Cryptocurrencies hype and the prospect of an African digital money

A renowned crypto enthusiast and expert on Bitcoin trading, Neuner tweeted recently a simple fact that highlights the impact of the technological revolution under way.

Citing a Bitcoin exchange only two years old without any other physical branch and 300 employees making 200M$ benefits in the first quarter 2018 while a known German bank, hundred fifty years old with 99.000 employees was posting 146M$ in same the period.

Summing up the sheer magnitude of the disruption facing the financial/banking systems.

The same week there were news frenzy about Bitcoin value going bullish on the market, passing some mark and bringing the market capitalization of the whole crypto products to around 500B$;+36% up in April thus pleasing the crypto zealots and newly converted.

Most of them adamantly betting on the Crypto Coins as Assets or Store of Value (SoV) tradable on shares markets and or exchanges.

The most optimists hoping it may be the next currency reference similar to Gold yet decentralized and the most radical wishing it may replace the mighty dollar and weaken its preeminence and the grip of the US Federal Reserve on the global financial system.

Not surprisingly the very same week the Chairman of the American Security Exchange SEC dashed that optimism and denied any possibility Bitcoin could be considered as a classic Asset subject for the securities exchange transaction and regulations soon.

Heavy weight financial experts, some Nobel economists and wealthy people making the top list of Forbes magazine, major banks CEO, some IT powerhouses and Central banks have issue mixed opinion usually dismissing  the phenomenon or their impact.

Elaborated Scams, money laundering schemes, illicit products trade over the dark Internet challenging national polices/prosecutions and Interpol did not help their case.

And serious reported incidents or cases are not helping either: heist in millions of dollars in Asia, exchanges and crypto "miners" hacked supposedly after employee negligence or complicity, theft of equipment at mining sites (Iceland), kidnapping of experts holding secret access codes, loss of crypto wallets holding huge personal saving or wealth, etc

The matter has even moved into global geopolitics with Iran and Venezuela tempted to or creating a crypto currency pegged on the petrol to escape US sanctions or close watch.

Add rumors over security agencies in covert wars behind the scene - see the last story on Russia FSB moves against social media Telegram or CIA said tracking any North-Korean involvement into crypto Coins trading to evade sanctions look more inspired by spy novels.

A public video seen teaching 10 steps to create a private personal crypto wallet to start  dealing with Bitcoin exchange (or similar) is absolutely shocking. Looking more of a training on intelligence matters and requiring advanced IT skills and suspecting mindset.

No wonder why only IT gurus, cyber security experts and young people crazy about video games can grasp or comprehend the new crypto space and are the ones leading the charge. Many of them dreaming for the killer products to make them rich instantly!

They have created a new jargon and are building sophisticated networks over the Internet making the Internet of Value (IoV) coming faster than the Internet of Things (IoT).

Scary enough to deter any decision maker or sensible leader not equipped on the subject..

What about Africa involvement?

Closer to us, TransformAfrica2018 conference by next week in Kigali feature this very topic on the agenda- BlockChain BC applications and crypto currencies.

Similar conference under will happen in Kampala end next month.

But the trade of Crypto's is already happening in many African countries with various levels of sophistication or volumes be in Egypt, Kenya, Nigeria, SA or Zimbabwe.

An Initial Coin Offering ICO branded NuruCoin was announced from Nairobi and some similar initiatives (Kora) are emerging in West Africa around the CFA currency.

Innovators from Kenya and their partners are banking on the reputation of M-pesa to follow through with the BitPesa trading in Europe after they bought a Spanish exchange.

Taking the route of many innovators that develop and market crypto products for its efficiency, immutability and security, low fees to tackle on issues in the Africa context.

Like money transfer, land registration or smart contracts built-in above BC foundation.

Taking the Utility path similar to the introduction of bank cards, chip or mobile for payment technologies developed by Fintechs, Telcos, banks for their users/clients.

And threatening incumbent positions like SwiftNet, WesternUnion or Visa and MC.

Bitcoin alternatives or competitors (1.500+ eg LiteCoin, Zcash) have been trying to solve major problems mainly the conversion to fiat money and vice versa and related forex.

