How Akoin & BitMinutes are Solving the Biggest Gap in Banking the Unbanked

If I had a penny for every time someone told me, “It’s like ____ but on a blockchain”, I’d probably have somewhere between $5-$10. Notoriously, the cryptocurrency market is riddled with blindly optimistic projects that rarely make good on their promises. Projects often led by teams who put great time and effort into theorizing complex blockchain use cases, but very little into how their projects will actually be executed, and even less on whether there is a demand for the product at all.

Many of the Initial Coin Offerings (ICOs) from 2017–2018 presented innovative, and clear improvements on the processes, systems, or assets they hoped to tokenize. Yet most of them haven’t come close to actualizing the future they sold to investors and token holders.

Even teams bursting with top tier talent don’t always comprehend the weight of the problems they hope to address. It isn’t enough to be the best in your field. Ideating an executable token utility that powers a sustainable token economy isn’t something you can take an eCourse on.

It isn’t enough to have the best technology, developers, and executives, regardless of how much funding is involved. Creating adoption and the widespread use of a token requires infrastructure, an understanding of geopolitical influences, international law, relationships with all the players currently involved (who have probably been around since whatever industry you’re targeting began), positioning, and timing.

The sad truth is that many companies launching cryptocurrencies lack the experience, relationships, and executable strategy required to distribute tokens to the people they hope to call their demographic.

Companies like Facebook.

The Challenge in Banking the Unbanked

Providing financial services to those without bank accounts, or “banking the unbanked”, is a goal that probably sounds familiar to anyone who’s been involved in crypto for a while. People have been whispering on the internet about Bitcoin and its ability to bank the unbanked for years.

The problem is, it hasn’t. The most successful cryptocurrency by market capitalization hasn’t succeeded in decentralizing access to financial services. Don’t get me wrong, along the way Bitcoin has picked up a new and improved use case as a store of value or “digital gold”. But the specific problem of banking the unbanked requires something a completely decentralized cryptocurrency can’t provide: a team and executable business model that reaches the last mile.

Which is why I was thrilled when Facebook released the whitepaper for its digital currency Libra. Even though Libra will be centralized, it excites me to see a household name enter the blockchain space. All ships rise with the tide after all. Even if you don’t support Libra, it can’t be denied that the press coverage around it has increased the volume at which other cryptocurrencies are mentioned in mainstream media.

I was even more thrilled when I read that Libra plans to help bank the unbanked by offering tokens to anyone with a Facebook account. At the time, this seemed like the most feasible attempt by any company I’d heard of.

Until I noticed it, the hole in Facebooks’ plan.

Distribution

There are two elements that the Libra business model relies on that haven’t been addressed. The first problem area is distribution; the act of getting a token into the hands of the people it’s meant for, in this case, the unbanked. I touched on this in a previous article on the Libra whitepaper.

“How does someone obtain Libra in the first place? If I am part of the 1.7 trillion people that don’t have access to financial services, how am I supposed to transfer cash from my pocket to my phone or laptop to purchase Libra with?” — The Truth about Libra

There is nothing written in the Libra whitepaper about how Facebook plans to allow those without access to financial services to obtain Libra tokens. It explains how it plans to stabilize the currency, lists 28 prestigious corporate partners, and uses beautiful graphics to illustrate how Libra will be used in the future. But there is no mention of banking the unbanked beyond them mentioning that they want to do it.

Execution

Executing its goal of providing a global payment infrastructure is a gigantic task. A task that is going to (and already has begun to) face intense regulatory pushback from governments and central banks globally. I’d be willing to bet that the only countries where Libra will reach the utility it hopes will be countries where governments are heavily incentivized. And incentivizing every government simultaneously is impossible — otherwise, we wouldn’t have fought two world wars already.

Facebook is going to need support from local city governments, state governments, and governing bodies to make this work. The Federal Trade Commission and European Union have already issued statements saying they’re wary of Libra. Both organizations want to hinder Libra’s progress. Several countries involved in the EU have already expressed distaste towards Facebook’s digital currency. France and Germany have both stated they intend to block Libra at every turn, and that it questions their monetary sovereignty.

Creating a global digital currency and creating a cryptocurrency to bank the unbanked are mutually exclusive goals. A token or infrastructure for banking the unbanked requires nuances that won’t allow it to scale at a global level. A person buying fresh lettuce from a village in Nigeria isn’t going to have the same needs as someone buying an Oat-milk latte from a Silicon Valley Starbucks.

After my last article on Libra, I began to look into the subject further. I wanted to find out if there were any companies that had succeeded in bridging the gap between those without bank accounts and the global economy.

Turns out, there is a solution, and in a sense, it’s already been executed and distributed.

The Prepaid Minutes Economy

While developers, economists, and investors have been debating on which cryptocurrency will be the first to be used how fiat currency is used today — some developing countries have already found a stable, transferable, and widely used fiat currency alternative: prepaid cell phone minutes.

Giving new meaning to the phrase, “time is money”.

Prepaid minutes are used in countries like Nigeria as a form of digital currency. Cell phone users can load up their phones with as many minutes as they can purchase, and transfer their minutes to friends and family members (if they use the same carrier), even pay for goods and services in the local economy. Prepaid minutes can be converted to cash by selling them to minute dealers or traders, who act as a currency exchange in the prepaid minute economy.

“The prepaid card is universally recognized as a tool for financial inclusion. With the main impediments to financial inclusion spanning the high cost of opening and maintaining formal bank account, a lack of money, the extreme distances to the nearest branch, the need for verifiable identification, such as birth certificates (something many Africans don’t have) and of course, trust in handing your hard-earned cash to someone else, it is easy to see how the prepaid framework could bridge the gap between formal financial services and the unbanked.”

The growth of the prepaid minutes economy shows direct demand for a digital currency amongst a large population of people without access to bank accounts. It also demonstrates the perfect target market to introduce a blockchain-based solution to. The infrastructure for a digital alternative to cash has already been built, it just needs to be repurposed.

Which is where Akoin comes in.

The Akoin Ecosystem and Financial Inclusion

Let me preface this section by stating that I am a skeptic by nature. I’m an entrepreneur, I’ve been in business for long enough to not have an ounce of optimism left in me. When I research cryptocurrencies, I don’t care about how good their idea is, I care about how feasible it is that they’ll be able to execute their idea at the scale they need to in order to succeed. There are some brilliant ideas in the cryptocurrency world, with genius developers, but they’ll never reach the number of users they need to become a functioning ecosystem.

Distributed ledgers require all players involved to be good actors and any player in a system can only be expected to be a good actor if he or she is incentivized. These incentives are usually derived from the token fees generated from using the network (when someone sends Bitcoin, for example, the fee to send that Bitcoin is paid to miners). Without enough users in a network, the entire system crumbles. The process I just described is commonly seen in the cryptocurrency market. Far more projects fail than succeed, and a surprising amount of the projects that fail actually have great products.

I digress…

When I first learned about Akoin, I approached it how I’d approach any cryptocurrency associated with a well-known celebrity: with extreme doubt and prejudice.

A friend introduced me to a couple of members of the Akoin team a few months ago. We talked about their plans, what Akoin is, its goals, and how bad L.A. traffic is. I left the meeting feeling positive towards the project, but still withheld judgment until I could conduct my own research. I had to consult with the all-knowing Oracle of the Skeptics, Google, to form my own opinion.

What is Akoin?

Akoin is a cryptocurrency being developed by artist, entrepreneur, and philanthropist, Akon. Akoin is a token that’s used within something its team calls the” Akoin ecosystem.” The ecosystem is their platform, within which token holders will be able to use Akoin to interact with different DApps in the marketplace and into the local economy.

The ecosystem will launch with a single DApp, but will scale to include more as the platform is tested. The Akoin platform includes a private exchange mechanism (via an Atomic Swap model) that allows Akoin holders to easily move between Akoin tokens, other alternative cryptocurrencies, their local currency and a number of other fiat currencies (dollar, euro, pounds etc).

