Xentavo, a Miami-based startup, wants to convince Belize, the Dominican Republic and other small countries to use blockchain for government services and eventually create their own national cryptocurrencies.
Xentavo has already signed memorandums of understanding with three potential “small state” customers to use its platform, although it would not identify them. The World Bank characterizes small states as countries or nations with populations of fewer than 1.5 million people, limited human capital and a confined or isolated land area. Besides Belize and the Dominican Republic, other examples could include Iceland, Malta, Qatar and Swaziland.
Describing itself as a blockchain framework for sovereign digital cash systems, Xentavo said it can initially facilitate payments in small states with its Xen token. Those nations’ governments can use the technology to manage smart contracts for various services and to eventually create their own national cryptocurrencies.
Why Small States?
Blockchain projects are already underway in governments of large countries such as the U.S., but they are mostly at the state level, including in and . Robert Koenig, Xentavo’s founder and CEO, tells ThirtyK that blockchain adoption may prove more feasible at the federal level in smaller countries. That’s partly because these nations tend not to have big bureaucracies that can slow the decision-making process.
The World Bank has identified 50 small states globally. Concentrating on those customers could give Xentavo a head start on vendors that primarily target large enterprises or government entities.
“They have to go through Europe because there’s no American correspondent bank left,” he says. “As a result, business life can be very difficult. If you’ve got a local currency on a blockchain, you can issue a loan within seconds.”
Small states like the Dominican Republic, meanwhile, lack strong land registry systems, Keonig says. That means someone can claim to have bought a property even if someone else has been living on it for generations. “As an individual, you have no means to argue otherwise,” he says.
Civic Service Transformation
Besides land registration, Xentavo says blockchain could also be a way for small states to replace, consolidate or optimize an array of other essential government services, from birth certificates and vehicle registrations to government procurement.
In some small states “the perception of corruption is there,” Koenig says. “Using blockchain in an area like procurement will ensure they have the transparency they need to address those perceptions.”
Small states also need mechanisms to secure financial support or charitable donations in the wake of natural disasters such as Hurricanes Irma and Maria, which devastated in the Carribean last year, Koenig says.
When working with small states, Koenig says one must be careful to show that they can rely on the technology. That’s why Xentavo plans to have its customers use its Xen token first before developing something more proprietary.
“We cannot afford any mistakes whatsoever,” he says. “If someone is able to break or do something inappropriate on the Xen chain, that can close the door to other opportunities.”
One of Xentavo’s advantages may be in targeting its offering to a niche market. The World Bank has identified 50 small states globally. Concentrating on those customers could give Xentavo a head start on vendors that primarily target large enterprises or government entities. “I don’t think (other vendors will) be able to scale down what they’re doing quickly enough,” he says.
Xentavo’s goal is to have two completed customer projects in place and at least four memorandums of understanding made public by the end of this year, Keonig says.