What is ROSCA and how can this be done at Digix?

ROSCA stands for Rotating Savings and Credit Association. This was a simple financial leveraging tool used in unbanked communities, where N families would pay in X amount of money for Y days, and receive X*N payments every Y days.

There is no reliance on a financial institution for such a service. There could be a fund collector, who may take a cut for providing collection and disbursement services, or it could just be the appointment of a family as a trustee. Faced with the pressure of social shame and the proximity among neighboring families, defaults rarely occur without good reason.

Enter the blockchain. ROSCA can now run freely across borders. An internet clan, an interest group consisting of users from different countries, can basically set up a ROSCA on the blockchain. Trust of disbursement is coded into a smart contract and deployed onto Ethereum.

Of course, the issue of default still remains. In this case, having a solid trust within users in a ROSCA is important. ROSCA groups are scalable on the blockchain, but the actors within a ROSCA group may not be.

If someone has a solution to solving this, ROSCA could be a big thing with digital currencies, such as Digix gold tokens.