater to economic expansion in the entire nation.
Roadblocks and Resilience
The inventive idea of digital currency as a source of exchange has met some criticism from traditionalistic believers of the financial model. Banks in Kenya fear that the development of a credit system could harm the loan system.