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Could Blockchain-Powered Anarcho-Capitalism Thrive in Africa?

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Blockchain-Powered Anarcho-Capitalism

Africa is home to some of the most corrupt governments in the world. According to the Transparency International Corruption Perception Index 2017, 11 out of the 20 most corrupt countries are located on the African continent. These nations are also among some of the worst performing countries when it comes to socio-economic development.

This data suggests that the state is at least partly responsible for many of the economic and social challenges faced by Africans today. This begs the question: “Would African nations fare better if they were not restrained by the state?”

In this article, we will explore a political school of thought called anarcho-capitalism, which promotes the replacement of the state with a free-market based system that empowers citizens through self-ownership and private property and whether blockchain-driven anarcho-capitalism could provide a viable alternative model for socio-economically struggling nations in Africa.

What is Anarcho-Capitalism?

Anarcho-Capitalism

Anarcho-capitalism, also referred to as libertarian anarchy or free-market anarchism, is a political philosophy that advocates the elimination of the centralised state in favour of individual sovereignty and free markets.

Anarcho-capitalists believe that in the absence of statute societies self-regulate through what is referred to as spontaneous order – an order which emerges as a result of the voluntary activities of individuals and not one that is created by a government.

In an anarcho-capitalist society, instead of having government-run public sector institutions such as law enforcement and courts that are funded by taxation, these services would be operated by privately-funded businesses who are chosen by consumers in the open market. This, in turn, should create a more efficient economy with better services.

Legal disputes would be resolved using tort and contract law through dispute resolution organisations as opposed to through punishment determined by political monopolies, which tend to become corrupted.

As opposed to the public image of anarchy, which often associates this political concept to chaos and lawlessness, anarcho-capitalism is based on the non-aggression principle (NAP). In simple terms, the non-aggression principle states that you should not assert aggression towards others or their property as this is deemed unethical.

Anarchism is also often linked to left-wing political schools of thought such as socialism and communism. However, while there is a large anarcho-communist community, not all anarchists are opposed to private ownership of property and free-market economics. In fact, the anarcho-capitalist movement has been growing in recent years in places like the United States and Europe due to the dissatisfaction with the performance of recent and current governments.

The term “anarcho-capitalism” was coined by Murray Rothbard, an American economist, historian and political theorist, in the 20th century. Rothbard believed that:

“Capitalism is the fullest expression of anarchism, and anarchism is the fullest expression of capitalism.”

Anarchism in Africa

Africa is not foreign to anarchist societies. Author Sam Mbah and I. E. Igariwey suggest in their book, ‘African Anarchism: The History of a Movement’, that many traditional African societies were built on anarchic elements and lacked state-like hierarchies.

“To a greater or lesser extent, all of […] traditional African societies manifested “anarchic elements” which, upon close examination, lend credence to the historical truism that governments have not always existed. They are but a recent phenomenon and are, therefore, not inevitable in human society. While some “anarchic” features of traditional African societies existed largely in past stages of development, some of them persist and remain pronounced to this day.”

“What this means is that the ideals underlying anarchism may not be so new in the African context. What is new is the concept of anarchism as a social movement or ideology. Anarchy as an abstraction may indeed be remote to Africans, but it is not at all unknown as a way of life. This is not fully appreciated because there is not as yet a systematic body of anarchist thought that is peculiarly African in origin,” the authors wrote.

How a Blockchain-Powered “Decentralised Economy” Could Disintermediate the State

The power of decentralised applications (DApps) and the new “decentralised economy” lies in the disintermediation of central authority. This does not only apply to businesses who act as intermediaries (such as financial institutions for financial transactions for example) but can also apply to public sector institutions.

Through the adoption of decentralised services, many centrally governed services that governments (aim to) provide could be largely replaced. The issuance of identities, business lending, asset and land ownership, startup funding, legally binding smart contracts, a direct peer-to-peer sharing economy, and decentralised digital currencies are among the possibilities that blockchain technology could provide to disintermediate many of the state’s functions.

anarcho-capitalismThe issuance of digital identities could be performed using a blockchain-powered database that does not require a centrally governed authority to oversee it. Instead, individuals could create their identities on the platform, and third parties who may require information on the individual could access it with the individual’s permission.

Business lending, as well as startup funding, which is often conducted through government grants or investment schemes, could be run by the private sector using blockchain solutions instead. Business lending, for example, could be performed on a peer-to-peer lending basis where investors lend to businesses directly without an intermediary taking a cut. Startup funding, on the other hand, could be conducted through initial coin offerings or security token offerings.

Asset and land ownership and transfers could be conducted on blockchain-based platforms for all stakeholders to view in a transparent and immutable manner. This way, there would be no need for public sector officials to become involved in the process and fees – and the potential for corruption – would thus be reduced.

