Africa is such a diverse continent, and each country will have a different way of integrating bitcoin and other digital currencies into their lives or culture.
However, even though there is a high level of potential for the use of bitcoin in Africa, uptake has been, and will continue to be, slow. Education will be key to ensuring people understand how it works.
This is the view of Chad Robertson, co-founder and chief executive officer (CEO) of South African startup Regenize, which is encouraging people to recycle by providing them with virtual currency that can be exchanged for a variety of goods.
The startup provides recycling services, collecting it for a monthly fee, and then rewards these customers with virtual currency that can be spent on Regenize’s mobile voucher platform to purchase vouchers for a variety of goods.
Robertson is happy with Regenize’s impact since its launch last year, but says uptake of digital currencies will depend on the industry.
“Using bitcoin as a means of purchasing everyday goods will be determined by the adoption rate of your larger retailers. However, for the financial services sector it has a high uptake due to reduction of costs when transferring bitcoin,” he said.
There are a number of factors that hinder the uptake of digital currencies like bitcoin in Africa, according to Robertson. He says awareness and education are vital factors.
“Specifically, in South Africa, we have such a huge gap that keeps on growing regarding wealth but also knowledge on the ever-changing tech landscape. If I’m sitting in a coffee shop in the CBD, it’s quite likely someone will know what bitcoin is. However, head down to the Cape Flats or townships, and it’s highly unlikely that there’ll be many people who are aware of this,” he said.
“However, this lack of education and awareness could be drilled down further on to find the root cause. There are too many people living in poverty in South Africa and Africa. They simply cannot think about using bitcoin as it’s not relevant to their needs. The local spaza shop does not accept bitcoin so how will someone get their bread or milk? Schools don’t accept it for school fees. You cannot buy electricity with bitcoin to keep your lights on. So why would they care or want to be educated on it?”
Robertson said if there was to be real uptake of digital currency, there was a need for solutions that work for the majority of people.
“If you look at the available places one can spend bitcoin in South Africa, it makes sense why it’s the minority who’s focused on it,” he said.
Security concerns also need to be addressed before mass adoption, which also links back to education.
“There are many people who have been scammed on the internet, especially those who are digitally uneducated. Therefore, there is a fear and a stigma around using the internet as a place to transact,” said Robertson.
Visibility is also an issue, with the majority of Africans used to having a brick and mortar institution available for their enquiries.
“With bitcoin, there’s no visible place to lay a complaint or an enquiry. I would think change management would play a large role in the transition from using a bank. For generations people have given their money to the bank and there’s a trust as the bank is a brick and mortar institution. With bitcoin, people might have fears of what happens to my money? Who do I complain to?” he said.
“If we really want to get the majority of Africa onboard, we need focus more on the people and their needs instead of trying to convince them to change.”
Abraham Cambridge, founder of South African startup The Sun Exchange, which uses bitcoin to crowdfund solar projects and recently took part in the Barclays Accelerator in Cape Town, identifies an even more basic problem, though it is one he sees being solved relatively quickly. His issue is with the low level of data access and smartphone adoption.
“Feature phones don’t really cut it, but it is just a matter of time. With smartphones getting cheaper everyday, soon anyone in Africa will be able to use bitcoin services where data is available,” he said.
“To help reach this point, at The Sun Exchange we are developing hybrid solar/data access projects with cryptomines embedded into the infrastructure. This will ensure that remote villages get energy, communications and their own digital currency money supplies in one fell swoop.”
However, Cambridge is very optimistic about the future of blockchain technology in Africa.
“This stuff is just getting started. Think global, free to use, secure computer systems that run autonomous businesses, data storage and energy transfer. Whole governments will be running on blockchain applications. The UAE city of Dubai has already set a target of being 100 per cent running on blockchain by 2020 so we are really not far from this world,” he said.
“Smart contracts running on self-driving cars that ‘bid’ for their position in traffic is just one of many incredible ideas I have come across that will change every aspect of our civilisation.”