These functionalities coupled with the first DApp they’re launching can be seen to represent the Akoin MVP (Minimal Viable Product).

The reason I bring up Akoin in regards to the unbanked is because of its first DApp and use case: BitMinutes.

After researching Akoin, I realized that it in order to achieve their goals, they’d have to bank the unbanked in the process. What’s surprising is unlike many of the businesses tackling the problem, they don’t use it as a core pillar of their P.R. and marketing campaigns.

Most companies that want to offer financial services to developing countries engrain that concept into their brand. In hopes that they can benefit from a positive brand association with a good cause. It’s easier to get a press release about your product-launch picked up by a major publication if you’re also trying to save the world. With Akoin, they seem to be taking a different approach. Their messaging didn’t make me feel guilty about not doing more for the unbanked, it made me hopeful for the future.

Akoin is focusing on Africa, its goal is to create an ecosystem of DApps to empower young entrepreneurs in the region. It wants to help them learn marketable skills, earn through the gig-economy for the first time, provide access to many entrepreneur building services and safely save their earnings. Akoin wants to be the infrastructure that allows African entrepreneurs to take part in the digital economy, and give them the tools they need to compete in the realm of international business. Tools like, credit and lending services, a method to quickly and cheaply transfer funds, and a way to pay for digital services like email providers and cloud storage.

The thing is, in order for someone to historically benefit from these services, they need to have a bank account. The reason unbanked entrepreneurs need help accessing financial services is that owning a bank account is the starting point for taking part in them. Which brings us back to the gap in Libras’ plan. How can you bank the unbanked when they don’t have a bank account or any way to open one?

When I posed this question to the Akoin team, they introduced me to Tom Meredith, the CEO and Founder of BitMinutes. BitMinutes is the first DApp to be released within the Akoin ecosystem and will be the focus of its MVP.

BitMinutes was created to provide affordable banking to the unbanked. Tom Meredith noticed that people in some developing countries were using prepaid minutes similar to a currency, but also that they were limited with what they could do with their minutes compared to fiat. They couldn’t build credit, take out loans, safely store their minutes somewhere similar to a bank account, or send minutes to their friends and family if they used different mobile service providers.

“Prepaid time is one of the most simple assets that exist, it’s simple to understand, and is already used by 4 billion people across the world.” — Tom Meredith

Through the Akoin ecosystem, BitMinutes tokenizes prepaid cellphone time and allows it to be sold for fiat or cryptocurrency. Think of it as a blockchain-based banking and settlement system for prepaid minutes, where you can also convert those minutes to cash or crypto. People who don’t have bank accounts can approach the prepaid minutes vendors in their village and convert cash into BitMinutes. Through the Akoin platform, BitMinutes can be sent quickly and freely to other phones as well as be converted to Akoin tokens or fiat currency. This addresses one of the core problems we discussed earlier, distribution.

There’s already a clear framework in place to distribute Akoin and BitMinutes tokens to their desired target markets.

Next, on the “banking the unbanked” checklist is execution: a company’s ability to navigate the complicated geo-political infrastructures that exist today to execute its business plan. I’ve analyzed countless cryptocurrencies, when I worked with an Initial Coin Offering Accelerator it was my life. The “make or break” factor with the majority of projects I look at is their ability to execute.

“You can create an ERC-20 token in a weekend, but reaching the 4 billion unbanked requires a global infrastructure, and a strong enough voice to reach them all. We’ve partnered with 50 mobile carriers and 80 companies over the past four years to build that infrastructure. All towards allowing the trade of prepaid minutes for fiat or cryptocurrency. ” — Tom Meredith

BitMinutes has the digital infrastructure necessary to execute the distribution of tokens, and a large enough network of partners to ensure that there will always be liquidity for tokenized minutes. Combining this infrastructure with the network and reputation Akon has built for himself through initiatives like Akon Lighting Africa might make this one of the more feasible execution plans I’ve encountered in crypto.

