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Why is Africa Slow to Adopt Bitcoin?

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Africa Slow to Adopt Bitcoin

With 54 countries in one continent, the adoption and integration of bitcoin in Africa will and continues to happen at different tempos. Although bitcoin has shown massive potential globally, its uptake in most parts of Africa has been and continues to be slow.

For bitcoin to experience massive adoption in Africa, co-founder and CEO of Regenize, a South African startup, Chad Robertson, believes that educating people on how bitcoin works is the key.

Regenize aims to motivate people to recycle things and in exchange they get rewarded with virtual currency that they can use to purchase various goods. The recycling services are monthly and come at a fee. Customers are then rewarded with the virtual currency that they can use on Regenize’s mobile voucher platform.

Since Regenize’s launch in 2016, the startup has had a positive impact on the people of South Africa. Still, Robertson firmly believes that different industries will influence the uptake of digital currencies.

In an interview with Disrupt Africa, he is quoted as saying,

“Using bitcoin as a means of purchasing everyday goods will be determined by the adoption rate of your larger retailers. However, for the financial services sector it has a high uptake due to reduction of costs when transferring bitcoin.”

Factors Hindering the Adoption of Bitcoin in Africa

According to Robertson, several factors make the adoption of bitcoin and other virtual currencies slow in Africa.

Education and Awareness

In his view, education and awareness are mandatory if bitcoin is to scale in Africa.

“Specifically, in South Africa, we have such a huge gap that keeps on growing regarding wealth but also knowledge on the ever-changing tech landscape. If I’m sitting in a coffee shop in the CBD, it’s quite likely someone will know what bitcoin is. However, head down to the Cape Flats or townships, and it’s highly unlikely that there’ll be many people who are aware of this,” he went on to say.

“However, this lack of education and awareness could be drilled down further on to find the root cause. There are too many people living in poverty in South Africa and Africa. They simply cannot think about using bitcoin as it’s not relevant to their needs. The local spaza shop does not accept bitcoin so how will someone get their bread or milk? Schools don’t accept it for school fees. You cannot buy electricity with bitcoin to keep your lights on. So why would they care or want to be educated on it?” he asked.

In Robertson’s view, there is need to develop solutions that work for everyone and not just the minority if bitcoin and other digital currencies are to have significant momentum.

“If you look at the available places one can spend bitcoin in South Africa, it makes sense why it’s the minority who’s focused on it,” he added.

Security and Visibility

Another factor that needs to be addressed before digital currencies can be fully adopted is security which ties back to education.

“There are many people who have been scammed on the internet, especially those who are digitally uneducated. Therefore, there is a fear and a stigma around using the internet as a place to transact,” stated Robertson.

On the other hand, Africans are used to the normal brick and mortar institutions where they can go and make their inquiries. Digital currencies are decentralized and lack visibility hence raising certain questions.

Robertson said, “With bitcoin, there’s no visible place to lay a complaint or an enquiry. I would think change management would play a large role in the transition from using a bank. For generations, people have given their money to the bank and there’s a trust as the bank is a brick and mortar institution. With bitcoin, people might have fears of what happens to my money? Who do I complain to?”

According to him, for more African nations to come on board, the focus shouldn’t be on change but on the people and their needs.

Smartphones and Data Access

The founder of the South African startup, The Sun Exchange, Abraham Cambridge, believes that the most basic hindrance to bitcoin adoption is access to data and smartphone adoption since bitcoin transactions rely on internet access. The Sun Exchange uses bitcoin to crowdfund for solar projects.

“Feature phones don’t really cut it, but it is just a matter of time. With smartphones getting cheaper every day, soon anyone in Africa will be able to use bitcoin services where data is available,” Cambridge said.

“To help reach this point, at The Sun Exchange we are developing hybrid solar/data access projects with cryptomines embedded into the infrastructure. This will ensure that remote villages get energy, communications and their own digital currency money supplies in one fell swoop.”

Despite these setbacks, Cambridge’s optimism on the future of the blockchain technology is significantly high.

“This stuff is just getting started. Think global, free to use, secure computer systems‎ that run autonomous businesses, data storage, and energy transfer. Whole governments will be running on blockchain applications. The UAE city of Dubai has already set a target of being 100 percent running on blockchain by 2020 so we are really not far from this world,” he noted.

“Smart contracts running on self-driving cars that ‘bid’ for their position in traffic is just one of many incredible ideas I have come across that will change every aspect of our civilization.”

Although Africa is slow to the adoption of bitcoin or any other digital currency for that matter, countries like Kenya, Nigeria, and South Africa are already a step ahead. Moreover, the University of Cape Town in Windhoek, Namibia is set to be the first in Africa to offer a postgraduate degree that teaches about bitcoin come January 2018.

Bitcoin

Nigeria Wants Regulatory Framework for Cryptocurrencies

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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

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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

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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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