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Is Africa Becoming the New Frontier for Bitcoin Startups?

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bitcoin startups

A while back I was having a conversation with a friend regarding the future of cryptocurrencies in Africa. We agreed that more people are becoming aware of digital currencies such as bitcoin, and its potential to solve some of the problems that plague the continent’s financial ecosystem. However, we had different opinions on how long this momentum can continue and whether it will penetrate the mainstream.

A major hurdle, of course, would be the prevailing regulatory climate which has seen bitcoin effectively banned in a number of countries. His view was until African governments changed their position on bitcoin, the adoption of the currency will be a very slow process. I, on the other hand, saw things differently. It was my belief that what will fuel the continent’s great leap to a bitcoin economy, will be crypto-solutions from startups leveraging blockchain technology.

Bitspark’s new venture in Nigeria

A prime example would be the launch of Bitspark’s new money remittance service to Nigeria. The Hong Kong-based company announced the new venture this week as part of a wider strategy to gain a foothold in the continent. Nigeria currently receives an annual $21 billion in remittances from around the world making it a top market for money remittance services.

The cryptocurrency service provider has created an end-to-end remittance platform that uses blockchain technology to facilitate transactions.According to Bitspark’s blog, their new remittance channel into Nigeria will be 14.4% cheaper than its competitors.  The new payment service will, therefore, reduce the cost of transactions. This, in turn, will help to save Nigerians receiving remittances hundreds of dollars over the course of the year.

Bitcoin as a Safezone

With inflation being a persistent problem in Africa, as is being witnessed in Kenya and Nigeria, bitcoin can be a medium that protects user’s wealth. Interestingly, the CEO of Africa Digital Marketplace, Hermann Djoumessi expressed something similar in an interview with CoinTelegraph.

He said,

“Bitcoin should be the “fly to safety” currency for all. However, one needs to remain careful and needs to start to understand that paper money as we know it is about to disappear. Therefore, one needs to have and carry a mix of cryptocurrencies and should always play one against another when times changes.”

But while commercial application of bitcoin technology may convince people of the financial sense, the support of regulators is still needed. Remember, the success of any bitcoin startup also depends on factors such as energy, data centers, financing, education, infrastructure, etc. This cannot happen without the support of local governments.

What next for Bitcoin startups?

Bitspark will join other startups like BitwalaBitPesa, and Remitano that are carving out their niche in the African payments space. According to a research report, there is significant interest for crypto-solutions in three countries, namely, Nigeria, Ghana, and South Africa. Most of this stems from using bitcoin for payments but also using bitcoin as an investment due to the price rally we have witnessed in the last twelve months.

It should be interesting to see how the convergence of bitcoin and businesses will shape the African financial and regulatory system in the coming year.

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Kidnappers in South Africa Demand Bitcoin Ransom for Teenager, Boy Found Unharmed

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Kidnappers Demand Bitcoin Ransom

In South Africa, a gang has kidnapped a 13-year old teenager and demanded a ransom to be paid in bitcoin for his release. The abductors have demanded a ransom of 15 BTC, which is an equivalent of $120,000 at today’s prices.

“This is a kidnapping! We have your child. Your child will not be harmed if the following demands are met: We demand a ransom of 15 bitcoins to be paid to the below Bitcoin wallet to secure your child’s safe release,” reads the note left by the kidnappers.

According to The South African, 13-year-old Katlego Mariate was kidnapped while playing with two of his friends at his home in Frangipani Street, Tasbetpark Extension 3, Witbank. Witnesses testified the victim was grabbed into a gold Toyota Corolla occupied by three unknown men before driving off.

The Police spokesman, Brigadier Leonard Hlathi, said the situation is being investigated:

“We are investigating a case of kidnapping that happened on Sunday in Witbank. There was a demand that was made that the parents should deposit cash in bitcoins.”

Another police officer said the parents of the victim, who are in deep shock over the incident, do not even know what bitcoin is. “They don’t even know what this bitcoin is. They’re devastated and you can see they’re worried and asking themselves: ‘Where’s our son?”

Boy Found Unharmed

According to Reuters Africa, police spokesman Hlathi informed the public that the boy was found unharmed on May 24.

This appears to be the first case in the country involving a bitcoin ransom in a kidnapping. However, it is not the first time this has happened in other parts of the world. Last year, a bitcoin analyst was kidnapped in Ukraine and, in early 2018, a lawyer was abducted with respective kidnappers demanding bitcoin as ransom in Mexico.

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Golix Shelves ICO and Takes Reserve Bank of Zimbabwe to Court Over Cryptocurrency Ban

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Zimbabwe Cryptocurrency Ban

Following the directive by the Reserve Bank of Zimbabwe (RBZ) to ban cryptocurrency, one of the largest cryptocurrency exchange in Zimbabwe, Golix, has now gone to court challenging the directive by Zimbabwe’s central bank after it was forced to shelve its token sale, which was scheduled to start on May 14. and was asked to cease operations by the central bank.

Golix informed Bitcoin Africa on May 15 that it has decided to suspend its planned ICO due to the RBZ’s new directive, which is effectively forcing them to shut down its operation by preventing banks from dealing with cryptocurrency startups. Moreover, as reported by TechZim, the central bank also reached out to Golix directly, in the week to follow the directive announcement, informing them that they are required to cease operations entirely.

