Blockchain, Identity, Chamas and Africa: A Q & A with Ian Grigg

Way before bitcoin and the blockchain, Ian Grigg was part of a vibrant group of pioneers that pursued the vision of digital cash and financial cryptography in the 90s – what is now call blockchain. It is an understatement to say he has seen it all.

Ian grigg

By God! There is too much noise in the blockchain industry. I know because I live it everyday; have been living it for the past 5 years.

Over time, I have devised a method to navigate and filter out the practical and realistic from the bold, utopian-dream proclamations. The trick is to seek out and follow the more sober-headed minds in the industry; these are the older wiser tech heads and the level-headed critics in the industry.

Ian grigg is one of them.

Ian Grigg is an architect and financial cryptographer who has been building, auditing and consulting for cryptographic ledger platforms for over 20 years. Way before bitcoin and the blockchain, he was part of a vibrant group of pioneers that pursued the vision of digital cash and financial cryptography in the 90s – what is now call blockchain. It is an understatement to say he has seen it all.

He is mostly known for 3 accomplishments (amongst others)

Co-inventor of the Triple Entry Accounting Ledger, a concept that sparked the explosion of a $400 billion Bitcoin, cryptocurrency and blockchain industry – bitcoin is the world’s first triple ledger entry system at scale.

The inventor of the Ricardian contract, a canonical design pattern for tying legal contracts into digital assets issued over the internet. His work on Ricardian Contracts foreshadowed today’s blockchain smart contracts.

Confirming the identity of 2 of the members of the team Satoshi Nakamoto that birthed Bitcoin – Craig Wright and Dave Kleiman

More recently, Ian was an architect consultant for one of the world’s largest consortium based distributed ledger protocol, R3 Corda, formed by 43 of the world’s largest banks, a partner at the $4 billion EOS blockchain for business and commercial scale and an audit consultant for Senegal’s Digital Currency roll out masterplan for Francophone Africa, serving under eCurrencyMint on behalf of Omidyar Network.

Today, Ian is a cofounder and Chief Technology officer at Chamapesa, a project using blockchain elements to digitize the indigenous culture of social savings and investments that is prevalent across Africa and the developing world. Ian believes the Chama groups of Kenya and savings groups communities in Africa and Latin America hold the key to designing identity systems for a blockchain powered internet economy.

So when Ian speaks, you listen and pay attention.

I managed to lock him down for a question and answer session, probing his mind on Blockchain, Identity, Chamas and Africa.

Whatever your opinions, what follows is one of the best bits of wisdom  you will come across on the interwebs.



What is identity?

There is no single succinct answer for this. Historically, there have been four schools of thoughts on identity

  • Identity granted to you by the state: I am who the state says I am
  • Corporate Identity: I am the collection of corporate records
  • Self: I am who I think I am
  • Community/chama: I am who my friends say I am

This is a useful framework but I am unconvinced the set is complete.


Why is identity a hot topic of discussion right now?

Identity is a hot topic today for a number of reasons:

The Anti-Money Laundering (AML)/Know Your Customer (KYC) approach by banks, financial institutions and money transmitters has been tried for too long but proven too expensive. It fails to achieve its headline objectives, and doesn’t work for neither the consumer nor the banks. Something better is required, but the pressure continues to mount

A McKinsey report from around 2015 put growth of compliance – primarily related to AML/KYC – at 20% per annum over a 15 year period.  This is unsustainable.

The assumption by authorities is that more failure needs more identity.


What do you think people (technologists, lawyers and government’s, policy makers etc) get wrong about identity?


  1. Understanding:  Astonishingly few people have a useful notion of identity.

Authorities tend to fall on the state-driven notion of identity documents like IDs and passports. Unfortunately, it is a poor basis for security because identity documents, such as passports, can be easily bought on the black market which undermines security.The sale of identity documents in many countries is pretty rampant – Visas in Africa, refugees in Europe and bars in the USA – but security analysts are blind to it.

Technologists fall on the public – private key notion of identity.  But this too has its fair share of problems. It has never worked because, although a private key can control an asset, the rest of the legal work to make it happen has not been widely understood.

If we look back to history, the digital signing process of the 1990’s was a complete failure, and (yet) today, digital signing is typically accomplished by scrawling on a display.  

The much talked about ‘success’ of Scandinavian countries like Estonia, worked because it mandated a country-wide approach; but it still fails at working outside of the Scandinavian boundaries.

Until technologists get out of their tech box and understand the social convention that is identity (and signing), they are lost.


