The financial or banking services industry has been at the forefront when it comes to digital technology. Africa has certainly not been left out of this digitization. From automation and electronic user devices such as ATMs to online banking and electronic payments, the sector has stayed ahead of the digital curve, benefitting consumers and corporates alike. The birth of cryptocurrency becomes the latest digital development this day.
Under the banking system, money travels from one person, goes through the bank before reaching the recipient. The bank here acts as a central mediator and charges a service fee for the customer, while also creating a record of the transaction. Just a few years behind, the bank was solely responsible for keeping these records, which show proof of any transaction. This is called the ledger system.
It often takes days to complete the process of verifying the information. The financial implication is that banks are able to dictate the cost of these transactions.
However, the introduction of the cryptocurrency – Bitcoins and blockchain, and its increasing acceptance within the digital community in the contemporary world, poses a threat to old-school currency – cash. As a virtual currency, Bitcoin is challenging governments, circumventing banks and threatening to blow actual currency out of use, especially within the digital community.
Bill Gates and former US vice-president Al Gore, made the following respective comments in support of the bitcoin buzz;
“Bitcoin is better than currency in that you don’t have to be physically in the same place and of course for large transactions, currency can get pretty inconvenient.”
“I think the fact that within the bitcoin universe, an algorithm replaces the function of Government is actually pretty cool. I am a big fan of bitcoin.”
In a February 2015 report, over 100,000 merchants and vendors accepted bitcoins as payment. The University of Cambridge, in another study estimated that there were going to be 2.9 to 5.8 million unique persons using a cryptocurrency wallet in 2017, with most of them using bitcoins.
There are increasing indicators of the acceptance of cryptocurrency in Africa, especially the sub-Saharan Africa. This is seen from the rise of digital financial companies or consultancies engaging in the trade of bitcoins. It is therefore not surprising that the year 2017 witnessed an increase in the popularity and use of bitcoins within the African digital financial community, as discussed below.
What is Bitcoin?
Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized form of digital currency. The payment system works without a reserve bank or a financial administrator to regulate its transactions. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
How does it work?
The system is peer-to-peer and transactions take place directly between users without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain.
Unlike the traditional banking system, blockchain short-circuits the ledger system in the blink of an eye by decentralizing it. In 2008, the initiators of bitcoins suggested that instead of carrying out a transaction in one single computer server at the bank, a transaction could be stored on thousands of computers around the world at the same time – rent-a-crowd worldwide.
The first Bitcoin specification and proof of concept was published in 2009 under the pseudonym Satoshi Nakamoto, who revealed very little about himself. He nevertheless, left the project in late 2010, and the Bitcoin community has since grown exponentially.
Cryptocurrency in Africa
The story of Bitcoins and blockchain is gradually becoming very popular in Africa and consequently, a lucrative gold mine too. From inception, transactions in bitcoin weren’t popular among the African digital community.
However, those who engaged consistently in it created bitcoin mines for themselves, and have been able to make a fortune from it. Today, South Africa is at the forefront of the Bitcoin business, having established the first office in Africa in 2016, precisely in Johannesburg.
“By investing in a smart new two-story building, credence is given to concrete that is that BitClub Network is a real business that’s invested in Africa and is here to stay” said Gerald, one of the investors in the business.
In Nigeria, another South African Bitcoin exchange, ICE3X in 2015 launched bitcoin trading in the country for the first time. This opened up a potentially huge market for bitcoin in Africa’s most populous nation. The company formed an exclusive partnership with Nigerian payment processor VoguePay, allowing users to directly buy and sell bitcoins from existing VoguePay wallets, using local currency, the Naira. ICE3X has rolled out merchant services allowing local businesses to accept bitcoin.
Talking to CoinDesk, ICE3X (pronounced ‘ice-cubed X’) founder Gareth Grobler, described Nigeria as “virgin territory” for bitcoin, with only a small number of traders and hobbyists involved in it then. But the story is gradually changing as the buying and selling of Bitcoin is taking shape with many exchange companies increasingly becoming involved in the business.
