Stellar co-founder Jed McCaleb hit a roadblock in his mission to serve the global underbanked when earlier this month his co-founder resigned, leaving him with her responsibilities, including more frequently engaging with the public.
For a computer programmer whose career has been largely under scrutiny since he founded defunct bitcoin exchange Mt Gox, the idea of taking on a more public role at Stellar was intimidating.
After years of building a payments rail system designed to make it cheaper to offer banking services to developing nations, McCaleb said it was time for him to make the case that Stellar should be considered a leading blockchain platform for enterprise customers.
McCaleb told CoinDesk:
“We’ve spent the past two years building a product, and now we’re showing it to the world.”
Founded in 2014 after McCaleb and his then-girlfriend and co-founder Kim left another startup he founded, Ripple, the two companies have always been equated in the blockchain community, despite their differing business models.
Stellar has raised a little over $3m from Stripe to build a new distributed ledger payments rail similar to Ripple’s, but aimed specifically at serving clients in developing nations.
In contrast, Ripple has raised more than $38m from investors as diverse as Andreessen Horowitz and Santander.
Barclays in South Africa
In his first public appearance, McCaleb spoke onstage at the Exponential Finance conference with Barclays Africa’s CEO of corporate and investment banking, Stephen van Coller.
In interview with CoinDesk, van Coller described how his company is testing its prototype on the Stellar payments rail at a high school in Johanessburg, South Africa. About 100 students aged 16-years-old to 18-years-old are currently testing a minimum viable product (MVP) designed so feature phones can be used to pay for goods.
To be profitable in Africa, where the margins per customer are small, van Coller says they’ll need to be able to reach massive scale, serving customers that conduct few transactions, for smaller amounts than in more developed regions.
Coller said that to reach such efficiency his team searched for a scalable service that didn’t use existing payments rails “because that’s where the cost is today”.
But even with a streamlined onboarding process and more efficient back-end, Coller believes the work with Stellar alone won’t be enough to serve Africa’s unbanked population.
Coller said he is currently in conversations with other financial institutions interested in financial inclusion.
“Our belief is that this needs to be an open platform, rather than run by just a single bank,” he said. “Every government should be building this. They should be building cheap payment rails within their country.”
Wholesale with Deloitte
But, Barclays isn’t the only bank interested in Stellar.
In May, consulting firm Deloitte announced that it was using the startup’s technology to build a blockchain-based service for a bank outside of North America, but it didn’t share the name of the bank or in which region it is based.
In conversation, Deloitte Digital principal Gys Hyman revealed more about how his company has worked with Stellar to build a prototype for retail transactions. Specifically, Hyman said Deloitte is using the Stellar payments rail to build a prototype aimed at wholesale transactions that must reliably move with additional information, including invoice numbers and tracking numbers.
Throughout the construction of the prototypes, Stellar’s role has changed, according to Hyman.
While Stellar played a very hands-on roll during the creation of the retail prototype, Hyman said the startup is now more involved with oversight and quality assurance.
Hyman says there are now other customers, “mainly banks” with which he is currently in discussions, adding:
“From a Stellar integration point, we’re ready. If a customer were to come to us tomorrow, we’re ready.”
One country at a time
As part of his increasing presence in the public eye, McCaleb has spent the past two weeks touring around Nigeria to visit with partners and demonstrate the new technology.
Otherwise, he said the company’s strategic plans are unchanged.
In May, Stellar published a company “roadmap” for how it plans to achieve its goal of serving the roughly 2.2 billion people in Africa currently without adequate banking services, one country at a time.
“We’re mainly focused on Nigeria because I think it’s important to start in one particular region and achieve ubiquity there,” said McCaleb. “Because we’re starting a network and you need to be able to send money to people you know.”
The first phase of the roadmap, to build a codebase for developers, was completed last November. The second phase, to integrate with money services providers licensed in each nation, was formalized on Tuesday with a challenge aimed specifically at attracting banks and licensed money-service transmitters.
The third phase is to bring the product to end users.
McCaleb told CoinDesk that this means Stellar will continue to eschew the sort of high-value, developed market use cases that have attracted his peers in the blockchain space.
He concluded:
“I think that one of the most powerful things that this technology is going to do for the world is actually get everybody into the same financial network.”
Image via Michael del Castillo for CoinDesk