  1. Skin In the Game: There needs to be skin in the game.

The problem with all identity systems to date is that the liability for the statement that has been made has typically been dumped on the consumer. Pretty much all popular / big identity approaches fail because they do not allocate the liability fairly. So in the end, all the costs and risks fall on the wrong players. These players in turn, do not support the system and it bogs down.

For example, today banks require expensive KYC on users. Users are asked for the same thing over and over again, with no thought as to their costs. So their time ends up being wasted and never compensated.  The result is economic sclerosis which is happening in Britain as business moves to grey market (cash) dealings because it is practically difficult to get a bank account.

We need to be able to have the liability that says, “If I have checked your passport and I say your passport is who you are,” and somebody comes and relies on that and they lose their house, I am liable for that statement.” – Ian Grigg on mattereum blog


Why does everyone want to put identity on the blockchain?

Everyone “knows” that identity is a huge problem.  Everyone “knows” that blockchain is the miracle solution.  Obviously … blockchain can not solve identity. Of course this is wrong.

Blockchain is one of the most limited inventions in computer science.  But it solves one of the most interesting problems. So it is both rapidly enabling in its tight parameters and brittle outside.

Blockchain has created an entirely new space which has drawn the rift brightly between the old world and the new.  Blockchain is insecure and has poor identity – the assumption of many is that Blockchain would be secure if there was identity.

Identity on blockchain fails for one fundamental reason – privacy.  Seen from the “excessive” lens of GDPR, the newer European data protection regime, putting *any* identity or privacy-effected on the blockchain risks the poster with future liabilities.

There are of course other reasons why blockchain and identity don’t mix.  But as time goes on, many discover that many applications *in blockchain* aren’t working because of that easy drug-fix: identity.  So, it isn’t that we need identity. It’s that blockchain applications need identity, like a drug addict needs another fix.


What does identity have to do with money?

Bugger all (nothing).

Cash works fine without identity.  None of the 1990s (digital cash) designs depended on Identity.  Only access-control mechanisms issued by large institutions need “identity” but actually the reasoning is deceptive.

All larger institutions follow a notion that identity will stop money laundering.  This first order thinking, of an academic or bureaucratic policy making, is false. In practice what “identity against money laundering (ML)” really achieves, is to shift the burden to corrupting the agents

Take for example phishing.

When banks shifted to using bank accounts and borders as guards against phishing, what the phishers did was to shift their attack to corrupting other people to wash the funds. The phishers would offer “online jobs” to people with bank accounts, and as the phish would work, the money would be sent to this worker-mule, who would then follow their instructions – do their job – and send the money offshore. Thus evading the banking security barriers.

The end result is that the phishers have to work a bit harder, and there are now three victims instead of two. As it is still profitable, and phishing makes profitable money, the cost to phishers is no impediment but the loss to society has increased.

This is also seen in all anti money laundering operations. Once AML is up and going and has power, the office that dispenses that becomes an obvious target. In the West it becomes a honeypot for thieves, and in the developing world it just becomes more corruption and more power instantly, there is only a shift in power upwards to the criminal.

These cases from Kenya where KSH 9 billion worth in corrupt scandals was funneled via the banking systems is a great example

CBK holds crisis meeting over involvement of banks in NYS scam

How weak NYS systems led to theft of billions

Nearly half Kenya’s banks handled NYS Sh1.6bn dirty cash

Three banks fined Sh3 million for NYS cash transfers

Where before, money was clean and criminals were criminals, now, transmitters are criminals, and the criminals seek to corrupt anyone who could be a transmitter.  Mules, corporations, banks – all of them.


One thing about Chamas/Chamapesa that is not obvious at first glance is its unique approach online identity. What gets you excited about the Chama approach to identity?

I’m more interested in the assets myself but that’s a topic that few people get into.

The interesting things about the identity is that it might finally support long distance trade (and commerce).  This is how it is done in Africa anyway – by checking on chamas in the area of your supplier, buyer. But this will ultimately move to the provenance of the chamas, to be attributes in the digital mesh of identity.

The small group of known, trusted people with skin in the game is the beating heart of community/chama identity


You also seem to think we can export this idea of Chama identity to the online world. Why do you think it matters? Why are Chamas and/or Chamapesa important for online communities?

Identity isn’t nearly as important for chamas as the online world.  That is in large part because chamas have solved the problem, and they’ve had to do that on their own ingenuity.  Their solution is so strong it is actually quite hard to see, to appreciate, to feel. It’s not as if  “oh, today, the identity broke again, let’s fix it…”  For chamas, identity is like oxygen, there is enough for all to go around and nobody really bothers.

