6 min read
Just like the explorers of a bygone age, Jack Dorsey came away entranced when he visited Africa for the first time last year. The Twitter and Square CEO is a big Bitcoin fan and investor—and during his visit, he declared that the continent was the future of Bitcoin.
Atsu Davoh, founder of Ghana-based cross-border transaction app Bitsika, was one of those Dorsey sought out during his recent visit there. “He was humble and very curious,” Davoh said.
And Dorsey is coming back, with other investors in his wake, because Africa is compelling, see—and especially so for crypto. The continent’s very specific challenges and its enthusiastic workforce are the key ingredients cryptocurrencies like Bitcoin need to succeed. Fragmented infrastructure means that Africans pay the highest remittance costs in the world, and are the second highest unbanked population, but these could prove to be opportunities in the right hands. Does Africa have the potential to lead the way on blockchain adoption?
Ray Youssef certainly thinks so. The CEO of peer-to-peer Bitcoin marketplace Paxful, Youssef credits the continent with teaching him about Bitcoin’s true use cases. “Africans have had peer-to-peer financial systems in place for thousands of years,” he said.
Approximately 45% of Paxful’s three million subscriptions are from Africa. Sending money in traditional ways is so onerous for many that it’s easier to get on a plane and deliver it yourself, said Youssef.
Cryptocurrencies are used as a store of value, for speculation and, increasingly, as a medium for borderless trade across countries, said Philip Agyei Asare, CEO of remittance platform, BTCGhana, which was founded in 2015.
“African crypto is like the Wild West, there are no legal hurdles or regulations,” said Bitsaka’s Davoh. “Governments don’t know that much about crypto so they let people do whatever they want to do.”
He claims to know someone who processed $30 million in Bitcoin over-the-counter transactions in one year. Nigeria has a big population and the best programmers, but is also more politically unstable than Ghana, he added.
Africa’s major economies, South Africa, Nigeria and Kenya, are all keeping an eye on cryptocurrency. Ghana and South Africa are also among those exploring the potential of national digital currencies.
Crypto regulation in Africa. (Source: Baker and Mckenzie)
Among the continent's more liberal crypto states is Senegal, where rapper Akon has started constructing the world’s first “crypto city.”
But the project has come under fire. Improving education is a more pressing need, many believe.
“The greatest national resources in Africa are above the ground, not below it,” said Paxful’s Youssef. “It’s the people—so driven, so ambitious, and just looking for a way to make a difference.”
In 2017, Paxful began a push to build 100 schools with Bitcoin.
Africa’s unique qualities make it ideally suited as a giant sandbox for blockchain and crypto development—from blockchain commodity exchanges in Nigeria, to boosting agricultural yields and establishing land rights in Kenya. Cardano is prominent among blockchain platforms working with African governments to address local needs, and training developers.
Students graduating from IOHK's coding academy in Ethiopia. (Image: IOHK)
“Africa missed the first, second and third industrial revolutions, but we have a real opportunity to be a part of the Fourth Industrial Revolution,” said Bitange Ndemo, who heads Kenya’s Blockchain and AI Taskforce.
The so-called “Leapfrogging” theory holds that it’s now irrelevant that Africa failed to develop current-generation IT infrastructure because next-generation services—5G, AI and the Internet of Things—can now be built without having to worry about the costs of overhauling legacy infrastructure.
In Kenya, birthplace of the M-Pesa, the digital revolution is transforming everyday life, paving the way for the application of emerging technologies like blockchain. Kenya’s startup scene is thriving, and the government is working on a trusted identity platform, and exploring biometrics for transaction verification.
Much of Africa’s digital revolution is due to the explosion in mobile phones, now commonplace even in the continent's poorest countries. Close to 10 percent of GDP in transactions are made with mobile money—the highest proportion in the world. UK blockchain platform Electroneum is tapping into this trend, and has also teamed up with an NGO to create “a crypto ETN village” in an as-yet-undisclosed location, a spokesperson told Decrypt.
Africa is also on the cutting edge of crypto innovation; Many believe 2020 could be the continent’s year of the stablecoin. Bitsika is currently developing its own ABCD stablecoin, and Nigerian Bitcoin exchange NairaEx is also working on one backed by the national currency, the Naira.
In a continent comprised of 54 countries and and 1.2 billion people, there’s plenty of disparity in how technology is used, something that also applies to blockchain and crypto.
Take the M-Pesa. Touted as digital currency for the entire continent, its success in Kenya wasn’t replicated in South Africa, and there’s no definitive answer as to why.
There’s also a huge disparity between Cape Town, South Africa, where you can now buy a pad near the city’s university complex with bitcoin, and Zambia, where cryptocurrency is illegal. But what Africa’s countries have in common is that across the continent, startup founders have grown up in an era of digital transformation—mobile, YouTube and the M-Pesa. That makes the continent a perfect crucible for the next wave of innovation, in crypto and blockchain.
“Jack said the future of crypto is in Africa, and I totally agree,” said Davoh. “If you just look at the freedom we have here, the talent and the attention we’re getting from outside—and the role and purpose these solutions serve—this is the perfect place. When I look at all the exciting companies being built here, I think that very, very soon, we’ll see a crypto valley happening in Africa.”
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