Cur­rency for the fu­ture

PNG en­tre­pre­neur’s push for Bitcoin

Paradise - - Contents - Shane Ni­nai will be a guest speaker at the 2017 Busi­ness Ad­van­tage Pa­pua New Guinea In­vest­ment Con­fer­ence on Septem­ber 7 and 8 in Syd­ney. See png­in­vest­ment­con­fer­

Ay­oung Pa­pua New Guinean en­tre­pre­neur is bring­ing Sil­i­con Val­ley to Pa­pua New Guinea to help boost fi­nan­cial in­clu­sion in the coun­try.

Shane Ni­nai, man­ag­ing part­ner of Day One In­vest­ments, is en­cour­ag­ing the use of the vir­tual cur­rency, Bitcoin. “For the first time in his­tory, we have the tech­nol­ogy to bank the un­banked,” 25-year old Ni­nai says.

With only 20 per cent of the coun­try hold­ing bank ac­counts, PNG is an ideal place to cre­ate an alternative low-cost bank­ing sys­tem, he says, but notes it is likely to take up to 10 years be­fore the tech­nol­ogy will be­come fully main­stream in PNG.

That tech­nol­ogy is built on two emerg­ing, in­ter­net-based plat­forms: the Bitcoin vir­tual cur­rency and Blockchain, which man­ages on­line trans­ac­tions (see def­i­ni­tions next page).

“The first step (in PNG) is to cre­ate all the reg­u­la­tory ‘sand-boxes’,” says Ni­nai, “which in­volves hav­ing the Bank of Pa­pua New Guinea ex­per­i­ment with this new tech­nol­ogy.”

Ac­cord­ing to ABC re­ports, the Bank of PNG and an Aus­tralian aid con­trac­tor are look­ing at how Blockchain could dra­mat­i­cally im­prove PNG’s low rate of fi­nan­cial in­clu­sion. The Aus­tralian Gov­ern­ment has al­lo­cated $AUD200,000 to help the bank investigate the pos­si­ble ap­pli­ca­tions of Blockchain tech­nol­ogy.

In emerg­ing mar­kets, Ni­nai told a Blockchain con­fer­ence in London in Jan­uary, a reg­u­la­torled model is the only way to en­sure that these sys­tems have value and are trans­acted at scale. The reg­u­la­tors’ ap­pre­ci­a­tion of this in­no­va­tion and a will­ing­ness to ex­per­i­ment is key.

Ni­nai points out that PNG is a coun­try de­pen­dent on close hu­man re­la­tion­ships – where $5000 dol­lars in cash may not mean as much as three pigs and a shell neck­lace.

“In­for­mal and alternative economies and gov­er­nance sys­tems … are deeply in­grained in our cul­ture and are still alive and well; and the Blockchain al­lows us for the first time to cap­ture this ac­tiv­ity.”

“In­stead of try­ing to fit the un­banked into a nar­row fi­nan­cial sys­tem, Blockchain al­lows us to cre­ate and cap­ture these alternative eco­nomic sys­tems that by­pass nor­mal mar­kets.”

Ni­nai says that while this tech­nol­ogy has taken off in the US and Europe, the real value is to fig­ure out how to get it to scale in de­vel­op­ing na­tions, where peo­ple are most ex­cluded from for­mal fi­nan­cial sys­tems.

In 2015, Ni­nai par­tic­i­pated in the Ku­mul Game Chang­ers en­trepreneur­ship pro­gram, where he was se­lected for the highly com­pet­i­tive Sil­i­con Val­ley en­tre­pre­neur­ial

ac­cel­er­a­tor pro­gram at Draper Uni­ver­sity. Af­ter grad­u­at­ing, Ni­nai joined Draper Uni­ver­sity staff as an en­tre­pre­neur-in­res­i­dence, men­tor­ing some 170 in­no­va­tive com­pa­nies.

Co-founder of Day One In­vest­ments, a Sil­i­con Val­ley-based ven­ture cap­i­tal fund in­vest­ing in Blockchain tech­nol­ogy com­pa­nies, Ni­nai’s part­ner is Tim Draper.

His com­pany, Draper As­so­ciates, aims to trans­form in­dus­tries with new tech­nolo­gies, and to build plat­forms for ex­tra­or­di­nary growth, jobs, and wealth creation.

Ni­nai says Day One In­vest­ments is sched­uled to close its fundrais­ing soon, hav­ing se­cured cap­i­tal com­mit­ments from a rep­utable an­chor PNG in­vestor, along with in­ter­na­tional in­vestors.

He says he has iden­ti­fied East New Bri­tain Province, where shell money is a form of ac­cepted cur­rency, as a po­ten­tial pi­lot province.

“To this day, micro-fi­nance in­sti­tu­tions and sav­ings and loans so­ci­eties are will­ing to pro­vide loans against this shell money be­cause they recog­nise it as cur­rency,” he says.

“For micro-fi­nance in­sti­tu­tions, this tech­nol­ogy has a lot of po­ten­tial and that’s where we’re see­ing the most in­ter­est.”

East New Bri­tain Province, where shell money is a form of ac­cepted cur­rency, is a po­ten­tial pi­lot province.

Shane Ni­nai … “PNG is an ideal place to cre­ate an alternative low- cost bank­ing sys­tem.”

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