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The downside to blockchain and bitcoin uptake in Africa

By , ITWeb
Africa , 07 Sep 2016

The downside to blockchain and bitcoin uptake in Africa

Some business leaders in Africa have reservations about the strength of blockchain technology as a means through which to increase the continent's internet penetration.

Thomas Kaperi, the managing partner at Optimum Consulting, a tech startup using analytics and exploring blockchain application in risk transfer, thinks that blockchain technology is going to move more Africans unto the internet - but, he also feels the technology's openness could be hindering its adoption.

Speaking at the Kenya Internet Governance Forum last month, Kaperi said blockchain - the tamper-proof open ledger technology that powers bitcoin transactions - has the ability to enable users to transfer and generate value on the internet without having to necessarily use any particular country's currency for their activities.

"The biggest downside about blockchain technology is the public aspect of blockchain technology. Because it's a distributed ledger, there are high chances that everybody will know what is on the ledger. That's the biggest downside," Kaperi said.

This is one of the factors precluding Africans from showing interest in this technology which has become a topic of discussion of late. Blockchain, which is now being applied for use in other non-financial sectors, has not attracted much interest in Africa - possibly because of the universal perception about its newness, lack of awareness of its use and the attendant stigma that has been attached to the digital currency it powers, bitcoin.

Despite suggestions it could improve the finance sector and economies of African countries that experience high inflation rates as a hedge against traditional fiat's value e.g. