An Overview of Blockchain in Africa

At 20:00 on January 7th, the 40th BlockMania AMA live broadcast and the 3rd BlockMania "Global Perspective" will continue. This BlockMania focuses on the magical African continent. The theme of this issue is "Is there a blockchain in Africa?" Share The guest was Thomas, the founder of Cryptology and former Shaka Ventures CEO. Thomas broke the prejudice for everyone, restored the truth of African blockchain, deeply explained what problems blockchain can solve for African economy and society, and introduced what kind of blockchain projects able to succeed on the African continent.

The following is the full review of this AMA

When it comes to Africa, many friends will actually have misunderstandings. Can you first introduce Africa in your eyes and help everyone eliminate stereotypes.

Diseases, wars, gold and diamonds, animal world prairie, these are the key words that everyone uses when mentioning Africa with new friends. In fact, Africa is far from being summed up in these few words.

Here are a few points that I think are the most important:

1) First of all, Africa is not a country, but a continent composed of 54 countries (defined by Chinese diplomacy). The governing systems and judicial mechanisms of various countries mostly continue the rules of the Commonwealth or French colonial period, but are influenced by the history and culture of each place, and differ in many details. Historically speaking, the formation of the territory of African countries today is entirely left over from the Western colonial period. The differences between countries on the African continent are huge, and they must not be understood in terms of the federal system of the United States, or the differences between "provinces" in China. It may be more appropriate to use Europe as an example. The official languages ​​of African countries are mainly English, French and Portuguese. The local language is Bantu language, which has innumerable branches. Most of the governing and legal systems are based on the British Commonwealth and France, and of course there are countries like Nigeria that inherit the mantle of the American federal system.

2) Africa is too big, with huge differences in hydrology and landforms. The maps we see every day, due to the deviation of the Mercator projection, visually underestimate the vastness of the African continent. The land area of ​​Africa is approximately 3.145 China. Such a vast continent naturally has hot places, deserts, lakes, and snow-capped mountains. But don't always think that if you go to Africa, it will be very hot and you will get tanned.

3) Africa is the continent with the fastest growing population today. As of December 2019, according to United Nations data, the current population of Africa is 1.323 billion, and the average age of the continent is 19.4 years old! ! 19.4 years old! ! (The average age of Japanese citizens is 46.7 years old this year, and the average age of Chinese population is 37 years old.) The United Nations predicts that by 2050, the population of the African continent will reach 2.5 billion. This is a vibrant continent!

4) Usually, if you want to classify Africa, the Sahara Desert is the boundary in terms of culture, religion and race, and it is divided into North Africa and Sub-Saharan Africa (Black Africa). There are many Muslims in North Africa, Arabic, culturally and ethnically belong to the MENA (Middle East and North Africa) region; sub-Saharan Africans are mostly black, and more religiously diverse. Today’s sharing will mainly focus on those in sub-Saharan Africa Black Africa region.

5) Africa is indeed lagging behind, and the Gini coefficient is indeed high. But compared to the rendering in the movie, it may not be as poor as you think. I suggest you read Factfulness by Hans Rosling to learn about the world we really live in.

Is Africa's Blockchain Market Active? This is due to what kind of political economy and social environment lead to?

It’s a big question, so let’s give a general answer: In Africa, the technology development related to “Blockchain” stays at the application level, and will always stay at the storytelling stage. Encrypted digital currency (mainly BTC) based on blockchain technology is just in demand. It is not active on the whole, but there is a trend of becoming more and more active. Individual markets such as Nigeria, Egypt, South Africa, Kenya, and Zimbabwe are already very active.

As I said before, Africa is composed of many independent countries, so the answer to this question must be explained by the country. Take several countries as examples:

With a population of 200 million, Nigeria is currently the country with the highest GDP in Africa. According to the estimation of our company (Cryptology), the average daily trading volume of OTC is around 300-500 BTC. There are many local exchanges, Binance and other major exchanges have already opened legal currency channels, and there are companies such as BitPesa (please Google yourself) that focus on cross-border payments.

As a veteran African economic power, South Africa has the second largest GDP in Africa and the largest per capita GDP in Africa. It has strong purchasing power. Due to foreign exchange controls, there is a high demand for digital currency. Luno, the largest firm in Africa, comes from South Africa, and international firms such as Huobi also have Desks in South Africa.

Kenya, the country with the best economy in East Africa, is also the most open and westernized country in East Africa (the landing station for African entrepreneurs). The central bank has repeatedly warned that BTC is listed as a high-risk investment, and at the same time it has taken measures to ban many digital currency-related companies. However, due to the large population mobility, the accumulation of talents, and relatively loose foreign exchange, it has become the most active blockchain ecosystem in East Africa. It is also one of the few countries in Africa with a developer ecosystem. ADA, EOS, ETH, and many small currencies often come to preach and do meet ups. If I remember correctly, EOS Nairobi has even reached the 23rd global node.

Uganda, the little overlord of East Africa (mainly fighting ability), the economy is open, the foreign exchange is open, and the economy is small. At the beginning of 2018, under the leadership of the big boss of Binnace CZ, he obtained the government's first Non-objection letter (understood as a license) on digital currency exchanges. Uganda has become another government willing to endorse Binance after Malta. In May of the same year, the first Africa Blockchain Summit was held in the capital Kampala, and the president and central bank governor gave opening speeches.

Zimbabwe's economy has been weak all year round, foreign exchange is blocked (it is said that the central bank's foreign exchange reserves are only 1 billion US dollars), and the central bank has repeatedly abolished banknotes. There have been various legends about the shocking premium of BTC. .

As for the environmental background that produced this trend, I will list a few key points:

1) The demand for cross-border payment is extremely high: the population flow between countries is large, but the central banks of each country settle independently, and the foreign exchange accommodation capacity is poor.

