A lot of the world’s consideration round blockchain is on the highs and lows of cryptocurrency values. Startups like FlexID remind us that distributed ledger expertise has the potential to play different roles, together with offering trusted records of identities with out the necessity for a centralized authority.
One of many startups working in direction of this imaginative and prescient is Zimbabwe’s FlexID, which is constructing a blockchain-based id system for these excluded from the banking system as a result of their lack of id paperwork. FlexID’s thought has won it funding from Algorand, a blockchain protocol created by Turing Award-winning cryptographer Silvio Mical. The 2 events didn’t disclose the scale of the funding.
African nations have made nice strides in selling monetary inclusion over the previous decade, nevertheless it’s nonetheless early days. Greater than 60% of adults in sub-Saharan Africa are unbanked, in keeping with World Financial institution estimates for 2021.
A number of years in the past the numbers had been starker. In Zimbabwe, as an illustration, solely 30% of the grownup inhabitants had entry to any monetary companies as of 2014. The variety of financial institution accounts within the nation stood at 1.5 million in 2016.
There’s a common conception that growing entry to monetary companies in a rustic results in enchancment in folks’s financial welfare. And that’s what the Zimbabwean authorities sought to perform when it launched a financial inclusion scheme from 2016 to 2020.
The hassle achieved some success: the proportion of the Zimbabwean grownup inhabitants with entry to monetary companies elevated to 55% whereas the variety of financial institution accounts rose to 8.5 million in 2020.
Nonetheless, there’s nonetheless loads of work to be carried out on this regard. When folks have little or no confidence within the monetary system, or they don’t know sure monetary companies that meet their wants exist or they don’t have formal identification paperwork to hunt these companies, reaching optimum monetary inclusion can show herculean.
These are points that have an effect on Africa and rising markets, not simply Zimbabwe. FlexID’s self-sovereign id (SSI) platform takes a decentralized strategy and provides customers management over their private data — not frequent in Africa the place different upstarts present centralized options, corresponding to Smile Identity, YC-backed Identitypass and Dojah.
With funding from Algorand, FlexID goals to make its decentralized id community obtainable in rising markets the place over one billion persons are estimated to lack formal identification, the startup stated in an announcement. Zimbabwean serial entrepreneur Victor Mapunga based FlexID in 2018 out of his frustration with the banking system.
FlexID is giving customers a blockchain pockets that shops their verificable credentials. Verification is completed on-chain by means of Algorand, which payments itself as an answer to the blockchain trilemma of safety, scalability, and decentralization. FlexID can even be integrating with different Algorand decentralized apps (dApps).
FlexID’s funding from Algorand comes at a time when African blockchain startups are pulling in large sums from traders. A recent report stated over 40 African blockchain startups raised a complete of $127 million in 2021. This yr has already seen some eye-popping investments corresponding to Mara’s $23 million seed round from traders like crypto alternate giants Coinbase and FTX.
Although FlexID supplies service within the id house, the overarching sector its answer and most blockchain platforms fall beneath is fintech. Corporations like FlexID are lowering folks’s dependency on money and remittance charges through crypto, decreasing obstacles to establishing an account through crypto wallets, and addressing the continent’s documentation problem.