Bitcoin in Africa
I think it’s time to accept the fact that bitcoin is much more than just an asset rich kids play with. Its implication is way more profound than that. In fact, if you see Bitcoin just as a speculative tool, you are missing big.
In Africa, bitcoin is a tool for financial empowerment. One that allows our fellow African friends to do business, be financially integrated, and increase their economic integration.
“In Europe & in the US, Bitcoin is a desire. In Africa and in some other countries, Bitcoin is a necessity.” — Jack Dorsey
In this article, we will forget about the speculative aspect of bitcoin and instead look at its utility through 3 real use cases of bitcoin in Africa.
1. Bitcoin as a tool to empower the most vulnerable
While Africa is a land full of resources and bright talent, it is one of the earth’s poorest and less economically integrated places. One of the main reasons for this poverty is that it is home to one of the most fragmented banking, payment, and currency systems in the world. This makes it really difficult for Africans to trade freely, innovate, and unleash their fullest potential. In some parts of Africa, simple financial tasks like accepting money as a business, paying a bill, or receiving remittances can be extremely complex.
Furthermore, as our fellow African friends don’t have access to easy banking facilities, they tend to save their hard-earned wealth in cash. But this can be really problematic as theft are frequent and one can see all his years of labor disappear in one instant. No insurance, no protection, nothing. Moreover, apart from physical theft, inflation also tends to erode the value of their savings drastically over the years and the hyperinflation case of Zimbabwe provides a perfect example of that. Huge corruption coupled with high debt levels and a weak economy destroyed the value of the currency. Consequently, all the people that saved their entire net worth in cash saw the fruit of their labor disappear in one instant.
Source: World Bank
Having said that, there is a lot of work being done to fight this problem, and in this post, we will look at one particular case: Bitcoin Ekasi.
It is an organization whose purpose is to empower individuals and communities by giving them greater control over their financial lives and providing an alternative to the traditional financial system using bitcoin.
They closely work with local businesses and merchants to allow them to spend and receive bitcoin, even without access to the internet. Furthermore, they place a strong focus on education by teaching kids how bitcoin works. They settle wallets and educate them on how to secure their wealth using creative ways to self custody their bitcoin. This allows those kids to have access to services that they have not been able to access for generations. Before using bitcoin, those youngsters were financially marginalized and often saw their hard-earned cash being stolen by older people in their own villages through violence. Now, those kids are empowered as they can earn, spend, and save their money freely thanks to bitcoin.
If you want to know more about this initiative, I encourage you to watch this incredible documentary: (5) The Silent Bitcoin Revolution Of Africa — YouTube
2. Bitcoin can bring energy security to those in need
How can we have a 21st-century economy without power and connectivity? While this is something taken for granted in the rich countries of the west, this is not the case everywhere. In Africa, despite being a continent full of resources, there are over 600 million people without access to reliable electricity. This is especially the case in small villages that doesn’t have the infrastructure required to be connected to the grid.
A multitude of efforts have been made to bring power to underserved communities and one of them is building decentralized mini-grid energy projects in rural communities relying entirely on renewable energy like wind, solar, and hydro.
However, building those kinds of grids is really complex:
- It is expensive and the time required to wire up the community is long.
- The electricity price varies a lot and it can be up to 4 times more expensive than compared to large African cities. Hence, poor populations cannot always have access to this power.
- Those grid-building companies find it hard to get access to secured financing. Their business is seen as too “unpredictable”.
- Renewable energy generation doesn’t happen at the same time as utilization. As a result, there is a lot of excess energy that goes to waste.
This is where bitcoin comes in with a company named Gridless Compute.
Their purpose: support those mini-grid projects by implementing bitcoin mining facilities on-site. In short bitcoin mining consist of solving complex computational problems with the aim of securing the bitcoin network. To compensate for this task, miners are rewarded in the form of newly created bitcoin.
Hence, bitcoin mining allows those mini-grid projects to:
- Make energy prices less expensive, and more stable, as all excess energy is used to mine bitcoin and thus generate additional revenues.
- Have a buyer of last resort for their energy when there is not enough demand for their energy. As a result, energy is never wasted but redirected to securing the bitcoin network while generating revenues.
- Help those grids to generate income from day 1, while the grid is being wired up in the community. This helps grid builders have access to financing as they have a resilient source of income.
Here, mining is a net benefit as it enables access to energy in rural Africa while making the bitcoin network more robust and decentralized.
3. Bitcoin as a way to save the African biodiversity
What if I told you that bitcoin is also saving Congo’s oldest natural park?
You will probably think that I am a fool. Everywhere in mainstream media, bitcoin is seen as an environmental disaster that is destroying nature due to its high electricity consumption. How can it be helping Congo’s natural park?
Well, we will leave this heated environmental debate for another post, and instead, look at what is happening in Congo.
The Virunga park or more formally called the Albert National Park is located on the border of Uganda, Rwanda, and Congo and covers more than 7,800 square kilometers of diverse landscape and wildlife. This is more than 800,000 football fields of invaluable biodiversity. In fact, this park is home to a wide variety of animals, including endangered species such as the mountain gorilla, the eastern chimpanzee, and the okapi.
Despite its cultural and natural significance, Virunga National Park has faced a number of challenges over the years starting with political instability, disease, and lockdowns. The compounding of those events has greatly discouraged tourists to come and visit this green oasis.
But the park could not survive long with no revenue from tourists. Hence, threats of building oil drilling facilities in the park became real.
In the midst of this crisis, Emmanuel de Merode, the park director, decided to use the park’s existing hydro plant facilities to mine bitcoin out of excess energy, and generate revenue.
This ambitious operation started in September 2021 and since then, the mining operation, relying entirely on sustainable and clean energy, has offset the loss of revenue from tourists.
“It’s an incredibly good investment for the park. We’re not speculating on bitcoin value; we’re generating it. We’re making bitcoin out of surplus energy and monetizing something that otherwise has no value. That’s a big difference.” — Emmanuel de Merode (Director of the Park)
Those extra revenues are helping to pay for the ranger’s salaries, fight criminal activities, and finance conservation initiatives.
Bitcoin has brought resiliency to this natural park and represents a better alternative to oil drilling facilities that would have devasted this priceless landscape.
I hope that through these 3 real use cases, you realized how bitcoin is having an impact in Africa. Of course, it is not a magic pill to all the problems faced by this continent. But nevertheless, it represents hope to empower the most vulnerable.
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