In the past decade, the continent of Africa, albeit with many differences from country to country, has benefited hugely from the cellphone and mobile banking.
Last year, the M-Pesa mobile money platform celebrated its 10th anniversary after originally being only a pilot scheme run by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania.
The M-Pesa story is well known, so there is no need for repetition there, but anything that rose from obscurity to a platform that now carries the equivalent of nearly 50% of Kenya’s GDP has the right to be described as awesome.
The cellphone itself has created a raft of innovation and apps that Africans have tailored for their needs. No need for the fixed-line internet in Africa, no need for that expensive infrastructure; the cellphone is suffice.
It seems strange, however, that the other revolution, that of blockchain and cryptocurrencies, seems to have had little effect in Africa.
Further inspection uncovers several reasons for this. In Africa, crypto acquisition comes with a premium, similarly to a decade ago when voice calls to Africa from Europe and North America were more expensive than other places.
There is a high arbitrage phenomenon that is prevalent with limited choice of high-liquidity bitcoin exchanges, stricter exchange controls or where access to international bank accounts is limited.
As a result, the local price of bitcoin across the continent can trade up to a 35% premium to the global dollar average taken from all major exchanges.
Dovetail this with the lack of credit card penetration - South Africa leads the way at 49%, but other countries such as Nigeria only have rates of 3% and 1% respectively - and it’s easy to see why crypto adoption has been slow.
Ironically, the very success of mobile money platforms such as M-Pesa mean that credit card adoption is likely to be very slow.
As so many times before, Africans have adapted. In 2006 there was a similar situation across the continent when P2P networks (the very definition of decentralization) appeared when it came to airtime usage. People would trade airtime between themselves to escape onerous telecoms charges.
Now it’s happening with crypto as users cross the service gap by forming P2P networks where anyone can buy or sell cryptocurrency. Michael Kimani, Chairperson of the Blockchain Association of Kenya, is convinced of this.
These informal networks, resemble the airtime currency informal networks of pre-2006 that powered remittance payment networks before M-Pesa became a thing.
There is certainly a demand. By looking at Google Trends over the past 90 days and it is clear Africans are searching for ways to be involved in cryptoassets and cryptocurrencies.
At time of writing, the top three countries searching are South Africa, Nigeria and Ghana, outstripping those of Singapore and The Netherlands, be that bitcoin, cryptocurrency or altcoin.
So last week’s launch of a new African-focused cryptocurrency exchange Coindirect is trying to match this demand with supply.
The company believes that Africans stand to benefit the most from the potential of cryptocurrencies, but the current crop of exchanges overlooks Africa and its unique complexities.
Coindirect has a three-pronged approach to accelerate the adoption of crypto in Africa. It says it has the potential to address the systemic volatility, insecurity and lack of governance that dominates most African fiat currencies.
Coindirect Co-Founder Stephen Young believes it is time for Africans to take control.
If Africans are to benefit from the cryptocurrency revolution we need make it easier to buy, store and trade cryptocurrencies. As Africans, it is our responsibility to help build the infrastructure and we need to be a part of the revolution.
Based in South Africa, the exchange is a digital currency service provider that allows users to buy, convert, store, send or sell more than 40 cryptocurrencies. The platform combines a peer-to-peer marketplace, wallets and an exchange to allow customers to access cryptocurrencies from their local currency.
With aforesaid arbitrage differentials of up to 35%, demand is likely to be high for Africans after the exchange launched last week.
Whether it will be a pivotal moment that brings cryptocurrency mass adoption to Africa remains to be seen.
If history is anything to go by, when Africans take control, good things happen. Let’s hope this is a good one, the future of crypto could be African; as ever the revolution continues to fascinate.