Africa: A Continent Waiting for Cryptocurrency
Distribution of cryptocurrencies is non-uniform across the globe. While in some countries, like the US, some European and Asian nations, bitcoin and altcoins have garnered significant support in local communities, other regions are almost crypto-deserted. For that reason, any crypto-related startup in such realms may boom and thrive. However, obstacles placed before such innovative startups may differ in various countries.
Africa as a region is commonly recognized as a prospective domain for development of cryptocurrency businesses and services. With most of the continent’s economies graded as ‘developing’ and biggest part of the population unbanked, Africa is a market where cryptocurrencies may find its own unique niche.
POTENTIAL FOR CRYPTOCURRENCIES
The financial inclusion situation is more or less similar for most of African countries.
Kenya lacks any reliable financial system on the background of thriving corruptive practices and unpredictability of local financial services. Credit cards there may not work all the time, and their servicing is expensive. Additionally, most Kenyans are completely unbanked and have no credit cards whatsoever. In most cases, their only option is to effect cash transactions, which involve serious fees. Last year, the Kenyan Central Bank issued a warning about hazards of bitcoin, mostly reiterating provisions found in other similar notions published by regulators across the globe. The most important of them is lack of any protection for users in case anything goes wrong. However, there is no official ban imposed on cryptocurrencies in the country.
Meanwhile, the Central Bank of Nigeria prohibited the country’s citizens to use their plastic cards abroad. The regulator’s move is commonly associated with devaluation of the country’s national currency, Naira, which, in its turn, is caused by global trend of oil cheapening. This may cause cryptocurrencies to inure in Nigeria, as it might effectively become the only option for Nigerians, who still wish to purchase goods and services abroad, or to effect international transactions. Bitcoin is neither regulated, nor prohibited in Nigeria for now, so the technology is likely to blossom in Africa’s largest economy.
“Africa is a country where people interact with money in different way than the rest of the world. There is in excess of a billion mobile devices. Most people prefer using their phones instead of computers. The one who manages to connect mobile devices and the blockchain, thus helping people save their money, will inevitably succeed. I think, many entrepreneurs see this opportunity at the market. But for now, it’s more like a minefield where de-miner startupers roam. Those more experienced still await for an opportunity and the emergence of projects to invest in,” says Dima Vollo, a cryptocurrency expert.
CURRENT STATE OF AFFAIRS
There are some prominent crypto-related projects in Africa already.
A remittance system BitPesa in Kenya works through exchanging user bitcoins for local currency and sending the amount to the recipient’s mobile account. The system may service even microtransactions, which makes it convenient for everyday use. Earlier, BitPesa raised around $1 million of investment for development of its cryptocurrency projects. The company intended to provide its services across East Africa with its service fees significantly reduced against those traditional.
The system grew popular, however, last year it was discontinued from M-Pesa, a mobile operator. According to the court ruling, local operator Safaricom servicing M-Pesa will not have to provide access to the startup. Though the case is far from being dismissed, the current ruling would prolong the service’s inability to operate as is. According to the judge, terminating the access to the account in the first place was justified by possible loss of Safaricom’s money transmission license because of BitPesa’s bitcoin operations. Safaricom’s point was in the fact that BitPesa’s bitcoin operations allegedly violate local AML requirements.
“African crypto-businesses have to compete with existing giants like Orange Money. Eventually, when people have realized advantages of cryptocurrency, the community will expand. However, even now there are some enthusiasts trying to popularize bitcoin and its philosophy,” Vollo says.
Meanwhile, North African Tunisia is going to become the world’s first country to operate its national currency via blockchain. The blockchain in question, however, is an advanced version of the bitcoin’s one developed by Monetas. With population of about 11 million, Tunisia has more than 3 million people unbanked. However, 600,000 of them using eDinar, a digital version of the national currency via La Post Tunisienne (The Tunisian Post), a state-owned public company being the only non-baking entity entitled to collect savings. In Tunisia, Monetas operates alongside with the Post, and local startup dubbed DigitUs. The existing 600,000 eDinar users will have their accounts and services transferred to the new technology as soon as due diligence is complete.
However, while some investment goes on, and some projects still manage to lauch, crypto-technologies are not as included in the continent’s financial systems as they are in the U.S. or Europe. This leaves the whole paradigm a great room for development.
SPREADING THE WORD
Two crypto-related conferences are to be held in Africa in March. The underdevelopment of both traditional and crypto-based systems justify the growing investment attraction for the region. However, the lack of awareness in Africa is also an issue.
“Africa knows almost nothing about Bitcoin, let alone blockchain. Explaining the technology from the scratch is an interesting and even exotic thing to do,” Vollo says.
One of the conferences, “The Blockchain & Bitcoin Africa Conference”, chose South African city of Johannesburg as its venue. Speaking at the conference, among others, will be Elizabeth Rossiello, CEO at BitPesa; Jonathan Levin, CRO at Chainalysis; Marcus Swanepoel, CEO at BitX; Tiana Laurence, CMO at Factom; and even William Frentzen, a U.S. federal prosecutor.
“The conference will investigate the upcoming challenges and opportunities provided by bitcoin and the blockchain technology as well as their impact on the current social, economic and political order. Blockchain technology is disrupting not only the world of finance, but also a number of online and offline sectors,” the conference’s official website reads.
Another conference, “The Future of Traceability”, will feature speeches by other prominent members of Bitcoin community in the city of Abidjan, Cote d’Ivoire. According to the release, the conference will focus on regulatory issues and alternate use-cases for blockchain-based systems. The conference promises to gather lawyers, financiers, representatives of banks and payment systems, developers, entrepreneurs, government officials, and investors.
Vollo, who co-organized the event, commented:
“We selected the line-up considering that 50% of the audience speaks only English, and the rest 50% only French.”
“Both Charlie Lee, the creator of Litecoin, and Bobby Lee, founder of BTCC, promised to come,” he added.
Other prominent speakers for the conference include Arnaud Bansard of Surys; Dean Masley of Blockchain Education Network; David Vorick of Nebulous Labs; and Elizabeth Rossiello of BitPesa once again.
One of the purposes of the conference is to raise crypto-technology awareness in Africa.
The concept of propagating Bitcoin and crypto-technologies in countries with mostly unbanked population may underpin the very idea of so-called “killer app” for virtual money. However, while Africa definitely lacks financial inclusion in general, it mostly lacks any attractive alternatives thereto. For that reason, crypto-solutions may change everyday lives of the continent’s dwellers for the better more drastically than in nations with developed banking infrastructure.
While in the latter case crypto-technologies may become a viable alternative to existing systems, in the former case they are capable of providing a superior solution incomparable to anything available there nowadays.