How The Blockchain will Change The Development Industry Forever (to the better) (part 2)
Part 2/3 — Local Entrepreneurship and Economic Growth
This is the second in a series of three posts, each of them addressing a different but related category of opportunities, and looking at possible applications in each. You should read the first part — on how the blockchain will change the financial realities in under-served markets and how savvy non-profits and social enterprises could have a critical impact in this area. This second part builds on those applications, to outline opportunities that go beyond money and identity, into more sophisticated — and potentially more impactful — opportunities.
(I am assuming you have a basic understanding of what the blockchaoin is. If that is not the case there is a simplified explanation in the first post of this series)
New forms of equity structure and trading
Currently, there is no real equity structure on under-served market segments, never-mind trading. There are many reasons for that — no infrastructure, no regulatory framework, no real incentives to bother with any business structure. Capital doesn’t follow opportunities here. In fact, there is no capital to speak of — hence, no real growth. Sure, it is a bit of a stretch to expect that there is any appetite for any equity structures on markets where the typical business is a mama selling a few bananas or a local store selling rice by the cup and the odd beer.
What if we could structure the equity on these markets, and raise the capital on modern, sophisticated markets? Let’s start with the basics. The mama selling bananas. Could we assume her business has a value? Or Triggerise’s own micro-distributors who go from door to door in their communities and make a living out of referring people to services or selling things like nappies or fortified staples — there are a few thousands of them in our global network as we speak. Could we valuate one of these businesses, just like we would any other business? How much would it be worth today? 15 dollars? 100 dollars?
I think we can. And once we do, we can record the valuation on a blockchain. Then we can sell shares and/ or stock options — either directly, or through a token/ Coin Offering. The buyer of these micro-shares could be from the same village or from a big city on the other hemisphere. You could aggregate (i.e. network index) and structure this micro-equity into modern investment instruments that can be traded directly with investors or through legacy brokers. Hell, you could even structure all sorts of derivatives on these instruments, increasing the flow of capital into capital-starved market with a high profit potential.
Commodity trading/ futures
Now let’s imagine one of these businesses is an agri-business. We can record various inputs onto the blockchain as well as crop yield and other outputs. We can structure a token (and smart contracts) and use that to basically sell/ buy futures. A bit like an old fashioned cooperative bank, but without the bank (and without the bank fees);.
With all crop data on the blockchain it should be easy to insure that crop. Or anything else, for that matter. Premiums are registered on the blockchain (linked to a smart contract and maybe fulfilled using a blockchain currency?). This can be done at any frequency — daily, weekly, etc. Once the insured event is registered, payment comes automatically.
These are just a few of the more obvious applications. Let me know if you know of any others in this space. And don’t miss the next (and last) part of this series, in which I outline the most interesting opportunities for our industry — the opportunity to raise impact funding without a direct involvement of donor.