Token — messaging plus payments (ETH) for financial inclusion
Today Coinbase released a new product called Token. I found out about it through Fred Wilson’s blog.
What caught my eye was the mission — universal access to financial services!
Naturally I shoved other stuff aside and immediately started digging in. On the blog I found this:
But what exactly is Token?
On the face of it, Token is an Android or iOS app that does:
1. Global instant money transfers (via Ethereum)
2. Messaging
3. Acts as a platform/browser for other financial apps
In addition, Token creates a reputation system to help people feel comfortable transacting with each other (strangers).
How does this help universal financial access?
This is the part I am going to have to think more about. For a mobile money service like this (and M-Pesa, PayTM, bKash etc) to become a platform that enables financial inclusion, several inter-linked things must happen:
- Mass adoption to send and accept
- An extensive cash-handling network (so users can go in & out of cash)
- Widespread trust
- Regulatory OK or a long enough window to become unstoppable
I won’t go into each of these factors. ALL are required. None can happen without the others. Can Token become the platform or ‘rails’ for a mass service to emerge?… yes but…
Very clearly there are challenges:
1. No in-country teams to push this
2. The ‘taint’ of cryptocurrency (to a regulator’s eye)
3. Exchange rate swings in Ethereum
4. An app- rather than telco-based approach (just a ton costlier to grow)
Seems tough to gain widespread trust, and build a cash handling and acquiring network given these challenges.
Maybe the app platform will help?
M-Pesa got big through simple product + Safaricom 80% market share & brand trust + on-ground execution + regulators staying hands-off early on.
None of those are present here.
Perhaps for Token the key will be not in pushing the rails as a standalone, but the apps. If Token can get some great micro-lending apps on its rails, and the exchange rate issues can be solved (not sure how), there may be a path.
Either way, I’m excited about the convergence of cryptocurrencies, emerging markets and financial inclusion. Look forward to seeing more of stuff like this.
