In the county of Kenya there exists an economic model using prepaid airtime minutes as a de facto currency, and this type of market is well on its way to reality in other small, impoverished countries that don't have the infrastructure of Western World. As any businessperson can appreciate, opportunities are often found in the least looked at places, like Kenya.
That was certainly the case for a company called BitMinutes, which is premised on the creation of a cryptocurrency (BMT) that is tied to the real-world asset of aforesaid prepaid airtime minutes. The bottom-line is that while Bitcoin seems to be all the rage (and very volatile) when it comes to cryptocurrencies, there are many other cryptocurrencies that hold just as much promise (if not more) that can have a substantial impacts in the small business sector both in the United States and globally.
While BitMinutes is an outside-the-box type of creation brought to life by an entrepreneur, and demonstrates how someone thinking beyond the borders of a U.S. market can find success, it also can help out small businesses abroad as they seek to grow.
Small businesses can make money using BMT in different ways. They can sell BMT just like the regular prepaid minutes they already sell, or they can lend BMT as an asset-backed token to essentially be used as collateral for microloans.
There is a genuine need for two improvements in local financial transactions. First, consumers and small business people need a secure way to make digital payments and loans for small transactions. Second, the businesses need access to more affordable credit to solidify and expand their business activities.
This technology works best in regions where most people are poor (by developed country standards), and the majority do not have bank accounts or credit cards. A sizable percentage of the world's population fits into these categories and could use the help.
Today, there are more than two billion adults who are unbanked. That means they don't have the ability to conduct financial transactions. In developing countries, the situation is especially dire, with only 41% actually having a bank account. The rest of the people in these regions rely on cash and bartering to conduct business.
The problem with this approach is that transactions can be insecure and expensive, with money transfer fees as high as 20% and small loan rates approaching 100% annualized. And that is if they can even get credit. Lacking formal financial relationships or a bill payment history, no institution will lend them money. By tracking all of an individual's wallet transactions, BitMinutes may facilitate a credit history and potential startup capital for would-be entrepreneurs.
It is not reinventing the wheel, which entrepreneurs understand is not necessary to achieve success in most industries. Instead, it is taking a commodity in prepaid airtime minutes, that individuals in less-developed countries are already using as resource of value, and building on it through a smart token, blockchain-based platform. Money has been moving from the U.S. to Kenyan residents for over four years, and now the company is looking at ways to expand.
BitMinutes' main competition is in the form of a company called Everex and another named LaLa World. While each is interested in providing financial inclusion, Everex doesn't yet have a live product and neither options offer a guaranteed lending service.