2007年12月11日火曜日

Ripple Project

I have long been interested in the potential of alternative currency such as LETS as a tool for social and economic development. When I was working with UNESCO in Korea, I proposed the idea of exmerimenting a community currency system as a part of the incentive mechanism for volunteers of the Cross-Cultural Awareness Program, with a longer-term aim of leveraging it to build a self-help community among foreign students in Korea (though it didn't materialize as I soon quit the job). However, I've also had a reservation about the archtectural weakness of LETS.

I recently learned about this new open-source system called the Ripple that seems very promising for overcoming the kind of problems LETS had. The system is symple and robust. It is basically a financial version of LinkedIn, or a cyber version of traditional, informal value transfer system called hawala or hundi. Of course the Ripple is far from perfect, but I have a distinct feeling that this idea can lead to a very exciting and concrete innovation.

I am particularly interested in its potential application in international development. Combined with P2P mobile banking systems that are taking off in many developing countries, this can significantly help mirofinance institutions reduce their high transaction cost, especially related to due diligence. The result can be a next major innovation in micorfinance after salary-based lending and Kiva.

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