Keyko + Humanity Cash: How to scale local community currencies

We’re proud to have been the engineering partner to make this immense project possible.

Over the last few months, our partner Humanity Cash has launched its first of many milestone projects: a digital version of the renowned community currency BerkShares. We’re proud to have been the engineering partner to make this immense project possible.


Photo courtesy of BerkShares


In this article, we want to share our excitement about this project. We’ll explain:


* What the vision behind Humanity Cash is

* How Keyko used the blockchain technology to make this possible




Keyko’s mission is to create unstoppable digital ecosystems. And we believe that financial inclusion is an intrinsic part of this. That’s why our past projects include Impact Market and the Celo Alliance for Prosperity. Humanity Cash totally fits this vision.


To grasp the potential impact of projects like Humanity Cash in the US, we need to understand the importance of local economies. Think independent shops and local entrepreneurs. Not Amazon or Walmart.


Local economies are crucial to the US prosperity as a whole. Apart from accounting for nearly 50% of the jobs, they are a critical element of local culture and identity. Plus, more competition creates better conditions for workers.


However, that competition is dwindling: local economies are under critical pressure from years of centralization. The US economy has experienced market concentration with the likes of Amazon, Walmart, Big Tech and Big Banks. As a result, the amount of new businesses, a key driver of US entrepreneurship, has almost halved, since 1980. That’s bad.


Put bluntly: the money flow favors a limited number of people in the center, rather than a large number of people all around. This is cause for concern for two reasons. One, if big companies decide to move factories, offices, distribution centers, etc., they leave behind a vulnerable local community and a shrinking local economy. But also, too much centralisation makes the whole national economy fragile and vulnerable.


The tendency to move against these monopolistic forces is not new. It’s been the driving force for previous local currency projects, like BerkShares. The concept of these ‘currencies’ is that they are only usable locally. The economics behind it are based on the multiplier effect, where for every dollar injected into a community, it may create 3–4x the economic value. That’s good.


However, these projects tend to be analog, labor-intensive and expensive to maintain and scale. Think administrative burden. Think bank fees to swap BerkShares back into USD. The BerkShare bank notes really look lovely, but they’re hard to scale.




Digitizing a previously analog and cumbersome local currency within US regulation is in itself quite a feat, especially if you want to integrate with the legacy tech infrastructure of one of the key stakeholders: community banks.


Why get community banks involved? A key insight from Humanity Cash is that they are crucial in providing loans to local companies, particularly small businesses and local agriculture, as well as financially underserved residents. Overall, they represent 15% of the banking industry’s loans, but that number rises to 36% for small business loans and no less than 70% for agricultural loans.


But again, bad news. Once the powerhouse of the American economy, more than 50% of community banks have disappeared in the last 20 years alone!


And that’s another blow to local economies. Local businesses not only have to compete with big corporations, but they’re also having difficulty getting loans. And on the flipside, community banks see their core audience of local companies fading away. It’s a Catch 22 of irrelevance.


Projects like Humanity Cash — and Keyko’s underlying tech — are essentially designed as a neo-bank fintech solution for small community banks. On the path to strengthening local economies, they will leapfrog the big boys (let’s be honest, they‘re generally boys) and increase their local relevance.




If you explain a community currency to a web3 native, they’ll go: “Oh, you mean, like a stablecoin, with programmable conditions.” Quite.


That’s exactly why Keyko got involved. We saw a perfect match between the capabilities of blockchain tech and the challenges that come with digitizing a community currency as well as involving local community banks.


We broke down the Humanity Cash project into five specific challenges, each of which were a match for Keyko and web3 tech.


The first two issues have to do with the digitization aspect of current (analog) local currency projects.


  • Money needs to flow digitally between buyers and sellers at low cost
  • The local currency is easy to get and equally easy to cash out


If you map this to the world of blockchain technology, you get the following components:


  • An intuitive mobile wallet app with private/public key, as well as a simple PoS system for participating merchants, with settlement happening on a blockchain.
  • Easy on- and off-ramp with simple ACH transfers that connect your own bank account to the platform.


Next, we needed to address the issues that come with other contemporary stablecoins like Tether or the spectacular recent failure, $UST:


  • For every local dollar in circulation, there is a US dollar in reserve, kept with regulated, non-speculative, community banks, which are FDIC insured
  • Money is guaranteed to stay in the community, i.e. only accepted at participating stakeholders


In Keyko’s tech world, that gets translated to:


  • A Mint and Burn mechanism, which is fully transparent and auditable and which seamlessly links existing bank accounts to on-chain wallets
  • Programmable money + blocklisting wallet addresses


Finally, a project like Humanity Cash has compliance obligations.


  • Transactions should be easily reconciled and auditable, like paper receipts


Again, we created technology for the platform that handles that requirement with:


  • A reporting portal to reconcile payments, track anomalies and handle compliance requests




Humanity Cash believes the key in creating resilient local economies is scaling the ecosystem of a community currency.


At Keyko, we used our experience of building digital ecosystems to make this vision a reality.


If that’s not a use case of using blockchain for financial inclusion, then what is?!


We will soon publish a more tech-y deep dive on how this works under the hood. Plus we’re busy thinking about how we can leverage this solution.


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