Africa Proving Bitcoin Is So Much More Than Just Remittances
Remember “bitcoin for remittances”. It was huge a little while ago. Companies like Beam from Ghana and Kenya’s BitPesa were going to use bitcoin to make the sending and receiving of money faster and cheaper for everyone.
It didn’t work that way. Beam ditched bitcoin. BitPesa pivoted from remittances. Other companies shut up shop almost as quickly as they had opened.
Using bitcoin may well have been a more efficient and cheaper way of sending money than, say, using Western Union. But the fact is people didn’t understand it, and more importantly, didn’t trust it. The legacy of Mt. Gox is too powerful.
Bitcoin in Africa is dead. Long live bitcoin.
A phoenix from the flames
Hang on, though. Just because individual Africans couldn’t get their heads round using bitcoin to send money, doesn’t mean it has no useful application on the continent and globally. Just last week, Barclays Africa was at the centre of the major development in blockchain technology that could change the way international trade is conducted.
Alongside Barclays UK and Israeli tech startup Wave, a graduate from the Barclays Accelerator in New York, Barclays Africa completed the world’s first trade finance transaction using blockchain technology.
The trade took place between Ireland and the Seychelles, and was the first time such as occurrence has happened live. Electronic funds and documents were quickly and securely sent, with a distributed ledger recording and verifying the ownership of the documents. Barclays quickly heralded a new era of trade finance, and says it will run further tests.
More than just remittances
The Barclays trade finance move may have made the news, but bitcoin has been undergoing resurgence for some time. And it is not about remittances, and surprisingly it is not even about financial services in some cases.
One company using bitcoin in an innovative way is South Africa’s The Sun Exchange. The company has launched a P2P lending platform that taps into the bitcoin community and helps them fund solar energy projects in Africa. The beauty of it is that it does not need to encourage people to adopt bitcoin, but rather targets those already using it.
The Sun Exchange has gone live with its first project, at the Stellenbosch Waldorf School in the Western Cape, which is now powered by a solar energy system funded through the platform.
Another South African bitcoin company tapping into the existing bitcoin community is Custos Media Technologies. Custos goes a step further than most bitcoin/blockchain startups, in that it is not even focused on financial services.
Instead, it is focused on tackling digital piracy. Custos embeds “bitcoin bounties” into copies of files which are sent to reviewers. If this content is illegally redistributed, that bounty can be claimed by a bounty hunter. Once this happens, Custos can see it happen on the blockchain, and alert the owner of the copyright.
The future is brighter, and different
Custos CEO G-J van Rooyen believes there are still plenty of opportunities for bitcoin to become a major concept in Africa, given the continent’s “interesting relationship” with new technology.
“African markets tend to skip certain technological stages, in favour of very rapidly adopting other technologies without the burden of legacy infrastructure. We saw this with mobile adoption,” he said.
“For bitcoin and other blockchain technologies, Africa might present similarly fertile ground. At this stage, the services built on top of bitcoin and other blockchains are still too immature to see rapid, broad adoption – bitcoin hasn’t had its “M-Pesa moment” yet. But it is certainly a continent waiting for better ways of moving funds and ownership.”
For van Rooyen, non-fintech applications of blockchain will also have an important part to play.
“Since production and consumption of content is becoming more global, it makes sense to have content protection mechanisms that are unconstrained by geographic boundaries,” he said.
Bitcoin is certainly unconstrained by geographic boundaries. However, to date, is has been constrained by other factors, such as the legacy of Mt.Gox, price volatility, and lack of understanding amongst users.
Companies, big and small, are overcoming this by developing solutions that tap into the existing bitcoin community rather than relying on the creation of one in Africa overnight. The hope is that as innovative applications for blockchain tech – be they in trade transactions, lending for solar projects, or tackling digital piracy – become more common and known, other avenues might open for the application of this innovative technology.
“Bitcoin for remittances” may well one day become a genuine thing. In the meantime, the concept is making baby steps in other areas where its impact can be more immediate.
Tom Jackson is a tech and business journalist in Africa, and co-founder of startups news portal Disrupt Africa. He splits his time between various African cities covering the latest development in the continent’s exciting economic story.