A number of African entrepreneurs have participated in an expert working group set up to advise Commonwealth country governments on virtual currencies such as bitcoin, the associated risks and their impact on innovation.
Early adopters of bitcoin from Kenya and Nigeria joined those from Australia, Barbados, Singapore, Tonga and representatives from the International Monetary Fund and World Bank to form the newly created Commonwealth virtual currencies working group; which met at a three-day conference in London at the end of August.
The working group issued a number of recommendations to Commonwealth governments on issues surrounding virtual currencies such as bitcoin.
According to the group’s recommendations, Commonwealth governments should review their legislative response to virtual currencies such as bitcoin to ensure they are addressing associated risks and avoid stifling innovation.
The recommendations urge countries to regulate virtual currencies and strengthen law enforcement – including through the provision of specialised training for representatives of the justice system, regulatory authorities and members of the financial sector – to counter risks such as criminal misuse.
“Member states should consider the applicability of their existing legal frameworks to virtual currencies and where appropriate they should consider adapting them or enacting new legislation to regulate virtual currencies,” the group concluded.
Nonetheless, with the right regulatory environment, the working group concluded that virtual currencies have the potential to benefit countries and drive development.
One of the African entrepreneurs to participate in the working group was Lorien Gamaroff, chief executive officer of South African bitcoin startup Bankymoon, who spoke on the potential benefits of bitcoin to the utilities sector across Africa.
“In Africa around 80 per cent of the population don’t have access to banks and are mainly engaged in a cash economy,” Gamaroff said.
“I come from an energy background and one of the biggest problems is how to get people to pay for their utilities. If people could use bitcoin to make payments via mobile phones that would be easier. Using an electronic payment system that doesn’t rely on a bank, fees would be lower. By linking a bitcoin address to a smart meter means you can be anywhere in the world and top it up,” he said.
Nigerian entrepreneur Kunmi Otitoju was also an early adopter of bitcoin in Africa, accepting bitcoin at her fashion label Minku. According to Otitoju, the real value of bitcoin on the continent has yet to be unlocked, and heightened use and uptake is the route to finding this value over time.
“Bitcoin opened up a new interest base for me. There’s been a lot of talk about how it can transform Africa but to acquire or mine bitcoin you need really powerful computers. Africa hasn’t been a place that has generated many bitcoin, so you have to buy them and when you factor in the volatility of their value, it’s very risky,” Otitoju said.
“Globally, digital currencies such as bitcoin are a new thing. No one knows what their usefulness will be, what the ‘killer app’ that will make them indispensable will be. We just have to keep using them and creatively expanding their use. Their value will emerge over time.”