Banking on New Ventures

Want to Make Change? Look to Canadian Cryptocurrency

Why It Matters

The world of impact will need to understand the potential of cryptocurrency, from fundraising professionals in charities, to entrepreneurs raising money. Impak, which launched a cryptocurrency about a year ago focused on the impact economy, reflects on what they learned and why we should prepare for a new finance era.

In late 2016, a startup called impak Finance launched with an ambitious mission: to create Canada’s first socially responsible bank. Impak raised more than $1M in a novel equity crowdfunding campaign, offering actual shares in its ownership to anyone who believed in the possibility of a new social economy.

Their vision was to turn the traditional functions of a bank—to take in deposits and investments, and lend out to borrowers—into one that factors in social, environmental, and financial returns.

For a few hundred dollars, I joined hundreds of others and became a shareholder in this new venture.

One year later, in the fall of 2017, impak Finance undertook another first for a Canadian financial institution: it created its own cryptocurrency, based on the same blockchain technology that powers Bitcoin. Similar to initial public offerings, or IPOs, tech startups have taken to raising money by issuing and selling cryptocurrencies through Initial Coin Offerings, or ICOs.

As an early investor in impak, I was rewarded with a handful of brand new MPKs—impak’s name for its digital currency—but had no idea what to do with them. To find out what this all means, I interviewed Paul Allard, impak’s co-founder and CEO.

Impak. The startup is hoping to work toward a fairer, greener economy. Learn more at Future of Good.

What is impak Finance and what do you hope to achieve with this venture?

Our goal is to rethink the role of money to build a fairer economy and healthier planet. Our mission is to channel capital toward the impact economy through consumption, investment, and banking.

 

How do you do that?

Our core expertise is qualifying the social impact of businesses, which we do through a semi-automated online process we have developed based on a methodology related to the 17 UN Sustainable Development Goals. For consumers, we are launching a mobile application that serves as a personal impact consumption wallet, which makes responsible spending easy by featuring impact-qualified businesses, and rewarding consumers each time they spend in the impact economy with MPKs.

 

What problem were you trying to solve with a cryptocurrency that couldn’t be done with the Canadian dollar?

Typically, money is created with debt in the financial economy, a process we consider to be a major flaw for the “real” economy and the people living in it. We want to encourage and reward the triple bottom line value creation in a way that couldn’t be done with regular currency. Every time a transaction happens within impak.eco, a percentage goes to the purchaser, like a cash-back rewards program, except this rewards purchases with a demonstrated positive impact for people, planet, and profits.

 

Walk us through how this actually works as a currency: Does MPK experience things like inflation and valuation fluctuations?

A currency only exists if citizens trust that it is worth something, and we needed to see if a large enough community would support this initiative, so we launched the ICO in September 2017, which was a great success. The impak Coin valuation is determined by a public algorithm and published once a week, automatically preventing speculation. To avoid inflation, value fluctuation, and other price instabilities, the variables of this algorithm will be monitored and adjusted by the MPK governance body, an independent body appointed by our board of directors and an independent collective governance board.

 

How is an MPK better or different than other popular cryptocurrencies out there, like Bitcoin?

The MPK is the first stable cryptocurrency designed specifically to support the growth of the impact economy. With MPK, transactions take a few seconds versus 10-40 minutes for Bitcoin, or four to seven days for credit card. And because values alignment is a major part of our DNA, MPKs are several thousand times more energy efficient than Bitcoin in terms of the computing power required to create and maintain the system.

 

What are the opportunities, risks, and blind spots we need to look out for in 2019 and beyond?

The ever-growing interest of institutions for cryptos will help the public gain confidence in using this type of currency. In the impact world this means a recognition of the impak Coin as a catalyst for impact businesses and impact-oriented citizens and investors. We, as a transparent company, need to inform mainstream consumers about the essential need for the impact economy to grow big and fast. We are not the only impact economy warriors around and we have the firm intention to team up with them all to benefit the people and the planet.