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Meet Africa’s Blockchain Startups: BitPesa




BitPesa is a bitcoin startup that is transforming how businesses make international payments in Sub-Saharan Africa. The Pan African platform uses blockchain technology to improve efficiencies in regard to remittances and trade between Africa and the rest of the world. The startup was founded in 2013 by Elizabeth Rossiello, a former investment banker with experience in Kenya’s microfinance sector.

Revolutionising remittances through Bitcoin

According to the 2014 World Bank report titled Send Money Africa, the average cost of remitting money to African economies stood at 11.89%, which was above the global average of 8.96%. At the time 70% of remittances to the continent were handled by money transfer services like Western Union and Money Gram, which charged 10-20% fee per transaction. Working in the Kenyan banking space, Rossiello noticed the need for an innovative payment system that could rival legacy systems being used which made money transfers expensive and slow due to the many intermediaries.

Against this backdrop, BitPesa was formed offering a platform that deployed the blockchain’s peer-to-peer network for payments and used bitcoin as a transaction currency. By offering a marketplace for African fiat currencies and bitcoin, the startup lowered transaction fees by 75% and reduced the transaction window from 2 weeks to 2 hours. In addition, the new payment solution was efficient and uncomplicated from an operational viewpoint as Rossiello pointed out in a Forbes podcast,

“The technology had to be easier, it had to be cheaper to set up, it had to be intuitive, and you didn’t need to maintain it yourself. So when you think about Bitcoin, right away when you start a company, if you learn about it and you have a developer that can link into it, you can just start. You don’t have to build the whole thing yourself. … [With BitPesa,] I do not need to invest in a million-dollar Oracle management information system.”

BitPesa makes it easier for people from other parts in the world to send money to say local banks in Kenya, by bypassing correspondent banks that charge a processing fee for transactions. These savings are passed down to the company customers in the form of cheap remittance fees. For people living in areas where traditional money transfer services like Western Union and MoneyGram have a monopoly on pricing through exclusivity agreements with postal corporations, BitPesa is a welcome respite.

Transforming B2B Payments

BitPesaBitPesa is not only using the bitcoin blockchain to enable cheap and fast international remittances but is also lowering the cost of B2B payments and opening new opportunities for African businesses. Through their platform, businesses can now send payments to employees, vendors, distributors and also receive payments from customers. Payments can be made or received from popular mobile money services, as well as transmitted to businesses bank accounts within a day. Many multinational corporations are already relying on their services to navigate the often unreliable and inefficient payment settlement systems that plague the African financial ecosystem.

BitPesa currently operates in Kenya, Uganda, Tanzania, DRC, Senegal, UK and Nigeria. Early this year, the company completed Series A funding to the tune of $2.5 million from a group of new and existing investors led by the US-based Draper VC. This raises the total funding it has received since 2013 to $6 million. Speaking to AppsAfrica , Rossiello asserted the money would be used to continue customer acquisition and growth efforts as well as migrate its headquarters to Luxembourg now that it is licensed as an FCA Authorised Payment Institution in the UK.

Africa provides a unique opportunity for bitcoin startups to thrive due to years of under-investment in infrastructure. Technologies such as bitcoin have the potential to improve financial systems and that’s why BitPesa is a prime example of what innovation can achieve in the continent.


Nigeria Wants Regulatory Framework for Cryptocurrencies



Nigeria Regulatory Framework Cryptocurrencies

With cryptocurrency adoption soaring in Nigeria, it is no surprise that on April 25, 2018, members of the House of Representatives, urged the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Commission (NDIC) to create a legal framework for the regulation of blockchain technology.

The resolve was passed following the adoption of a continuous motion titled ‘Need to regulate blockchain applications and Internet technology’, which was supported by Solomon Adaelu, who emphasised the innovation that the blockchain brings such as the potential to accelerate payments in the country’s financial services industry.

Adaelu said: “Blockchain as a digital and decentralisation ledger technology that records all transactions without the need for financial intermediary bank is new to humanity and can be a core payment facilitator for financial services industry. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”

The blockchain was invented in 2008 for the cryptocurrency bitcoin. Since its establishment, it has helped solve the issue of double spending on digital currency transaction without the need for a central server or trusted authority.

Adaelu went on to state that the deadline for a unified cryptocurrency regulation had been set for July 2018 following the G20 Finance Ministers’ meeting in March.

He further added: “Countries such as the USA, the UK, Russia, Venezuela, and Kenya have [already] provided [a] framework for the regulations of this emerging technology,” and believes that Nigeria should be next in line to do so.