Aside from warning the general public to keep away from decentralised digital currencies, RBZ sent a directive to all banks on May 11, 2018, giving them a maximum of 60 days to end any relationships they may have with cryptocurrency exchanges. Several bank accounts belonging to Golix have already been closed.

The circular, which was issued by the Registrar of Banking Institutions in Zimbabwe, N. Mataruka, lists Golix and Styx24 as the country’s cryptocurrency exchanges. In the circular, one of the reasons RBZ gave regarding the ban was that they wanted to be able to “safeguard the integrity, safety and soundness of the country’s financial system, and to protect the public in general”.

Golix is Fighting Back

Golix Launches ICOGolix will not go out without a fight. Golix has presented the High Court of Zimbabwe with three arguments on why the ban of cryptocurrency in the country is not just. In their first argument, Golix questioned whether the RBZ has any legal authority to ban cryptocurrencies. In their explanation, Golix detailed how they had severally met the RBZ including a day before the circular was released. According to their first argument, RBZ has no authority over Golix and neither have they, in their engagements, ever shown or behaved in a manner that indicated so.

Golix’s second argument terms RBZ’s directive as unfair based on the legal principle of administrative justice as the central bank of Zimbabwe neither gave reasonable notice nor the right of response. This, according to Golix’s argument, means the RBZ breached the right to Administrative Justice considering that by statue, RBZ is an administrative body.

A quote from the second argument by Golix as shared by Techzim states:

“Applicant was never advised prior to the ban that it will be implemented even though Respondents had ample opportunity to advise Applicant of same. As aforesaid, the last meeting between the parties was held on 11 May 2018. Four officials from the Applicant including myself attended the meeting while fifteen officers, including the Registrar of Banking Institutions represented the Respondents. In that meeting, the discussions were more of Respondents wanting to learn and understand the technology behind our business and our business model. The impression we got was that Respondents wanted to understand in order to begin working on regulation. No mention was made of any impending ban on our business”.

Unconstitutional Ban

According to Golix’s third argument, the ban by the RBZ is unconstitutional. Golix sited Section 68 of the constitution by saying: “Section 68 of the Constitution requires that administrative action be lawful, reasonable, proportionate and procedurally fair. I humbly submit that Respondents’ actions fell short of the standard required in the Constitution”.

In their defense, they give reasons as to why the view the directive as unconstitutional as:

“First, the press statement issued by 1st Respondent does not state the purpose for which the ban was imposed. The reason why it was necessary to impose the ban is not stated in the press statement. We can only speculate as to why the ban was imposed. In the absence of a clear reason for the imposition of the ban, it is really difficult to assess the proportionality of 1st Respondent’s decision vis-a –vis the goal it was intended to achieve. Nonetheless, even in the absence of a clear reason for the ban, it is not difficult to see that the decision is disproportionate”.

Following the directive, Golix issued a statement via their blog notifying its customers that unless RBZ changed its position before the 60-day window period given, they “will not be able to send or receive fiat currencies for cryptocurrency trades”.

While the High Court of Zimbabwe will determine the fate of the case between Golix and RBZ, the move by Zimbabwe’s central bank to ban cryptocurrencies is a clear indication of how most African states are yet to embrace digital currencies such as bitcoin. And while we cannot speculate on the ruling that the court will make, this move could slow down the adoption of cryptocurrencies in other African markets.

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Can Bitcoin QR Codes Provide Artists With A New Revenue Stream?

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Bitcoin allows everyone in the world with an Internet connection to send and receive payments without the need for a financial institution as an intermediary. This also enables anyone to be rewarded for their product, service or even artwork by simply providing a bitcoin address for payments.

Pascal Boyart, a French street artist, is using quick response (QR) codes to help Kickstart his street art career with bitcoin donations. He recently gained the attention of the bitcoin community when one of his murals became a trending topic on the Bitcoin subreddit. Boyart has already received over 0.11 bitcoin, which translates to roughly $1,000.

A self-described cryptocurrency enthusiast, Boyart believes that there are many benefits for the creative industry from decentralisation. According to a report by The Next Web, rather than displaying art in galleries and going through dealers, the bitcoin QR code is part of a movement by artists who want to gain more independence. Boyart also explores the themes that relate to crypto and decentralisation in his work. The artwork that made Boyart popular on Reddit was a mural painting of Rembrandt, the famous Dutch painter.

Bitcoin QR Codes

Bitcoin QR CodesWhen using bitcoin to pay at point-of-sale or face-to-face, users generally scan QR codes to make the payment instead of typing in lengthy bitcoin wallet addresses. A QR code can easily represent the amount of data required in a machine-readable manner for a bitcoin payment to be processed.

Independent artists often struggle financially, which is why new forms of monetisation, such as Patreon or integrating cryptocurrency QR codes into their work, provide excellent alternatives that could lead to artists being able to live solely off their art.

Boyart managed to earn revenue from his murals without needing an exhibition in a gallery simply by attaching bitcoin QR codes to his work. This shows that as a decentralised peer-to-peer payment platform, bitcoin presents all creatives, whether they are authors, artists, musicians or photographers, with a new potential monetisation avenue as they can sell their work directly to fans worldwide.

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