Crypto startup Pigzbe is reinventing the piggy bank for kids

A new company called Pigzbe, based in the U.K., wants to make it easy for family members to send money to kids.

"Pigzbe is a digital piggy bank for children that works with cryptocurrencies," said founder and CEO Filippo Yacob. "It's a product that aims to reinvent the piggy bank for the 21st century."

Yacob saw many problems with the physical piggy bank. For example, to add money to a child's actual piggy bank, you'd have to show up in person to drop the coins. Plus, adults don't always carry change.

He wanted to remove some of these problems with physical money and came up with the idea for Pigzbe after witnessing a skype session between his son and father.  

"My son's granddad was showing him a coin," Yacob told Spark. "He was asking him, 'Have you been a good boy? Have you made your bed?'"

Yacob's son said yes, and his grandfather said he was going to give him the coin when he sees him.

That got Yacob thinking. What if grandpa could send money immediately so that his son would get rewarded right after having done something right?

Actually, I would really like to have my kid use a payment app so I don't have to find coins when she wants to buy milk and popcorn in school.- Andreas Park

The solution Yacob and his team came up with is a cryptocurrency called Wollo. Using Wollo, which is created by Pigzbe, family members can send money to their niece or grandchild in three seconds, no matter where they are thanks to the digital property of cryptocurrencies. The transaction cost is also tiny, according to Yacob.

"For 30 cents, you can make 100,000 transactions for amounts as small as a quarter to as big as a million dollars."

How it works is that instead of sending fiat money to a child, family members would have to first convert their money to Wollo. The child would receive the money in wollos and be able to spend them on candies and shoes, for example, at Pigzbe's partner stores in the real world, explained Yacob.

Andreas Park is an associate professor of finance at the University of Toronto. While he agrees that cryptocurrencies make it easy to do borderless transactions, he's not sure about some other aspects.

One thing that concerns him is possible high conversion fees.

"In terms of the Wollo movements, it could potentially work really well," said Park. "The real problem arises whenever you would need an interface with the normal economy."

Because grandparents and parents don't earn their salaries in Wollos, you will have to convert your fiat money into Wollos, he explained. "That could potentially be quite expensive."

Additionally, he's hesitant to let his child use Pigzbe because of the gaming component of their product.

"I want my kids to spend money responsibly and I don't think a responsible usage is to spend it on stickers and the like."

Having said that, Park believes financial literacy is important and is keen on letting his child use other payment apps to learn about money.

"Actually, I would really like to have my kid use a payment app so I don't have to find coins when she wants to buy milk and popcorn in school," he joked.

He points to existing services like the one that Toronto company nanoPay offers with their MintChip, which can also make transfers within seconds.

"It's not geared towards children," Park said, "but it works equally well."