Bitcoin may have taken Africa by storm, thrilling a generation of young tech savvy entrepreneurs hungry for alternative investments but it is not just the currency side of the technology that is making waves on the continent.
Companies are turning to blockchain – the secure, continuously growing digital ledger that underpins cryptocurrency transactions – to devise solutions to domestic issues. And with all the ingenuity of bitcoin, and none of the volatility, it has the power to be transformative in Africa.
African blockchain is at a crossroads. “Governments can choose to be in a race to be the most restrictive, or alternatively to be the most embracing and innovating when it comes to blockchain technology,” says Neil Blazevic, founder of Africa Digital Assets.
Many African countries suffer from instability and poor financial and physical infrastructure. Blockchain, with its exchanges secured by cryptography, thrives in such environments.
“The best uses for blockchain are seen where many parties from different sectors lack trust, or have different interests,” says Mr Blazevic, “as it can reduce corruption, increase transparency, automate accounting and improve processing times.”
In overcoming a lack of trust in transactions, blockchain’s potential is vast. Blockchain-based land registries can tackle land fraud. It could instil further trust in financial transactions, streamlining remittances and other payments. And by underpinning cryptocurrencies, blockchain offers a means of capital exchange in banking black spots.
In Kenya last year, the Supreme Court declared a disputed election “null and void”, after electronic voting machines were compromised. A blockchain-based voting system could instil trust in elections and democratic institutions on the continent.
According to Paolo Tasca and Geoffrey Goodell, executive director and deputy director, respectively, of University College London’s Centre for Blockchain Technologies, its impact in Africa could be far-reaching. “Reducing centralised control and surveillance would empower local cooperatives and businesses to develop trust relationships on their own terms, which in turn may have significant positive ramifications for local economies and for human rights,” they say.
Blockchain start-ups are proliferating on the continent, finding new ways to utilise the technology to solve local problems. Otlw in Kenya is developing an educational system built on an Ethereum blockchain. Project UBU aims to empower lower income South Africans with a blockchain-based digital currency. ChamaPesa uses blockchain to help local Kenyan cooperatives improve bookkeeping .
In Ghana, where land fraud is a serious concern, Bitland is providing land registry services using Bitshares blockchain, allowing Ghanaians to register property ownership, taking the burden of guaranteeing property rights and confirming transactions off corrupt and underfunded local authorities.
The picture is not entirely rosy. Brain drain, which afflicts industries across Africa – most damagingly in medicine and nursing – is a significant concern in the continent’s budding blockchain market. Plenty of cities are struggling to hold on to talented developers. Nonetheless, the enthusiasm around a technology that could help overcome barriers on the continent remains a significant draw.
How governments navigate it will prove important moving forward. “Governments should provide a friendly regulatory environment and use their resources to incubate a new generation of African blockchain developers,” says Mr Blazevic. African universities, too, he feels, should take steps to educate graduates in how to deploy the technology.
Whether blockchain can fulfil its potential in Africa will probably depend on whether it is viewed as an innovation in its own right. There is a concern that the suspicion around cryptocurrencies among governments and large companies in Africa will spill over into blockchain. But ultimately blockchain has far more applications. Bitcoin is the tip of the iceberg.
If blockchain avoids the fate of its volatile cousin, there is little doubt that it could allow many African countries to leapfrog time-consuming infrastructure creation, demolishing roadblocks along the way.