2) Traditional banks can’t meet the needs: Banking services are bureaucratic (many rural people can’t even complete KYC), and the fees are high. As of 2014, 66% of people in sub-Saharan Africa do not have bank accounts.

3) The inflation rate of most national currencies is high, and the people need relatively stable means of asset preservation.

4) There is no compliant and stable securities market for people to invest.

5) Bribery, arms, gold resources and other funds transfer needs that are not convenient through formal channels.

Can you describe the current ecological landscape of blockchain in Africa? What are the links in the industrial chain?

In fact, there is no complete "blockchain ecology" in Africa, mainly for the investment and use of digital currencies.

Technology and technology applications have not seen actual cases so far. There is a project called Bitland, which records various parameters in land property rights on the chain. Participating in activities is often mentioned as a positive case. In fact, this project has never really taken off. There are many reasons. If you are interested, you can open another topic "Black Entrepreneurship Projects I Have Seen in Those Years." . "

The ecology of the currency circle is relatively complete, from mining to OTC, from ICO to exchanges. Every development is a big topic. Give an example of each.

The core of the mining industry is the price of electricity. Everyone thinks that Africa lacks electricity, but in fact some African countries have very developed hydropower. To put it another way, the backwardness of power transmission infrastructure (power transmission and transformation) in most African countries has resulted in surplus power generation capacity. This makes it possible for countries with large hydropower such as Ethiopia to have lower electricity prices. Currently (through unspeakable special channels), the lowest electricity price that can be obtained in Ethiopia is 2 cents. There are indeed some small mines with Chinese background operating in Ethiopia. Ethiopia is located on a plateau, and the temperature near the target power station is around 12-20 degrees all year round. After addressing the security issues, Ethiopia is indeed a suitable place for mining development.

There are also some small-scale mining stations (and personal mining stations) in the vast land of Africa, all of which are based on the use of special channels to obtain cheap electricity.

OTC, due to the opacity of information, the vast majority of BTC/USDT transactions are OTC. Our company "Cryptology" is currently one of the largest OTCs in East Africa. OTC mainly solves two practical needs: one is to act as a bank between African countries; the other is to help local digital currency investors integrate legal currency and digital currency.

ICO, KORA based in Nigeria is the largest ICO project with a local team background in Africa that I have seen so far. According to disclosures, in early 2018, a total of US$12 million was completed through public offering and private placement. They immediately invested in Quidax, a local Nigerian exchange. Two years later, KORA has just launched a new mobile payment product, KORA Pay, and the transaction volume of Quidax is also slowly increasing in Nigeria. This wave of operations is very coquettish and smooth, and it is also one of the few projects that I have seen landing in Africa (data cannot be disclosed).

On the other hand, pure Ponzi air projects like One Coin are also common on the African continent. Amazingly, most of the victims I know know it's a scam and just regret taking the last set.

Exchange, Local Bitctoin should be the largest exchange in Africa (still decentralized?). In addition, Luno is considered the oldest exchange in Africa, but there are only two trading pairs; Binance has many trading pairs and has a good reputation; other big exchanges like Okex, Huobi, Bitfinex are known to many people, but because they do not have a bank card, Not willing to do KYC, cash transactions and other issues, there are not many users.

Wallet, this is very interesting, the "Blockchain" wallet is absolutely mainstream in Africa. It has obvious advantages, fast certification, and small price fluctuations (in fact, fluctuations are delayed, often 10$ lower than that of large exchanges), and it is used by 90% of African currency practitioners. As for the reason for the rise of this wallet, the local people explained to me that because the most popular names heard by the local people are Blockchian and Bitcoin, so they think that this "Blockchian" is the "Blockchian" that BTC is based on! Therefore, it is very important to choose a straightforward name for starting a business in the African market!

What do traditional financial markets in Africa look like? What can blockchain do in the financial field?

The traditional financial market in most African countries, or understood as the banking industry, is extremely bureaucratic and has a large number of Unbanked people. This is why the World Bank and the United Nations have repeatedly emphasized the importance of financial inclusion (inclusive finance) in the 2030 goal.

There are many reasons for persistent poverty in Africa, and I think banks are a very big one. Imagine that your second aunt who is doing business in the countryside carries papayas on her head to sell on the street at the entrance of the village every day. No matter how many papayas she sells, she gets cash, and the cash will be stored in every corner of her house. Banks are very unfriendly to many middle- and lower-class people. There are few online stores and high account opening fees. Some bank deposits have fees (above a certain amount), account maintenance fees, cash withdrawal fees, inter-bank settlements, and transfers. There may be fees, The meager surplus of the working people has been eaten by the bank. There are too many similar articles, so I won't go into details.

Fortunately, in many African countries, two types of financial service providers have emerged under oppression. One is mobile wallet services based on operators; the other is a community credit system.

Operators don’t talk much about mobile wallets, such as mpesa, airtel money, and MTN money, which are similar to the SP business in China in the early years. Open a set of storage and settlement system in addition to telephone charges. It is simply understood as giving money to the operator to help you save and make settlements. At present, Kenya and Tanzania, two East African countries, have mobile payment penetration rates higher than 80%.

The community credit system in Africa is not well understood by Chinese people. According to the scale and assembly method, it can be roughly divided into Sacco (the name in East Africa) trade union/community, with up to a thousand people; Group finance, with a few to dozens of people . A mutual guarantee consensus is reached within the community, and individuals hand over the money to the elected person in charge for asset management. Savings and loans are available (some Group finances are only available for loans).

As for what problems "blockchain" can solve in such an environment. I believe that all the viewers are excellent entrepreneurs, practitioners, or fathers of funders. You must have your own opinions and answers. I will stop playing tricks.