Short video by REMITANO, a Nigerian Exchange firm, explains how to buy and sell bitcoins.
Bitcoin in Cameroon
The idea of cryptocurrency and particularly bitcoin is relatively new in Cameroon. The word Bitcoin is still a very strange word to many persons, as compared to Nigeria, where it is gaining grounds. Apart from some members of the digital community who had been introduced to it, a good number of persons have just heard of it and are still trying to have a grasp of how it works.
Enstine Muki is one of the very first tech-bloggers in the country to have consistently educated the digital community on cryptocurrencies, particularly Bitcoin. He is popularly known as the “moneymaking blogger” because of his many educative blog publications on how to make money online.
Cameroonians who have been introduced to bitcoin for some time now, are already making some progress in the business. One can now buy bitcoin in the country online with Express Union Mobile, MTN Mobile Money, Orange Money, Moneygram, etc. Other digital currencies like Etherium, Dogecoin and more are accepted at trade.cryptoafrica.com.
This means that one can also buy airtime or credit from the mobile telephone companies using bitcoins. That’s how good cryptocurrencies have become in Cameroon.
Bitcoin Success Story of Shireen Ramjoo
Jay Caboz is an award-winning photojournalist and author at Forbes Africa Magazine who has written on bitcoin. In September 2017, he presented the bitcoins success story of Shireen Ramjoo. Ramjoo is a former communications and marketing employee at a South African bank who has made quite a fortune from Bitcoin.
At the age of 32, she was so interested in Bitcoin to the extent that she left her banking job to start her own consultancy. Today, she is CEO of Liquid Crypto-Money, based in Johannesburg South Africa.
“The first time I heard about Bitcoin, I had to write a press release for Standard Bank. It must have been early 2012. At the time I didn’t understand it, it just went over my head. I thought it was too technical. After I left the industry I wanted to be my own boss. I was looking for an opportunity and came across Bitcoin…” Ramjoo noted.
A trailblazing investment
“One year and seven months ago. November 2015. That was the month I started with R3, 500 ($260) and now it’s worth R37, 000 ($2,800). A Bitcoin was $260. Exactly one year later that Bitcoin was $900. It grew over 300%. Today it’s $2,800.”
“We are in an evolution of money here. What people don’t realize is when the internet first started some governments were against it. As more countries started adopting it, more countries got involved. That’s the same phenomenon happening here,” added Ramjoo.
“We keep hearing of [blockchain] from a more technological point of view. Remember the topic of money is social… when you understand that this is actual money that you can use – I can go and buy bread and put petrol in my car – then you start wanting to find out more.”
Shereen Ramjoo, Founder of Liquid Crypto-Money speaking about Bitcoin being the future of money. Countries will regulate Bitcoin in 2018. pic.twitter.com/PqM1NpnedS
— Young Prof Assoc (@ypalive) September 13, 2017
“You can compare it to when the internet first came and emails. The whole process of us writing a letter, going to the post office, then waiting for the letter to get to the person. When the email came, the postal service became a third party, and not being used as much as we used it before,” argued Ramjoo.
“There is going to be a new generation for banks. We are starting to see it play out in the market – governments starting to issue out their own cryptocurrency. Tunisia was the first country in the world to have its own government-issued digital currency… Some people are old school and will keep their money in the banks. But the bank of the future will not be the same as it is now,” she concluded.
What the future holds for Bitcoin
The idea of cryptocurrency and particularly Bitcoin and Blockchain is still pretty new in the world’s financial system. In Africa in particular, the concept is at its embryonic stage. It is, therefore, just the beginning of a new system that looks absolutely promising. It may grow to transform the world’s financial system and many will make billions in the process. Many people appear to be ignorant of what’s happening. Nevertheless, those that do, will likely become richer, if and only if they engage in this new digital financial innovation.