THE UNBANKED IN AFRICA AND THE RISE OF THE UNBANKED IN AFRICA AND THE RISE OF CRYPTO-ADOPTION IN…

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THE UNBANKED IN AFRICA AND THE RISE OF

THE UNBANKED IN AFRICA AND THE RISE OF CRYPTO-ADOPTION IN AFRICA

Before, we go deeply into cryto adoption in Africa, it is pertinent to understand what crypto currency is and the

evolution of cryptocurrency in Africa.

What is Cryptocurrency?

A cryptocurrency, crypto-currency, or crypto is a digital asset designed to work as a medium of exchange

wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database

using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify

the transfer of coin ownership. Cryptocurrency does not exist in physical form (like paper money) and is typically

not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to a central

bank digital currency (CBDC). When a cryptocurrency is minted or created prior to issuance or issued by a single

issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency

works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction

database.

Bitcoin, first released as open-source software in 2009, is the first decentralized cryptocurrency.

Evolution And Current Situation Of Cryptocurrency in Africa

Following the announcement by Facebook in 2019 that it would be launching its own crypto coin,

cryptocurrencies are beginning to be taken a lot more seriously after a rocky start to entering the mainstream,

when increased speculative investment led to regulatory crackdowns in 2018 on the back of the negative

attention created by various crypto scams.

This market backlash slowed down the development of the sector and its potential positive contribution to

financial innovation through its underlying blockchain technology. The backlash also led to a spectacular crash

in the price of bitcoin, of over 80% – from around $20,000 in late 2017 to around $3,000 at the beginning of

2018, leading many financial experts to predict the end of crypto.

But the revolutionary contributions to payments efficiency and investment diversification instead saw the sector

proving resilient.

The industry went from strength to strength over 2019. It has been professionalising and the bitcoin price has

been stabilising, and much like the dotcom boom and crash, the products and services that offer real value to

consumers and investors are proving to have staying power.

It is also becoming apparent in the geopolitical tumult of the US-China trade war and Brexit, and alongside

government failures such as those in Venezuela and Zimbabwe, that crypto is an important hedge against

political risk, in providing a means to diversify assets externally.

This levelling has been supported by the announcement of Libra, and also by central banks, which have now

started to announce plans for Central Bank Digital Currencies (CBDCs) worldwide – backed by themselves – as

the competition from private money at scale to fiat currencies becomes apparent.

From the World Bank to the Bank for International Settlements, regulators have now had to play catch-up with a

sector the majority of them had long dismissed; their failure to understand its revolutionary impact means that

the stalwarts of the crypto industry are now several steps ahead in their expertise.

As one of the most outstanding fintech innovations of the decade, crypto holds enormous promise for allowing

countries to restructure their economies and leapfrog the constraints of the global economy, although there is

still a long way to go

In Africa in particular, where the payments revolution has seen 60% of the world’s mobile money pass through

Africa-based and led payments platforms, a race to capture the African crypto market has accompanied wider

increased investment interest in cryptocurrencies.

Twitter’s CEO, Jack Dorsey, recently announced he would be moving to Africa to explore the opportunities in

crypto. Nicolo Stoehr, host of the prestigious Crypto Finance Conference (CFC) held this January in St Moritz,

has said the potential on the continent is enormous. CFC will be attended by some luminaries of the crypto

world, such as the Winklevoss Brothers who run the exchange and custodian, Gemini, and Meltem Demirors, the

chief strategy officer of crypto hedge fund, CoinShares.

Africa has, like everywhere else, had issues with opportunistic crypto fraudsters and many Ugandans lost money

from the OneCoin ponzi scheme. Many African regulators over 2018 cautioned investors they would have zero

protections from losing money from crypto. However, all industries have their fraudsters and the negative news

that got the attention should not detract from the fact that there are without doubt scalable and world-leading

commercial projects taking off alongside amazing opportunities for development.

For example, decentralised payment network OmiseGO in March 2018 airdropped (gave away free) $650 worth

of crypto tokens to 4,400 refugee families in Uganda via the East Africa-based charity GiveDirectly as an

experiment in universal basic income. OmiseGO is supported by Vitalik Buterin, co-founder of Ethereum, which

provides the blockchain for Ether.

Crypto Adoption; Some African companies or business that have adopted the cryptocurrency techonology

AKOIN

Eager to improve financial stability in Africa while providing a secure monetary system and, in fine, boost

economies, the worldwide Senegalese singer Akon has launched, in 2018, a new cryptocurrency branded Akoin.

This currency aims to represent the economical basis of the Akoin Ecosystem, a future smart city project close

to Dakar, extended on 2 000 ha, gathering digital projects. As part of the Akoin Ecosystem, consumers will be

able to buy, save and spend their Akoin directly with their application to be available on each mobile phone by

December. Surrounded by computer engineers, the worldwide singer ensures the cryptocurrency Akoin will be

based on cryptography to secure and verify transactions and make it impossible to counterfeit. This initiative is

the continuation of Akon’s actions in Africa, which provided solar energy solutions in 18 African countries

already, through his Akon Lighting Africa foundation.

BANKYMOON

Bankymoon is a software and consulting firm with expertise in Blockchain technologies from South Africa. They

develop bespoke solutions for clients who require Bitcoin and other crypto-currency integrations. Bankymoon

has launched prepaid blockchain smart meter technology as a solution to electrical utilities struggling to collect

revenue and African consumers lacking formal banking facilities. They integrated Bitcoin payments into smart

metering systems that allow users anywhere in the world to send electricity, water, and gas to any recipient to

top up their utility meters.

Buycoins

Created in 2017, BuyCoins is the only exchange platform in Nigeria that allows Nigerians to buy and sell

cryptocurrencies (Bitcoin, Ethereum, Litecoin, and Bitcoin Cash) directly with their local bank account or debit

card, instantly with no wait time. BuyCoins developed thanks to the Y Combinator Summer 2018 program.

After the CBN’s order on the 5th Feb 2021, prohibiting the Nigerian Deposit Money Banks (DMBs), Non-Bank

Financial Institutions (NBFs), and Other Financial Institutions (OFIs) from working with cryptocurrency

exchanges. Buycoins found a workaround to help their customers, they no longer directly accept deposits or

process withdrawals in Nigeria but they introduced P2P (peer-to-peer) deposits & withdrawals by matching user

deposits to user withdrawal requests.

SUN EXCHANGE

The Sun Exchange makes it possible for South African businesses and individuals to buy solar panels and to

lease them to companies, farmers, or schools. This project allows the growth of innovative solar panel networks

thanks to mobile payments, online payment, and the use of cryptocurrencies.

LEAF

LEAF is a Rwandan company that is developing a platform of mobile applications to facilitate the conversion of

currency into virtual currency via blockchain technology, dedicated to the population that does not have access

to banks in Africa.

Conclusively, Cryptocurrency is not only a solution for the fate of the “unbanked”, it also allows citizens to be

in total control of their and to monitor the process. The intangible nature of digital currencies means that a

government cannot physically remove the wealth of a citizen. Successful adoption of mobile money in African

would be a high jump for a citizen to understand and adopt cryptocurrency or be a comfort zone for the citizen

who wants to trade digitally and refuse to try the new technology.