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Introduction

Specification

Use cases

Microfinance

The global microfinance market amounted to $124B in 2018 [23]. 139.9 million borrowers benefited from the services of microfinance institutions, compared to only 98 million in 2009. Of these 139.9 million borrowers, 80% are women and 65% are rural borrowers. The main regions of microfinance are Latin America with $48.3B, South Asia with $36.8B, East Asia and Pacific with $21.5B, and Africa with $10.3B. In developing and emerging markets, a large segment of the population is still unbanked and more than 50% of the economy is informal. The majority of micro-businesses don’t have a bank account or access to traditional financial services. They mostly rely on support from their friends and family or they go to loan sharks charging as high as 15-20% per month. Connecting this market to the Growr protocol that provides a global decentralized micro-lending marketplace will bring efficiency in capital allocation, fair conditions, and transparency of the impact. Using the protocol, unbanked micro-entrepreneurs can apply for productive unsecured micro-loans with their self-sovereign credit record.

Agriculture finance

Currently, smallholder farmers have difficulties accessing financing for their activities due to high informality and distance to servicing providers (banks, MFIs). The financing gap is higher in rural areas with agriculture remaining largely underserved. The farmers suffer from loan sharks charging high-interest rates, thus not having much left after each season for their long-term farm development. Smallholder farmers can access the Growr protocol and apply for unsecured micro-loans by forming cooperatives and receiving credentials from regional merchants that source inputs and wholesale buyers that deliver their production.

Lending to vulnerable social groups

Vulnerable populations such as victims of violence, and natural and man-made disasters, as well as micro-merchants from poor communities, are prime beneficiaries of the protocol. Such populations can rely on memberships within local associations, who can become both credential providers and funding donors. In addition to lending, donations can also benefit from a global and open protocol such as Growr, giving the donors complete transparency of the impact of each dollar they give.

Crowdfunding

The crowdfunding business model continues to grow fast globally. In addition to the established platforms for investment in startups and product R&D, impact finance providers such as Kiva are helping micro-businesses with loans for as little as $25. Crowdfunding transition to distributed ledgers and Bitcoin is a matter of time, as the example of Kickstarter [24] and Geyser Fund [25] shows.

Islamic finance

Islamic finance forbids interest (riba) and therefore traditional interest-based lending is not applicable. The protocol may provide Sharia-compliant instruments instead, allowing borrowers to apply for funding based on risk-sharing.

Bitcoin-native unsecured lending

Bitcoin and its ecosystem have already demonstrated its great potential as a financial inclusion tool. The Growr protocol can be a complementary solution to Bitcoin-based circular economies and community custody solutions such as federated mints, by enabling groups of people to jointly apply and use credit from the decentralized marketplace. This will create a stronger incentive for more communities to join the Bitcoin inclusion movement.