Posted on

Blockchain for Inclusion? Gates Foundation Strikes Tepid Tone at Money2020

Bitcoin and other blockchain applications may help expand access to financial services for the world’s poor, but the technology is not the cure-all that some of the early rhetoric in the space made it out to be.

That’s the takeaway from a panel discussion Sunday at Money2020 in Las Vegas featuring representatives of the Bill & Melinda Gates Foundation and Omidyar Network, two of the most prominent philanthropic organizations focused on promoting financial inclusion.

While both executives said they see potential from distributed ledger technology to support their mission, their enthusiasm for the prospect was notably subdued.

Kosta Peric, the deputy director for financial services for the poor at the Gates Foundation, went so far as to downplay the blockchain-like aspects of his organization’s recently announced Mojaloop software. The open-source software is designed to make disparate financial networks interoperable, all in the service of helping the world’s underbanked.

While Mojaloop makes use of Ripple’s Interledger Protocol, “it’s not exactly a blockchain,” Peric said. “Some pieces of that are inspired by blockchain.”

Slow and redundant

Peric was particularly lukewarm on the usefulness of bitcoin and other public blockchains for financial inclusion.

Specifically, they are not adequate for domestic payment systems, he said. One reason is performance: no public blockchain can match the 1,000 or more transactions per second of real-time domestic payment systems, Peric said.

Also, public blockchains do not make sense for this use case because “payment data from one country ends up being spread across the planet.”

He tempered these comments by adding that public chains “can totally make sense” for international remittances. But moving money is not the only way blockchains can be useful for financial inclusion, said Arjuna Costa, a partner at Omidyar Network.

“Beyond payments, there’s a lot of potential we haven’t tapped yet,” he said, describing two use cases that would help poor people get access to capital, albeit indirectly.

One such use case Costa mentioned lies in land registries, which would help people secure title to properties that they could then borrow against. Another is using blockchains to analyze payment flows (including receipts and invoices) for small businesses, which would then help financial institutions to assess their creditworthiness and therefore lend to them.

The potential of distributed ledger technology is very high,” Costa said.

Bitcoin supporter

The most enthusiastic voice about blockchain during the session was the moderator, Christine Duhaime, founder of the Digital Finance Institute, a fintech think tank based in Vancouver, Canada.

“One of my favorite technologies of all time is bitcoin,” said Duhaime, who is also a lawyer with a specialized anti-money-laundering and counter-terrorist-financing law practice.

To illustrate why she likes the cryptocurrency, she pointed to the work of Code to Inspire, an organization that teaches Afghan women and girls how to code, how to find work online – and how to use bitcoin. It gives these women a measure of financial autonomy and privacy in a country where financial services are unavailable to them or unsafe to use.

Duhaime even went so far as to laud initial coin offerings, the process by which startups or open-source project raise funds by issuing a custom cryptocurrency.

While acknowledging that the controversial fundraising method has risks, she said it could go a long way toward expanding access to capital for underbanked entrepreneurs.

Duhaime concluded:

It allows access to capital for Joe Average on the street. It could be a farmer, it could be a billionaire – it doesn’t matter. You skip the markets, you skip the infrastructure, you get access to capital.”

Photo by Marc Hochstein for CoinDesk

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at news@coindesk.com.

Posted on

Old Flames, New Code: Ripple and Hyperledger Reunite for Interledger Effort

Ripple and Hyperledger might soon get a chance to reignite an old flame.

Following an early promise by Ripple to contribute code to the Hyperledger blockchain consortium’s open-source repository, the two organizations parted ways over differing opinions on blockchain design. Whereas Hyperledger’s members largely focused on private blockchains that required permission to join, Ripple instead created hybrid technology featuring a cryptocurrency more reminiscent of a public blockchain.

But now, the star-crossed companies have found an unusual Cupid who may have what it takes to finally bring them together: NTT Data, a Japanese system integration company.

The story begins with NTT Data (through its subsidiary Everis) working on a new version of Ripple’s open-source Interledger protocol beginning in July 2016. The plan was to reimplement Interledger using the Java computing language, since Interledger is currently only available in JavaScript.

When Ripple learned of NTT Data’s efforts to rebuild the platform, it was not only intrigued, it wanted to help.

Together, the companies have submitted the results of that collaboration to Hyperledger, of which NTT Data is a founding member. If admitted, the new Interledger implementation could mean not just a new language for developers to build with, but a bridge to connect all of Hyperledger’s open-source codebases, including Fabric, Sawtooth and Burrow.

In an exclusive interview with CoinDesk, Ripple CTO Stefan Thomas expressed enthusiasm about the effort, yet also relayed that there are final obstacles to be overcome to finally make things official with Hyperledger.

Thomas said:

“We are supporting that effort, but there’s still a lot of decisions to be made.”

Marrying blockchains

Described in a November 2015 white paper as a bridge between traditional banking ledgers, public blockchains and private blockchains, Interledger has evolved into a product capable of conducting a single transaction across as many as seven different ledgers.

And with that, NTT Data increasingly saw it as a way to connect its clients to a diverse set of the “world’s existing payment networks,” according to Everis blockchain program manager Isaac Arruebarrena.

In interview with CoinDesk, Arruebarrena explained how NTT Data, which last year conducted $15.7 billion (17 trillion Japanese yen) in sales, grew from being a founding member of Hyperledger in 2015, to identifying Interledger as “one of the cornerstones” of its corporate strategy.

“Our main goal is to become the best technology partner for the companies we work with,” said Arruebarrena, adding that, while there seems to be some headbutting between Interledger and Hyperledger, he’s dedicated to bringing the two together.

He said:

“We are determined to contribute to the evolution of the Interledger protocol in order to enable interoperability between distributed ledger platforms and financial institutions’ existing ledgers.”

The fun begins

However, several steps stand before NTT Data moving Ripple’s proposal into Hyperledger, according to the project’s executive director, Brian Behlendorf.

First is the formal selection of a name, which is currently the unwieldy “Hyperledger Interledger-Java,” taken from the platform’s key distinguishing trait.

But Hyperledger members are currently discussing how to make the platform’s name more accessible, and possibly more easily trademarked. Alternatives include Hyperledger Connect, Hyperledger Liquid, Hyperledger QuILt (IL standing for Interledger) and Hyperledger Jill (a portmanteau of Java and Interledger).

Outside the collaborative naming process, the technical steering committee is now evaluating the code and could accept or reject it as soon as next week, but likely no later than “another few weeks,” said Behlendorf.

He continued by saying that, once the code is approved, the project will begin the onboarding process as an incubating project, adding, “and then the fun begins.”

Behlendorf concluded:

“As Interledger appears to be a compelling way to build bridges across chains to transfer messages and assets, it’s something I personally really hope to see accepted into Hyperledger.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Ripple.

Candle image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Interested in offering your expertise or insights to our reporting? Contact us at [email protected].