Bitcoin in Africa – Rhetoric and Reality.
Africa and Bitcoin – Rhetoric V. Reality
Africa is routinely cited as the region most likely to benefit from Bitcoin and blockchain based technologies. Terms like ‘the unbanked‘, ‘remittance‘ and ‘diaspora‘ are standard vocabulary for many in the Bitcoin community. Yet, despite all the hype, the technology is yet to take off in Africa in any meaningful way. The blockchain as a data structure is new, and it would of course take time. Still, there are no guarantees. Further, the real issues are routinely glossed over; favouring empty rhetoric over candid discussion, which is disingenuous. Our own, Gareth Grobler, has been saying for some time that the focus on Bitcoin’s potential anywhere besides the charity sector is premature. Specifically he notes that:
“At the moment, the only arena in which Bitcoin can make an impact on the here and now in Africa, is with charities.”
This lead directly to the ‘Resources‘ charity initiative we have launched at iceCUBED. As an African operating one of only a handful of bitcoin businesses in Africa, his words carry weight. And the fact that his statements fly directly in the face of the standard rhetoric, is revealing. Richard Boase has joined the growing choir of sceptics whose voices are finally starting to rise above the usual grandstanding. He is the architect of the Bitcoin tablets in the Kenya project; an initiative that earlier this year, sought to help introduce Bitcoin to developing economies. Starting with a six week trip in Kenya, the idea was to get local people using Bitcoin on tablets and blogging about their daily lives. [youtube=http://youtu.be/eJsc6eW1yQc&rel=0] His experiences in Kenya were jarring. In a recent interview with Let’s Talk Bitcoin he was candid in his assessment of the bombastic rhetoric coming from the Bitcoin community relating to certain issues. It’s quite clear that the mismatch between the dialogues at home in the west, and his experiences in Kenya left him somewhat disillusioned. This is understandable. Mr Kimani of the African Digital Currency Association (ADCA) is of the opinion that, while criticisms about volatility are overblown, Bitcoin does have a PR problem in Kenya. For Bitcoin to be useful to the poor, it is looking as though it will perhaps have to disappear into the background. In this way, it will insulate those who can least afford it from its wild fluctuations. Even if the protocol doesn’t become invisible, in a perverse kind of irony, Bitcoin would only be useful to the developing world with a much larger ‘market capitalization‘. A larger pool of liquidity could help to ease volatility and make it more reliable for the world’s poor, both as a medium of exchange and store of value. However, to get to that kind of market size, means enriching the handful of people who own almost all of the Bitcoins, and in this way it would mimic the massive wealth disparities they experience at home. On the face of it, it seems the handful of large Bitcoin holders who control most of the money supply, have much more to gain from widespread adoption in places like Africa than most of the local poor populations… at least for the moment. On this issue, the article entitled “Who Owns all the Bitcoins” makes for a very interesting read. Clearly Bitcoin has its own issues amongst rich western nations, where its use is most prevalent and it needs to get those issues in order first. Ultimately someone is going to have to find something useful to do with these Bitcoins in Africa if they are to take off. The technology is revolutionary no doubt, but right now, there is little value in them for any poor communities in Africa, except removing friction in the flow of micro donations to establish charitable organizations and causes. Though even that use case is wildly optimistic. Any use cases at this stage are pure speculation. To quote Richard Boase quoting William Gibson, “The Street finds its own uses for things.” Perhaps then the best approach is merely to make blockchain technologies as accessible and risk-free as possible, as they exist. Then we can let the local market decide how to use them.