“With Akon’s relationships with African countries and governments, due to the wins he brought Africa with Akon Lighting Africa, integrating Akoin is positioned as a win for Africa government heads. BitMinutes are already doing something amazing for the unbanked; but if they can amplify their message and reach a larger base through Akoin, why not increase the reach of their efforts. Our partnership with BitMinutes lets them take the infrastructure they’ve spent years building and bring it the users it was made to help”. — Lynn Liss, Akoin COO & Co-Founder

Beyond the infrastructure and geopolitical reach needed to execute, the Akoin MVP will launch with another trick up its sleeve: a network of Trusted Agents who trade in pre-paid minutes.

In a recent United Nations briefing, Akon discussed the role of prepaid minute vendors in Africa in relation to Akoin

“We’ve partnered with mobile companies so you’ll be able to use prepaid minutes and trade them for Akoin, as well as for fiat. Incorporating minutes was an important piece of the ecosystem. I know some Africans that are Minutaires.”

Or ‘someone who holds at least 1 million in prepaid minutes’ as further clarified by Jon Karas, Akoins’ President & Co-Founder

“We selected BitMinutes as our first use-case because people in Africa (and other rising economies) already hold prepaid minutes as a huge store of value. The ability for them to trade those prepaid minutes into the Akoin cryptocurrency or a number of fiat currencies and utilize their stored value with an easily accessed TAN agent for microloans, local goods, and services or the pool of entrepreneurial tools they can access on the Akoin platform is incredibly empowering!” — Jon Karas, President & Co-founder, Akoin

Minute millionaires, or as Akon calls them, Minutaires, represent a growing market in Africa. A market of white-collar workers who want to take part in the financial freedom offered through the gig-economy. These currently overlooked individuals are amongst the same unbanked entrepreneurs that Akoin wants to empower. More importantly, they also serve an important function in the ecosystem.

The Akoin platform leverages the already existing network of prepaid minute vendors as a tool to provide financial services to the unbanked. Current vendors, as well as consumers, can apply to join the Trusted Agent Network (TAN), through which they’re incentivized to offer a new service to generate themselves some extra Akoin tokens. The service in question is essentially opening digital bank accounts for the unbanked. TAN agents will be able to conduct Know Your Customer and Anti-Money-Laundering processes on their smartphones in real-time. In the words of Tom Meredith, “they’ll essentially be able to open bank-like accounts on the fly.”

The Akoin platform and BitMinutes DApp are turning their Trusted Agent Network into the Uber of banking. Agents are empowered with new earning opportunities while honing a white-collar skillset, and people who’ve never been able to build credit or take loans can summon a TAN agent through the Akoin MVP, and join the digital economy with more ease exists in several first world countries.

This is one of those unfortunately rare cases where a token is created to solve a widespread problem for a target demographic that’s ready and willing to try new solutions. A mother in Mozambique is more likely to adapt to a new financial infrastructure than a developer in Silicon Valley because her current infrastructure is lacking. Crypto adoption is hard to achieve in the United States because our general attitude towards finance is, “If it isn’t broke don’t fix it.” The only time we get up in arms about the financial world is when a recession occurs, people only care about fixing the system when it loses them money.

In some African countries, the financial system has been broken for a long time, it’s why Minutaires prefer to store their wealth in the form of minutes as opposed to their local currency. They’re actively looking for a better alternative to government-issued fiat currency, that will allow them to partake in digital services.

After speaking with Lynn Liss, Tom Meredith, Jon Karas, and others involved in the Akoin MVP, I was enthralled by Akoin and BitMinutes. So, I did what I do whenever I find an exciting business that’s genuinely disrupting an industry or making an impact on a large demographic: offer to help.

That being said, I’m proud to announce that I’m joining the Akoin team as its Blockchain Lead. All opinions and thoughts expressed above are mine and mine alone, and this article depicts my completely honest opinion of the project. I hope I’ve built enough of a reputation for you to know that I won’t work on a project I don’t believe in. I’ve worked for myself for the entirety of my career, I wouldn’t give up that freedom to join an effort that isn’t moving towards an attainable goal. I see Akoin as the best vehicle for me to leave a positive impression on this world, and you know how much I love legacy.

(Disclaimer: The writer is the Blockchain Lead at Akoin)