And to speed up the acceptance of businesses or merchants for daily transactions that imply the wider ecosystem readiness. That imply a tremendous amount of work.

Sometime it is less opacity needed and brought in by Crypto's branded Cut and Carat issued in Israel for the ultra controlled diamonds trade where trust is imperative.

Rwanda has taken a conservative approach with the Central bank BNR warning the public opinion on the above risks real or perceived, actually not seeing favorably the local banks and or stock brokers allowed soon for crypto transactions processing.

The narrow economy and the commitment to prudent handling of the macro economic and monetary policies agreed with the IMF under PSI shall prevail for some time.

Yet Rwanda as an Innovation and IT hub should be ready to embrace the BC revolution.

Global players IBM, Microsoft or WiseKey are bring in new applications or tools for developers. A startup with a killer apps on smart money transfer has demonstrated a Proof of Concept (PoC) to the IT Ministry, now waiting for the actual final product.

How long Rwanda will snub the call of the crypto currency, while being acclaimed as IT vanguard and set to develop a modern Kigali Financial Center, remain to be seen?

Her own model Singapore or Dubai have opened up Block-Chains, endorsing strategies to embed them into their next developmental plans on Global Trade and Supply Chains

Seen as imperative to keep their edge or competitive advantage in the geopolitical game.

IMF have softened up their stance on the topic and their DG Christine Lagarde in her last statement issued ahead of Spring meeting has indicated her openness to the debate.

The matter is hot topic at the European central bank ECB and EU parliament has opening debate to hear both side arguments. They can afford it and have no urgency.

Yet the matter is already set on the agenda on the next G20 at the ministerial level in Argentina.. The guidance or decision might be the turning point and shall have a lasting impact on the financial/banking services thrown today in anxiety and jittery mode.

Rwanda and her President also representing the AU has been formerly invited thus cannot ignore the matter and need to have some progressive and consistent position.

Is the continent ready for a Pan-Africa Digital Currency?

During the recent Business Summit prior to the AfCTFA protocol signing in Kigali by the way only ratified by Rwanda, the panelists have put on record the request for an African Digital Currency ADC to spur the intra-trade as a facilitation instrument.

Both a smart contract BC platforms and payments facilitation to ensure the trust needed in the e-commerce, continental intra-trade, supply chains and partners identification.

Some researchers at MBA and doctoral level have concluded it is feasible and desirable. The last one seen strongly advocating for a ADC pegged on gold reserves brought in by each Central bank in proportion and process to be determined by their continental body.

That development would fall in the category leading to a Stable Coin meant for global trade and taking into the equation macro-economic impact, monetary policies, inflation control and liquidity management. For a true stable financial system and global trade.

Canada, China, Estonia, Japan, South Korea, Russia and many other countries have some national digital currency under consideration or final stage of development.

An Israel firm launched the crypto Rubio pegged on Diamond and precious metals value.

Showing how the world is searching a new equilibrium for financial services dispensation.

To reflect the change of balance of economic power and heavy reliance on technology.

In fine, the needs and demand for new services come as the technology matures and when the world is soul searching new paths for wealth and jobs. Some innovations used obviously as defensive and offensive tactics against competition or for competitiveness.

The ADC initiative might have some merit and an historical significance at this junction whereas Africa has no choice than unite for real and leapfrog to survive.

Yet its implementation will need a bold leadership and initial resources allocated to build a favorable ecosystem to bring key players on board as to partner with Governments-AU

Telcos and ICTs, Services industries and local Banks, Academia and Innovation Centers shall be proactive to face this disruption hitting soon like a powerful typhoon.

Africa shall anticipate and invest heavily (energy and skills) or be left permanently behind.

Innovative SMEs and smart youth have an opportunity to enter the fray and jump into this multi-Trillions $ global industry shaping itself today similarly to the Internet debut.

Don't be surprised to hear Africa crypto coins branded as AfroPesa, Isaro or Wakanda.

After all, owners of these Crypto's or domain names, innovators or entrepreneurs from Africawho will launch successful BC applications might just be the next Gate or Bezos!


Eng. Roger Munyampenda, is a Management Consultant & Business Strategist.

The views expressed in this article are of the author.

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