Abstract
This paper presents the results of what may be the world’s first randomized control trial on community currencies, focusing on Grassroots Economics Community Inclusion Currency (CIC) model run on the xDAI blockchain. Beneficiaries in Nairobi, Kenya were sent the equivalent of $30 in cryptocurrency tokens, enabling a level of impact evaluation usually unfeasible for most cash and mobile-money based transfer programs. Results show that CIC transfers of $30 are associated with $93.51 increase in beneficiaries wallet balance, a $23.17 increase in monthly CIC income, a $16.30 increase in monthly CIC spending, a $6.31 increase in average trade size and a $28.43 increase in expenditure on food and water. However, the difference in treatment effects for males versus females suggests gender imbalances persist. This study serves as an important prototype for novel cash transfer models and presents some of the first quantitative evidence in the area of “crypto for good.”
Highlights
Community currency (CC) models have been explored as a more sophisticated successor to conventional cash transfer programs
Much in the same way that transactions on the Ethereum blockchain or Bitcoin blockchain can be tracked in real time, the movement of Community Inclusion Currency (CIC) tokens is recorded on an immutable public ledger
Two research questions are explored, with their relevance in the literature and accompanying hypotheses described below: First As a crisis recovery tool, what effect do CIC transfers have on the local economic engagement of recipients? If this effect is negligible, we would expect to see no significant change in trading behaviour beyond the nominal increase equal to the transfer amount
Summary
Community currency (CC) models have been explored as a more sophisticated successor to conventional cash transfer programs. CCs commonly consist of non-interest bearing physical vouchers or digital tokens which are issued and honoured by members of a network and can only be spent on goods and services provided by other members in the network (Bendell et al, 2015). Much in the same way that transactions on the Ethereum blockchain or Bitcoin blockchain can be tracked in real time, the movement of CIC tokens is recorded on an immutable public ledger. This creates a rare opportunity for detailed impact evaluation at the individual and community level. Even minor changes to trading networks can be mapped and visualized, offering meaningful information on how cash transfers circulate within the local economy
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