Other lawmakers supported the motion while acknowledging the warning given by the NDIC to be careful when trading cryptocurrencies, given the complexity and uncertainty surrounding them.

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Binance Partners with Blockchain Innovation Hub in Uganda to Promote Economic Development



Binance in Uganda
Image by Binance

Binance, a global cryptocurrency exchange, has partnered with Crypto Savannah, Made in Africa initiative, and Msingi East Africa to promote economic development and youth employment in Uganda using blockchain technology. The partnership aims to achieve these goals by “creating thousands of jobs and bringing investments to Uganda.”

Made in Africa initiative and Msingi East Africa are organisations that are dedicated to the economic transformation of African countries while Crypto Savannah is a newly created African blockchain innovation hub.

According to Trading Economics’ data, the employment rate in Uganda stood at 47.80 percent in 2012 compared to 88.30 percent in 2009. The broad use cases for blockchain technology have the potential to change these statistics for the better by providing innovation opportunities for young people.

Changpeng Zhao, CEO and founder of Binance, announced these plans on Twitter and hinted at the possibility of Binance getting more involved in African projects.

Binance’s initiative is believed to have peaked at a recent meeting with the Blockchain Association of Uganda (BAU) where Zhao interacted with the local blockchain community and promised to support and train young entrepreneurs leveraging the blockchain. He also advised young entrepreneurs to offer solutions that are going to improve the lives of the society.

“Binance is tailor-making partnerships according to the environment. We want to understand the landscape and grow our understanding of the market.”

Zhao’s meeting with BAU will be followed by the Africa Blockchain Conference 2018 which will be held in Kampala in May.

Blockchain Technology is Gaining Momentum in Africa

The Binance initiative is just one of the several upcoming blockchain-based projects that are taking place in Africa. For instance, the World Food Program recently announced a partnership with Devery to make food delivery to Tunisian school children safe. Furthermore, the World Blockchain Summit held in Nairobi last month has helped to open doors for global blockchain companies to establish themselves in Africa.

In view of the Binance initiative, Africa could attract more global blockchain companies in the future as the technology continues to take root on the continent.

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BitMari Conducts First Test Remittance on the Bitcoin Lightning Network



BitMari Bitcoin Lightening Network

Zimbabwean startup BitMari has managed to successfully conduct its first Bitcoin Lightning Network test transaction with Tanjalo, a bitcoin startup from Lagos, Nigeria. The transaction signals a shift for remittances in Africa as users can soon expect almost instant low-cost bitcoin remittances.

Fast Transactions, Low Fees

BitMari is a Zimbabwe-based bitcoin company that leverages blockchain technology to expand into new remittance markets for the African diaspora. The startup was founded in 2015 by Sinclair Skinner and Christopher Mapondera to address the challenges faced by Zimbabweans when sending money overseas and vice-versa. In 2017, the company made history by becoming the first bitcoin enterprise to receive a money transfer license from the Reserve Bank of Zimbabwe. The company also formed a strategic partnership with Agribank to handle remittances for their customers using bitcoin.

Tim Akinbo, the co-founder and CTO of Tanjalo, was able to transfer $15 from Nigeria to a recipient in Zimbabwe through the BitMari platform using bitcoin. He believes the almost instantaneous money transfer will be instrumental in transferring value and promote cohesion by bridging local communities. The company is excited about the new development especially after successfully setting up the Lightning nodes.

Skinner, who is an ardent supporter of the adoption of bitcoin and blockchain technology in Africa to solve everyday challenges, stated:

“BitMari’s quick adoption of Lightning is active use of Bitcoin and Blockchain technology to solve real World challenges facing Africans on the continent and in the diaspora; such as costly remittance fees.”

The Bitcoin Lightning Network

The Bitcoin Lightning Network (LN) is a system built on top of bitcoin that enables people to send and receive payments instantly, and lower transaction costs by bypassing the blockchain. The Lightning Network’s use of payment channels lets users transact with each other directly without having to broadcast their business to the entire network. Currently, the Lightning Network is growing after being launched a short while ago on main-net by the Lightning Labs team.

BitHub Africa, a Nairobi-based blockchain accelerator of which BitMari is a member, has published a guide on how someone can go about setting up a Bitcoin Lightning Node on a cheap computing device called Raspberry Pi. The device can be used to process transactions by anyone with the resources and skills to host the node.

For now, BitMari is searching for other Lightning nodes to connect to their own. The company is also focusing on improving its user experience to increase adoption of its services and pass on the benefits of fast and affordable remittances to its customers.

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