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Samuel Attah

Running a Bitcoin Exchange in Nigeria – An Interview With NairaEx CEO David Ajala

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Earlier this week, Bitcoin Africa had the chance to interview NairaEx CEO David Ajala to learn more about the story behind NairaEx, how he came across bitcoin and the rise of bitcoin in Nigeria.

NairaEx is one of the most popular bitcoin exchanges in Nigeria, which puts Ajala in a great position to witness the exponential growth of bitcoin in the West African country.

David Ajala“I came across bitcoin in 2013 while looking for alternative remittance mediums. Sending remittances to friends and family abroad had cost me a significant amount of money and time when relying on banks and Western Union-like services. Looking back, in 2013 bitcoin was significantly smaller with a small user base and significantly lower value, but the speed and cost of transactions were unbelievable, incomparable to any other service I had used previously. Being on a global scale, I also had no restrictions on where to send my money to,” Ajala stated.

What inspired you to launch the bitcoin exchange Nairaex?

Launching the bitcoin exchange primarily came from the restrictions faced by Nigerians looking to send money abroad. Relying on traditional systems such as banks and Western Union, Nigerians often end up paying some of the highest fees in the world.

Coupled with the volatile Naira, sending money abroad using banks simply doesn’t give assurances your money will still have value after fees and Naira exchange rates are calculated. This is where bitcoin came to be a perfect solution as prices are considered stable and fees significantly lower on our exchange.

What’s your opinion on the future of bitcoin and the blockchain in Nigeria and Africa in general?

The future of bitcoin seems bright compared to the past. Currently, markets are considered favourably for traders with daily price swings many can profit from. For companies and private users, bitcoin remains more reliable than the naira with a single exchange rate, parallel markets don’t affect bitcoin prices like they do to the naira.

However, scaling will become a bigger issue as the number of bitcoin users increases to almost 6 million (according to the Cambridge University), transactions are getting slightly slower, taking on average 10 minutes but are still significantly faster than Western Union, which often takes days.

Considering the cost of remittances in Africa in general, bitcoin will prosper well into the future as transactions remain cheaper and faster, although a scaling solution needs to be found.

How fast is Nairaex.com growing? Can you tell us how many users NairaEx has?

In line with the huge interest in bitcoin markets, NairaEx too has grown relatively fast. Having accumulated over 100,000 customers last year, bitcoin use has grown exponentially around the country as many of our customers see the value of crypto compared to the traditional naira.

Furthermore, having successfully completed over 170,000 orders since launch, the exchange has become one of the most trusted names in the country. Currently, NairaEx processes over 1 billion naira worth of transactions every month.

What challenges do you face running NairaEx?

As with any bitcoin exchange, many of the risks we encounter relate to the origins of funds being used on the exchange. While the majority of funds transferred by clients are clean and transactions hassle-free, a minority remain complicated as funds could be stolen, obtained via fraud or are outright illegal in some cases.

The risk does remain large as often it only takes one rogue transaction to cause months of legal and financial complications. Luckily, we are continuously working to improve our fraud prevention mechanisms to ensure all transactions remain legal and safe.

What is next for NairaEx?

The future for NairaEx is likely to involve an expansion in services to accommodate a range of consumers.

Currently, our service is exchange and remittance centered, but as bitcoin use and adoption increases, we hope to provide merchant and corporate services to complement our current offering. As our blockchain service matures, we may also launch Bitcoin investment funds to allow consumers to profit off the extremely volatile crypto markets.

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Meet Africa’s Blockchain Startups: Kobocoin

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Kobocoin is a decentralised peer-to-peer digital currency and micro payment system. It was created by Felix Onyemechi Ugoji, a Nigerian entrepreneur and developer based in the UK.

The digital currency is designed to run a proof of stake (POS) consensus mechanism. That means that users who stake their coins to verify transactions on the Kobocoin blockchain using a funded kobocoin wallet are eligible to receive a new kobocoins anytime they are minted.

As you may already know,  the use of mobile financial services in Africa is higher than that of traditional banking services. There are several existing “banking-on-the-go” providers that offer mobile payment and transfer options. Kobocoin, however, takes a fundamentally different approach by utilising blockchain technology to its advantage. It aims to be the solution for the unbanked as well as establish itself as a viable alternative in the African mobile money market where everyone can pay for goods and services directly from their mobile phone while simultaneously be able to cash out to their respective local currency easily.

Another major focus for the digital currency is the large African remittance market. With Africans sending home over $80 billion yearly, Kobocoin intends to provide a quick and more cost-effective alternative for Africans in the diaspora to use for sending money home.

BitcoinAfrica.io was able to interview the founder and lead developer of Kobocoin Felix Ugoji. Here’s the full interview with the brain behind Kobocoin.

What kind of problem, market deficiency or opportunity inspired you to launch Kobocoin?

