On Friday (March 19), Charles Hoskinson, Founder of Cardano (ADA), as well as Co-Founder and CEO of IOHK, described a scenario that would tell him that Cardano has “done something unique, magical, and special.”
Hoskinson talked about about peer-to-peer (P2P) microlending platform Kiva:
“As many of you know, I’m big fan of Kiva. I go use it all the time and every time I do an AMA now, I give out loans. I’ve already done five from the AMAs.
“And I think to myself for me the moment I know that Cardano has truly made a difference and changed the world is if I can open up an application just like I do Kiva at the moment and I can have a direct relationship with someone somewhere in the world who is not doing so well and I can actually give them not as a gift, not as charity, but a loan to them and they pay me back and I can do that again and again and again and I win more than I lose. That to me would mean success for Cardano.“
He then moved on to explain why:
“Because so much has to happen for us to get to that moment. You have to build an identity system. We have to make sure that metadata system is where it needs to go. There’s needs to be a proper payment system that can work in all places, including these areas with intermittent internet.
“With identity, you have to have reputation. You have to have social structures form. You have to be able to give them an asset in that jurisdiction they live that they can spend as if it was the local currency. So, stablecoins have to form. Then you have to actually get paid back and be able to profit from that, make it a recurring circle. If that’s possible, everything is possible. DEXs will be here, oracles will be here…
“And because the interest rates could be higher than what we see in the negative interest rate world and what we see in America, corporations will use this mechanism as a treasury management function, either directly or through structured financial products.
“What does that mean? That alone means we will witness one of the greatest wealth transfers in human history, from the developed rich world to the developing not so rich world because not of charity but because it makes business common sense.
“If you’re a CFO of an organization and you’re looking at an asset that has a greater than 90% repayment rate, an asset that has sovereign guarantees or insurance behind it or people to offset risk and returns above 10% or 15%, why wouldn’t you go and put 5% of your company’s treasury or 10% of your company’s treasury?
“That one moment alone would mean hundreds of billions of dollars every year of direct foreign credit flows into these countries for the first time ever. It creates pan-African and transnational currencies that mean you no longer need central banks. It creates tons of micro businesses that are cash in and cash out.
“And to offset risk, markets form, insurance forms, all kinds of things form to trade these instruments for people to get liquidity as people pay back and build back. Then if we’re willing to give a loan, why wouldn’t we be willing to invest in a business. The micro IPO ushered in by security token. That is the logical next step.
“Once that’s been established, the very same thing that gives a credit score to someone that’s enough to convince you to give them $100, $200, $300, would convince you that maybe you should be an angel investor in their business for $10,000, $15,000, and we can securitize it so individually it can be $20, $30.
“Why? Is it charity? no the cost of running a business in Ethiopia is ten to fifty times less than the cost of running a business in San Francisco, and it doesn’t necessarily equate to ten to fifty times less profit. That’s the key. A whole new world opens up once this infrastructure is in place.“
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.