Affordances of Digital and Blockchain-based Community Currencies: The Case of Sarafu Network in Kenya

TL;DR

This study explores how digital and blockchain technologies have enhanced community currencies in Kenya, improving economic facilitation but also introducing complexity challenges.

Contribution

It provides a detailed case study of Sarafu Network's digital and blockchain evolution, highlighting specific affordances and trade-offs involved.

Findings

Blockchain enables automation of tax calculations.

Linkage to mainstream currency via stablecoins enhances integration.

Digitalization improves transaction functionalities.

Abstract

Community currencies (CCs) have been adopting innovative systems to overcome implementational hurdles from issuing paper currencies. Using a qualitative approach, this paper examined this digital transition of Sarafu Network in Kenya and its predecessor CCs as a case study. From the original vouchers launched in 2010, the foundation Grassroots Economics introduced a digital interface in 2016 that operates on a feature phone, and then integrated blockchain technology starting in 2018, undergoing several migrations before becoming settling on its current iteration called Community Asset Vouchers on the Celo blockchain since 2023. Using affordances from human-computer interaction, the research shows that digitalization and blockchain improved the facilitation of economic activities of the local communities, both their typical market transactions as well as traditional reciprocal labor exchanges, by offering more functionalities compared to the analog version of Sarafu. The unique contributions of blockchain include enabling automation of holding tax calculations and linking the vouchers to the mainstream monetary system via stablecoins facilitated by a series of smart contracts also known as the liquidity pool. The study also finds that there is an inherent trade-off between blockchain benefits and user interface complexity. Hence, balancing innovation and community needs remains a challenge.