That’s a question with a number of answers. In some ways, it was a political decision. We Africans always seem to be late to the game when it comes to disruptive technologies. We seem to rely heavily on others making advancements that we eventually have to purchase from them at a premium. I want us to have our own blockchain, built to our specifications, that we could build applications on that apply to us (but with a global outlook to allow them to be exported). When it comes to Mobile Fintech adoption, Africa leads the way globally and by a very large margin! I believe that blockchain technology has the potential to revolutionize Africa and bring financial inclusion to people previously forgotten or ignored by mainstream financial offerings. Look at M-Pesa which is being exported around the globe. It’s a purely African innovation based on the way we Africans barter and trade. Who says we can’t do the same to revolutionize blockchain adoption?

Bitcoin, the big daddy of them all, is massively hoarded. Some estimates state figures of up to 70%. If we Africans adopt bitcoin in the way that some propose, how many bitcoins will there be to go round the whole of Africa? It’s also about ownership. Let’s own our own blockchain and build our own apps that innovate the way we live for once.

Also, the computing power necessary to run the bitcoin blockchain is at odds with the ‘green’ direction of most new technologies. Bitcoin is not ‘green’ in any way. It’s the elephant in the room. Bitcoin mining uses the same amount of power as almost 270,000 average American homes. And that’s a conservative estimate!

How will Kobocoin address this problem or opportunity in a unique way?

kobocoin ImageKobocoin is unique because it is a cryptocurrency and blockchain with an African heritage aimed at the African market with global ambitions. Kobocoin (the currency) is made up of four unique human-friendly denominations. These are KOBO, MANILLA, COWRIE, and MANSA. These four currency denominations were carefully chosen because of their significance to us Africans. They allow for four different levels of trade using the same crypto currency.

It is optimised for mobile phone use. It is Proof of Stake (PoS) as opposed to Proof of Work (PoW). Mining is achieved through ownership and not the raw computing power that’s required for PoW blockchains (e.g. bitcoin). The Kobocoin ecosystem uses a fraction of a fraction of the amount of energy needed to keep the bitcoin ecosystem running. Now that’s green!

Raspberry Pi is also supported by Kobocoin (this is part of the IoT initiative using ROKOS technology). At one time I had a dream of every school in Africa having access to the Kobocoin blockchain using Raspberry Pi’s. Unfortunately, I don’t have the resources to fulfill such a dream, but the fact remains that any institution with a Rasperry Pi at their disposal can get the kobocoin wallet and blockchain loaded, and then start creating apps on the blockchain.

At this moment in time, the kobocoin currency is not massively hoarded. This means that it’s ready to be adopted by savvy early adopters and developers with the foresight to see the massive opportunities that lie ahead. Yes, early Bitcoin adopters made a lot of money with bitcoin. Early Ethereum adopters made a lot of money with Ethereum. I hope that one-day early Kobocoin adopters and developers will also see their faith rewarded financially, and have their own stories to tell! I hope the vast majority of winners will be Africans living in Africa!

With already existing mobile financial services how do you intend to overcome the competition?

Existing mobile financial services are centralized and require registration or subscription to participate. Kobocoin’s blockchain technology allows access to everyone regardless of credit status or banking history.

There is no subscription or registration required. Nobody is checking up on you or monitoring progress. I believe that people will see the true benefit of this decentralized operating model as the industry progresses. I’ve not had the privilege of using any of the existing mobile financial services but from what I understand, applications built on the kobocoin blockchain will be able to offer the same services at significantly lower cost, without registration, and with far greater privacy features.

Also, those existing financial services seem static at this moment. The Kobocoin blockchain is a platform that will allow and encourage developers to create apps as the market demands them. Anybody with programming skills can create an app for users of the Kobocoin platform. Permission is not required. If you can think of it and build it, then go ahead. If it’s useful then Kobocoin users will adopt it and you will be rewarded for your innovation without any questions being asked. Can any other mobile financial service offer such freedom to developers and users? I think not. They are all closed systems owned and operated by multinationals.

And bear in mind that kobocoins cannot be faked or counterfeited like traditional money. It is a clean and robust technology.

What do you hope to achieve with this project in the long run?

Global adoption is the quick answer. In practical terms, I’d like Kobocoin to be seen as a global blockchain in the same way that Bitcoin and Ethereum are. Though it’s heritage is African I want the outreach of the kobocoin currency, the underlying blockchain, and the apps built on the blockchain to have a global reach.

I believe that we Africans will bring innovation to the blockchain and fin-tech arena, and I would like to see apps built on the Kobocoin blockchain adopted worldwide (just as we already have in the mobile fin-tech arena with M-Pesa). I really believe that we have the innovative ideas that can move the blockchain industry forward. I believe our ideas and innovations will be exported worldwide. And I’d love to see all those ideas realized on the Kobocoin blockchain!

Like any other altcoin, kobocoin (KOBO) can also be traded against bitcoin and other notable cryptocurrencies. It currently has a market capitalization of around $350,000 and can be traded exchanges such as Cryptopia and Yobit.

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