The outlook for crypto and blockchain in Africa

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The Cryptocurrency Exchange Coinbase’s listing on the Nasdaq at $ 86 billion pushed bitcoin to an all-time high of $ 65,000 BTC to USD in February 2021. Other cryptocurrencies, or altcoins, such as Ether and Dogecoin have also seen historic highs alongside stellar prices for the blockchain. digital assets such as non-fungible tokens (NFTs).

Bitcoin’s extreme volatility is often cited as a reason not to invest, but it is an emerging rising class and as such its volatility is understandable. However, with speculative alternative investments like these, you probably shouldn’t be gambling with the house’s money anyway – you should only invest with what you can afford to lose.

Indeed, seeing the unprecedented flows and returns of the asset class, the UK’s Financial Conduct Authority (FCA) warned investors on January 11, 2021 that they could lose some or all of their money by investing in bitcoin.

The FCA is concerned that: consumers may not be protected against money laundering given the incomplete regulatory framework for cryptoassets; price volatility exposes consumers to extreme losses; the complexity of the products, especially with crypto-derivatives, makes it difficult for consumers to fully understand the risks; and there may be liquidity issues when trying to convert crypto back to cash.

Nonetheless, while the regulator is right to stand up for consumers and market integrity, the aforementioned recent developments mean that the asset class is undoubtedly professionalizing. It is also slowly becoming a more generally accepted means of payment. Companies such as PayPal allowing payment in bitcoins and altcoins will only accelerate this.

The potential for bitcoin in Africa is particularly good, with 60% of global mobile money already passing through the continent, and Nigeria being the world’s second largest bitcoin market after the United States.

The Next Frontier: Central Bank Digital Currencies

The next frontier for crypto is central bank digital currencies. Sovereigns are already positioning themselves to create digital fiat in the form of central bank digital currencies (CBDCs) as crypto begins to challenge currency issued by banks.

In fact, crypto does particularly well in countries with macro headwinds. That’s really the point, in economics there has long been the concept of “the illusion of money”. If you think fiat currency is real or well governed, you clearly haven’t thought about QE properly or spoken to Zimbabweans and Argentines lately.

Some of the magic blockchain money on the internet may just give central banks the challenge they need to start thinking about ways to make money more efficient as a public good. The announcement that the UK is planning to create its own ‘Britcoin’ alongside efforts to support the digital yuan and euro, means crypto and blockchain are here to stay.

Expert views

For IC Intelligence Insight 4, I asked some of the industry’s leading experts to give us their thoughts on the above developments.

Crypto-currencies: the answer to the payment problem in Africa?

Owen Odia, Country Director for Nigeria at Luno, examines how cryptocurrencies could be an ideal antidote to expensive cross-border payments in Africa, alleviate currency instability, and help expand financial inclusion.

“With the right infrastructure, cryptocurrencies could provide the gateway to a much needed transformation of the financial systems of many African countries,” she said. Read more.

Central Bank Digital Currencies and the Future of Crypto and Blockchain in Africa

Professor Monica Singer, South African Head of Consensys Solutions, explores the reasons why so many Africans remain unbanked and underbanked.

“The time has come for African central banks to integrate existing mobile phones and implement CBDCs backed by blockchain technology to bring financial inclusion and the privilege of e-commerce security to all,” a- she declared. Read more.

How NFTs Will Revolutionize Africa Forever

Erikan Obotetukudo, Co-Founder and Chairman of Crypto for Black Economic Empowerment (CBEE), takes a look at the value of non-fungible tokens (NFT) for artists and fans.

“Without getting too technical, think of NFTs as a key that represents the unique property of a digital asset. Assets can range from online media and intellectual property (such as art, games, music, books, movies), infrastructure (such as titles, deeds), identity (such as identity cards and passports) and more, ”she explains.

“If Burna Boy released a song as NFT today with a limited supply of just 1,000 copies available for purchase, 1,000 owners all over the world could claim exclusive access to one of Burna’s few songs. Boy. This makes it a collector’s item. If one of the NFTs is bought by many people, this is an example of “fractional ownership”. This means that several people pool their money to own an NFT. If Burna sells each NFT for the equivalent of $ 50, then he earns $ 50,000 for the one song he played directly to his audience.

She examines four different value propositions of this NFT use case for Africans:

Ownership and wealth creation Income and royalties Liquidity, collateral and financial freedom Creative Economy, African Youth, and Global Perceptions.

Read more.

Some practical applications of blockchain and crypto in Africa

Oliver Oram, CEO of Chainvine, explains why he believes Africa has the potential to be the most exciting region for blockchain and crypto. Read more.

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