Contractual agreements between businesses and individuals could be coded into immutable self-executing smart contracts, which would reduce the need for centrally-governed courtroom interventions in the matters between individuals and businesses. Moreover, the widespread adoption and societal implementation of smart contracts could drastically reduce the need for laws and bureaucratic legislation.

A true peer-to-peer sharing economy could also be created using blockchain technology, which could replace many public sector services with private sector solutions such as specialised healthcare or transport services, for example.

Furthermore, decentralised digital currencies such as bitcoin would eliminate the need for a central bank to meddle in the monetary affairs of a country and could empower citizens to “be their own bank” as opposed to relying on financial intermediaries to conduct their financial affairs.

Could Blockchain-Powered Anarcho-Capitalism Work in Africa?

It is difficult to know with any degree of certainty whether socio-economically struggling African nations would benefit from introducing blockchain-driven anarcho-capitalism as there have been little to no anarcho-capitalist societies to date.

According to freeblr, anarcho-capitalist societies have existed in the past, most notably in Celtic Ireland from 650 to 1650 and in the Icelandic Commonwealth from 930 to 1263. However, as these historical instances of anarcho-capitalism date back several hundred years it is difficult to determine whether these societies were truly 100 percent stateless and capitalist, and how well these societies functioned.

Anarcho-capitalism thus remains largely a political ideal and theoretical model that stands untested in modern history. This makes it difficult to judge whether an anarcho-capitalist society would flourish in countries that have suffered under corrupt governments.

In theory, however, anarcho-capitalism has the potential to create more wealth for a larger number of people in a society where it would be introduced. If you take away the state and its restrictive regulations, crony capitalism, and taxation, entrepreneurship and innovation could thrive while workers would be able to take home their entire paycheck as opposed to giving a share to their politicians.

The economy, in an anarcho-capitalist society, would become more efficient as private companies would have to compete to offer the best possible products and services that the consumer can then choose from. That would mean lower prices, higher quality products, and better services than in the current state of the economy.

Anarchy in AfricaInterestingly, one could argue that a high degree of economic and entrepreneurial freedom already exists in most African nations due to its thriving informal sectors that stay mostly untouched by government rules and regulations. Vendors in poor areas, for example, are often able to sell their goods wherever they please without government interference and taxation is only sporadically enforced in many African slums. This would suggest that anarcho-capitalism can be found in pockets of Africa’s society today.

The lack of effective state-led policing in many African nations would also feed into this argument as punishment for crimes is often enacted by local communities themselves as a form of self-governing, which could be considered as quasi-dispute resolution organisations.

In light of Africa’s experience with anarchy in many of its traditional societies, the lack of state-control in many of the poorer parts of the continent, and African citizens’ general distrust of governments and their institutions would suggest that the continent may be fertile ground for anarcho-capitalism. Through the widespread adoption of decentralised blockchain solutions, many of the government’s functions could be disintermediated and would thus become redundant, which would also feed into the argument that anarcho-capitalism could potential thrive in Africa.

Whether struggling African nations would be better off through the adoption of a free-market economy without government interference will remain unknown until the first libertarian society that embraces anarcho-capitalist ideals comes to fruition on African soil.

Unfortunately, due to corrupt government officials and the omnipresent corporate cronyism found all over Africa, it would be an uphill battle for the brave souls who attempt to create a free society based on the non-aggression principle, individual liberty, and personal financial sovereignty.

Blockchain Technology

vCargo Cloud to Implement Blockchain-Based Electronic Certificates of Origin in Kenya

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Blockchain-Based Electronic Certificates of Origin

Fintech company vCargo Cloud (VCC) has partnered with the Kenya National Chamber of Commerce and Industry (KNCCI) to roll out blockchain-based electronic certificates of origin (eCOs) in Kenya to modernise a vital part of the country’s trade facilitation processes. The eCO platform by VCC utilises the blockchain, which will make it easier for various stakeholders to authenticate certificates.

Speaking of the partnership, VCC said that the partnership with KNCCI is proof that their blockchain-based platform is disruptive and allows for instant verifications of the eCOs, which results in improved efficiency, security and transparency in the authentication of trade documents. The move also comes after VCC unveiled a similar blockchain-based solution in Singapore in May.

An electronic certificate of origin (eCO) is an international trade document that certifies that goods in any given shipment have been manufactured from said country. Customs and traders usually request for eCOs in order to verify goods while banks request the same, among other documents, that are used in any trade finance transaction.

In an interview with GTR, Desmond Tay, VCC’s CEO said that their blockchain-based platform would be slightly tweaked to the needs of the KNCCI but it is similar to the one in use in Singapore. He went on to say: “After the success in Singapore, we have been trying to bring the blockchain eCO solution to other places around the world. We are in discussions with a few chambers in Africa and Southeast Asia and expect to see further expansion soon.”

Kenya was the next launch country for VCC seeing that they have an office in Nairobi according to Tay. VCC is also in talks with several other countries in East Africa as well as chambers in Japan, Myanmar and Sri Lanka regarding implementing its platform in those countries.

