Social Currencies In Brazil: Blockchain's Newest Frontier?

Forbes

2 days ago

Despite their obvious applicability, social currencies have yet to be fully-explored in the context of blockchain use cases.
The last crypto cycle saw a variety of experimentation with the concept, but these attempts ran into product-market fit and regulatory barriers, and thus have not ascended into the mainstream consciousness.
Builders in Brazil, however, think they have the right ingredients to deploy blockchain-based social currencies in the real world, specifically in communities that already have a tradition of adopting such alternatives
A new partnership between Chainlink, Plexos Institute and the EDinheiro Insitute aims to bring greater financial services to underserved communities in the country by introducing a blockchain layer on top of these existing social currency networks.
Community Currencies: As Old as Civilization
Social currencies have been around as long as human civilization, and are typically designed for acceptance and usage by specific people for specific purposes within a specific geographic region or online community.
Think 'dining dollars' issued to college students as part of a meal plan, where students can redeem the funds for meals on campus or at participating restaurants in the neighborhood, but can't spend them in the next town over.
Yet, while blockchain technology makes it quite simple to mint, transfer and burn currencies (anyone with basic skills can launch a new token on Ethereum or Solana), we haven't seen too much real world experimentation vis-a-vis other types of blockchain applications.
Early social token platforms like Roll and Rally let creators launch their own tokens to reward followers and incentivize engagement. While these platforms achieved some success, they ultimately didn't pan out due to regulatory and product-market fit issues.
Other projects like Friends with Benefits and Seed Club have also experimented with social tokens with a community governance function.
Crypto media company CoinDesk experimented with a social token of its own called DESK in 2021-22. The token functioned as a loyalty reward for participation in activities at CoinDesk conferences, and could be redeemed for NFTs and other types of swag and exclusive access.
Brazil as a Prototype?
Can blockchain-based social tokens find a home in the 'real world'? Local builders in Brazil think so.
That's because Brazil is already home to more than 180 social currency experiments that have been ongoing over the last 30 years. These have been facilitated by the EDinheiro Institute - a platform that allows communities to issue and redeem currencies with a baked-in legal framework.
These currencies are used to distribute social aid and benefits, promote local commerce, stimulate cash-scarce local economies and provide financial access to persons and businesses at the fringes of the traditional banking system.
Camila Rioja, President of the Plexos Institute, is leading the initiative to introduce blockchain into these existing currency networks, which, importantly, come with pre-existing consumers and merchants.
For its first experiment, Plexos, alongside Chainlink and EDinheiro, is creating a new blockchain-based social currency called Aratu in Indiaroba, a small community in Brazil's northeast region.
Rioja told me that the social currency concept makes sense in this scenario because the model has already been proven out locally:
Reinforcing the Local Economy
Unlike speculative crypto tokens, Aratu and Brazil's other social currencies are pegged 1:1 to the Brazilian real, governed by local municipalities, supported by local banks, and designed with legal structures that prioritize community autonomy.
Revenues generated through transaction fees - typically 2–3% - are reinvested into local funds rather than extracted by global payment processors.
'This is money that stays in the community. It's not flowing out to Visa or Mastercard,' Rioja explained.
Why Blockchain?
If the existing system works fine, why introduce blockchain into the equation?
The simple layer is that blockchain adds new layers of transparency and efficiency. In this case, Chainlink's Runtime Environment acts as a secure connective tissue that enables features like automated reporting, compliance with Brazil's data protection laws, and potentially new forms of community governance on how funds are distributed to the community.
Thomas Trepanier, Head of Business Development LATAM & Canada at Chainlink Labs, said in a statement that Chainlink is uniquely able to bring transparency, accessibility, and connectivity to Brazil's social currencies.
João Joaquim, Coordinator at EDinheiro Institute, echoed that:
Adding a blockchain layer onto these social currency systems ultimately opens the door for more programmability and advanced products enabled by smart contracts, Rioja explained:
Community currencies are already distributing benefits like housing support and food subsidies, but 'with blockchain, we can track those flows, validate them publicly, and start thinking about new financial primitives: credit pools, microloans, or even real estate financing.'
Legal frameworks currently dictate how funds are paid out, however, so any advanced use cases like these would require legislative reforms, but blockchain integration is the first step towards these objectives.