But the online world is suffocating for identity.  In two ways:

One is that everyone thinks that ‘identity’ will solve our security problems.  It won’t or at least that which everyone pushes won’t, but this is just too hard to get across.  This then becomes the reason identity is so important for the online world – the world at large is going to push its flawed notions of identity and do more damage.  So it’s about limiting the damage – if we can get a working model in place, then we can limit the damage done by a flawed models.

The second way is that identity – useful notions of identity – can open the way to much bigger trade opportunities.  This is an enabler effect. These possibilities aren’t really alive because although people feel the closeness, they don’t know how to make them happen, and don’t recognize why their efforts fail.  This is like the mPesa effect. It was a noddy system, but it created a capability that simply wasn’t there in the past, it solved the payment leg of the supply chain, and that was worth a huge amount.  So in a sense, to use a metaphor, Chamapesa could supply that “mPesa of identity” effect.


What can Chamapesa do for the world?

Outside the developing world, there are few chamas – mostly because they are not needed.  People can for the most part save and safe store money, with some exceptions such as 2008, repeated bailouts and losses of the mediterranean nature, AML seizures. These are still ‘hidden’ from investigation although their causality is starting to become apparent with things like Trump & Brexit.

It is however pretty clear that as the financial conditions get worse, the use of alternates such as chamas increases in popularity, much the same as with cash and local monies.

There are a few use cases we have seen:  crypto chamas because holding crypto is substantially tricky and groups can handle this better.  Which again is pioneered in Nairobi. There is also the possibility of distance chamas, which are likely more popular to western audiences in contrast to say Africans, who understand the value of in-person meetings.

I think to a large part Chamapesa can solve things in communities driven by developing world circumstances – especially say trade supply lines, starting with the developing world end.  Too hard to get into that for now, but the mistake is to start from the Western end of town.


Speaking about Africa, what would you say are the top 3 quirks you have identified between the West and Africa?

Westerners don’t understand Africa.  They come along and look and assume that their models work.  But they do not see that Africa is different at all levels. So they try their models and they fail, but they never quite fail enough to tell the Westerners that it was they that were wrong.  Instead, Western assumption of superiority tricks them into thinking that they should just try harder, more, better.

Corruption runs at a higher level.  Corruption is a major driver of daily activity.  People’s businesses and lives are structured to a much higher degree around the corruption level, and many businesses are simply not possible because of the level of corruption This is very hard for the west to understand.


What did you stumble upon in your foreign adventures in Kenya and East Africa?

The transport system is very interesting – made of smaller units, but working to a standard model.  Matatus, tuk-tuks, boda bodas etc.

Understanding how the corruption reaches into every corner was fascinating.  

The NGO sector and how it was corrupted was interesting because the same thing happens in the Caribbean, and there it is laid out in an old novel from the 1950s called Don’t Stop The Carnival by Herman Houk. I read this book at a very young and thought it was hilarious but when reading it in the Caribbean, it took on a darker aspect as it described how the corruption was self-inflicted.


What is the future of identity?

We are in the early battles of the state/nation fight for panopticon view over identity against the underground or grey world.  The former is Facebook & Cambridge Analytica, mobile phones as tracking, agencies tracking and Chinese good citizen ratings. The latter is the developing world, the grey economy, the cryptocurrency trading world.

It is a dynamic battle.  There are winners and losers.  The West has won most of its battles and taken its chosen ground, but is now exposed in a salient of its own making – the impending collapse of the banks from the inside due to the perpetually rising cost base. As the banks get squeezed by more and heavier compliance, their finances enter a deadly embrace.

Meanwhile, the blockchain sector has left a deadly trail of data and theft which could also put its economics into deadly embrace, yet as regulation encroaches by e.g., requiring KYC/AML over exchanges, the border is pushed out to put exchange inside.  

Meanwhile, the developing world is advancing but only by organic growth, which is markedly slower but more resilient than the growth of the banks cancer and the blockchain moonride because there is substance in that growth.

Who will win?  Who will lose? Hard to predict… but it probably matters.

A safe form of identity might play a big part in that future.


Thank you Ian for your sage wisdom!




Recommended readings and listening from Ian


Chamapesa Overview on Youtube

Ian’s website and blog 

Ian Grigg and Vinay Gupta “Mattereum, Chamapesa and dispute resolution” 

EOS Blockchain: An Introduction

Identity As an Edge Protocol

Podcast: Bitcoin & a Little Bit of History Repeating?

Podcast: Bitcoin: A Disruptive Innovation

Podcast on Ricardian Contracts, Blockchain And Digital Assets Prehistory

Corda: An introduction

The Ricardian Contract

Legal Analysis of a Governed Blockchain



Author: Michael Kimani

Consultant, Entrepreneur, Researcher, Writer, Digital Assets Investor and Trader,

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