Hawala meets Baki
Blockchain like most inventions is a product of necessity. The defects of the fiat financial system are a shared sentiment, and I use “sentiment” to denote that these problems vary to certain degrees in different regions of the world. Hence, the adoption of blockchain technology is driven by unique factors across economies. While developed economies would adopt blockchain for decentralization, their underdeveloped counterparts are adopting blockchain to hedge against crippling economies.
As a result of the unique needs of underdeveloped economies and the lack of economic infrastructure, the Hawala system was born. This system enables remittances and trade financing and was the backbone of many economies pre-Internet banking.
This antique representation of the Hawala system undermines its enduring nature and fails to do justice to its longstanding presence. The Hawala system continues to thrive and has embraced technological advancements to enhance its operations. It has adopted Internet banking to facilitate its peer-to-peer networks but still struggles with the depreciation of working capital, scarcity of FX, and the flaws of legacy banking systems.
The current adoption of blockchain technology in underdeveloped countries has sparked a notable trend among Hawala traders, who are embracing this innovative solution to complement legacy banking systems.
The inevitable adoption of blockchain technology by Hawala traders further underscores the system’s remarkable ability to adapt to evolving economic climates
Canza Finance takes this a step further with the introduction of Baki (DeFi) to solve and ease some of the system’s most pressing issues:
- FX scarcity: with the introduction of Baki’s on-chain currencies (zTokens) for USD and African currencies: zUSD, zNGN, zCFA, and zZAR, on-chain settlement of transactions is possible.
- Devaluation of working capital: Minting and holding zTokens earns value on idle capital while hedging against inflation.
- Lending defaults: Providing liquidity into Baki’s trustless pools ensures returns on capital
Our upcoming FX exchange, Baki, aims to build on systems already in place, by always having the ability to provide liquidity. This ensures the flow of working capital in US dollars, without being exposed to scarcity that is increasingly apparent in traditional markets.
By achieving this, Baki aims to no longer sell the process of conversion through premiums but rather allow agents and other users to seamlessly swap US dollars and African currencies.
With the integration of Baki; the Hawala system once again adopts innovation and ensures its relevance.
Baki.exchange testnet is live and you are invited to participate.
At Canza Finance, we give businesses an edge over localized limitations: currency devaluation, FX premiums, latency, high fees, and bureaucratic trad-fi models using DeFi. Reach out to us via any of our social media channels to get started.