VCC is, however, not the only company rolling out blockchain-based solutions that are meant to boost trade in the African market. Two months ago, IBM Research, in partnership with Twiga Foods, launched a blockchain-enabled microcredit solution to offer loans to informal and small businesses within Nairobi. Blockchain startup Wala and trade platform Black Commodities have also joined efforts to unveil a cryptocurrency product financing solution that will provide 50,000 small-scale farmers in Africa with loans worth $10 million.

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Bancor Set to Launch Blockchain-Based Community Cryptocurrencies in Kenya

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Bancor in Kenya

The Bancor Network has announced plans to launch a network of blockchain-based community currencies in Kenya. The launch of community cryptocurrencies is meant to help curb poverty through the stimulation of both local and regional commerce as well as increased peer-to-peer collaboration.

This new project will enable communities within the East African nation to create and manage their own digital tokens, through the utilisation of blockchain technology, thereby, closing the barriers that have historically existed to prevent the use of community currencies.

Will Ruddick, Bancor’s new Director of Community Currencies, will manage the project from Nairobi where he has lived for over a decade. He also runs a non-profit foundation known as Grassroots Economics, which oversees community currency programs in six different locations in Kenya that serves more than 1,000 local businesses and 20 schools. Ruddick, together with his team, will make use of the Bancor Protocol to expand Grassroots’ existing paper currency system into a blockchain-based network that intends to decrease poverty and build stable markets through the use of local currencies. Ruddick said:

“When communities have the same right as nations to create and manage currencies, they will unlock their full potential.”

Co-founder of Bancor, Galia Benartzi, said in a press release: “We have seen the crypto world generate roughly $400 billion for new currencies, and we believe the same mechanics can be applied to help communities create wealth on a local level through the use of blockchain-based community currencies that fill regional trade gaps, enable basic income and food security, and promote thriving local and interconnected global markets.”

Bancor’s Project Plans

Bancor in KenyaBancor will be seeding its first currencies by donating some of the capital it raised during its $153 million token sale in June 2017. The Bancor Network enables anyone to create digital currencies that contain one or more balances in a connected currency. This allows integrated currencies to be replaced with one another without the need for a counterparty. The currencies also have built-in mechanisms that are built to algorithmically calculate prices based on the supply of the currency and adjusts effectively to its use.

The Bancor Network is already being utilised daily to process more than $20 million conversions in digital currencies and is now set to be rolled out to disadvantaged communities across Kenya.

Plans for the launch of the project include:

  • First pilots in the two largest slums in Kenya: Kibera and Kawangware.
  • Grassroots will leverage its network of local businesses network to circulate the currency by giving discounts and additional benefits to customers who use it in their transactions.
  • As more people buy and hold the local currency, its market cap is expected to increase, hence create wealth and purchasing power for its holders.
  • Anyone will be able to buy and sell the community currencies (including community members) using other digital currencies or major credit cards with transactions processed via the open source Bancor Protocol, enabling users worldwide to support the communities from afar.
  • A balance in a stabilised “parent” cryptocurrency still under development will – at the start – be pegged to the Kenyan Shilling (KES) and allow for exchanges between the network of local currencies at algorithmically calculated prices.

Impact Investing Tools

In an attempt to build an alternative Grassroots Economics community currency network in Kenya about eight years ago known as “Bangla-Pesa”, Ruddick, an American-born physicist, was jailed by the Kenyan authorities. He would later relaunch the community currency network in partnership with the government of Kenya. Both he and the Bancor team have been vocal on the potential of community currencies to curb global poverty using a bottom-up approach for sustainable economic development.

This project is part of growing efforts from a wave of blockchain startups to use blockchain technology, smart contracts, and cryptocurrencies to build the next generation of aid and impact investing tools.

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Tanzanian Blockchain Community to Hold First Blockchain Event on June 30

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Tanzanian Blockchain Community

The Blockchain Tanzania Community has organised the first blockchain event in the country to be held on June 30, 2018, at the University of Dar es Salaam from 10 am to 1 pm.

The event will be a commencement seminar where Blockchain Tanzania will share its objectives, vision, and mission with the public and other stakeholders.

The Blockchain Tanzania Community brings together professionals, companies, academicians, and regulators such as the Tanzania Revenue Authority (TRA) and the Tanzania Communications Regulatory Authority (TCRA).

The organising chairman Rutazaa told BitcoinKe:

“As a community, we aspire to create an environment where youths will be inspired to engage and learn, investors favoured to invest, and regulators encouraged to fairly regulate, so blockchain, for what it is, can revolutionise our country.”

Tanzania is joining the ranks of other East African countries such as Uganda and Kenya that are embracing blockchain technology. For instance, Uganda is set to establish a blockchain taskforce while Kenya already has a functioning taskforce.

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