Young Bitcoin entrepreneur brings Silicon Valley to Papua New Guinea

A young Papua New Guinean entrepreneur is bringing Silicon Valley to PNG to help boost financial inclusion in the country.  Day One Investments’ Shane Ninai tells Business Advantage PNG of his plans to encourage the use of the virtual currency, Bitcoin.

‘For the first time in history, we have the technology to bank the unbanked,’ 25-year old Shane Ninai, Managing Partner of Day One Investments, tells Business Advantage PNG.

With only 20 per cent of the country holding bank accounts, Papua New Guinea 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 below).

Regulation critical

‘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.’

In emerging markets, Ninai told a Blockchain conference in London in January, a regulator-led 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.

Why PNG?

Ninai pointed 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,’ he said in his address.

‘Day One Investments is scheduled to close its fundraising within the next month, having secured capital commitments from a reputable anchor PNG investor along with international investors.’

‘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.

Entrepreneur program

In 2015, Ninai participated in the Kumul GameChangers 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-in-residence, 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 within the next month, 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, microfinance institutions and savings and loans societies are willing to provide loans against this shell money because they recognise it as currency,’ he says.

‘For microfinance institutions, this technology has a lot of potential and that’s where we’re seeing the most interest.’

Shane Ninai will be a guest speaker at the 2017 Business Advantage Papua New Guinea Investment Conference on 7 & 8 September in Sydney.

What are Bitcoin and Blockchain?

Bitcoin is a virtual currency and payment system, which uses a software program to record and pay for things without a third-party broker, like a bank or government. Users install a bitcoin wallet app on their phone or computer, and buy the virtual currency from a bitcoin exchange. Its promoters say bitcoin is ideal for people in developing countries, who might have mobile phones but not bank accounts.

Blockchain simply refers to a bookkeeping method that chains together entries so that they are very difficult to modify later. Among the world’s leading companies now using Bitcoin and Blockchain technology are IBMExpediaMaersk and Dell.

Posted in: Papua New Guinea

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