By Reuben Orinda
We can’t outlaw something that we are not yet competent with, or regulate a game that we don’t know how it’s played. We have not reached a position where we can costerise (sic) cryptos, but we welcome applications from interested parties. All should feel free to present their ideas for consideration,” Prof Luoga, the Bank of Tanzania governor, said in Dodoma last November, about six months after President Samia Suluhu Hassan first spoke about cryptocurrency.
“I know that throughout the world, including Tanzania, they have not accepted, or started using these routes. However, my appeal to the central bank is that you should start working on that development. The central bank should be ready for the changes, and shouldn’t be caught unprepared,” President Hassan said last June in Mwanza.
Just a couple of days ago, as we started 2022, I remembered Prof Luoga’s statement, which made me reflect on blockchain technology, especially considering that momentous milestones were achieved in this disruptive technology in 2021. The world’s first and most popular cryptocurrency, bitcoin, reached an all-time high of over $68,000 on November 10. A mere investment of $100 in bitcoin around 2011 would have made you worth at least $4.3 million as of December 2021, which is just ten years. There aren’t stocks on Wall Street that would have made you this rich.
We have seen many global companies such as Tesla, Mastercard, BNY Mellon, Twitter and Square investing in cryptocurrencies. The world’s richest person, the tech billionaire Elon Musk, caused a stir by publicising Dogecoin. Some other companies started to accept cryptocurrency payments or exchanges. They include Mastercard, Pavilion Hotels & Resorts, AXA insurance, Microsoft, Tesla, Visa, Amazon, Paypal and Starbucks.
NFT (non-fungible token) was another blockchain revelation that made it big in 2021. $24.98 was the average NTF price in January 2020, but this has since skyrocketed to around $900. The First 5,000 Days, Human One and CryptoPunk made headlines as NFTs sold by multi-millions worth bids. OpenSea is the number one market for NFTs, with a total sales volume of $14.6 billion in 2021.
And what about Web 3.0 that makes Twitter founder Jack Dorsey restless. Web3 became a buzzword in the last quarter of 2021, with reports showing that more than 65 per cent of active developers had already engaged with Web3 backed by Ethereum blockchain by 20 per cent.
In a nutshell, this is the future of the internet, where users create content and control networks and money, circumventing internet giants such as Google and Meta, which currently set standards. Who wouldn’t like that, honestly?
What is the blockchain status in Africa?
In Africa, the involvement in blockchain technology is significant, especially in cryptocurrencies, particularly bitcoin. However, not much has been done with regard to NFTs and Web 3, although there are a few individuals making progress.
With a huge unbanked population, Africa has infrastructural problems, especially those involving payments despite huge steps having been made in mobile money. Cryptocurrency would have been a lifesaver for Africa, but, unfortunately, African governments have been hostile to cryptocurrency.
The situation leaves Africans with only P2P options in cryptocurrency platforms such as Binance. There are no rules to support or allow public projects involving cryptocurrency.
Kenya and Nigeria are the foremost cryptocurrency adopters in Africa. However, their central banks have yet to support this development. Kenya, where the sector is unregulated, is the best-case scenario, while Nigeria is now shutting down accounts involving cryptocurrency to protect its currency, which is not viable. Nevertheless, Nigeria is among the first countries in Africa to accept the use of cryptocurrency.
If you scrutinise this, you would understand how cryptocurrencies and blockchain, in general, could benefit Africans, especially in money transfer and NFTs. Unlike in Europe and America, cross-border money transfer is an issue in Africa, but with cryptocurrency, this is just a piece of cake. If you have ever made a crypto exchange, you should know what I mean. Governments shouldn’t fear cryptos, but should instead embrace them and work out how to control their volatility.
Some Africans are already doing this, but more innovations and sophistication could come into place with further support. There is a whole lot of good in Africa adopting cryptocurrencies, which could solve our basic payment problems, unlike in the West where people are trying to make their payments anonymous.
What lies ahead?
My appeal to the relevant ministry and institutions is that they should create the infrastructure to support this transformation in the digital economy. We can’t ignore what is developing in the rest of the world. I remember a time when we were hostile to computers and the internet. Look at us now.
The same will happen if we continue to fight blockchain and cryptocurrencies. It is now or never. I hope we see the potential in this, and invest in the new opportunities when they are still in their infancy, and the future will be very exciting for us all.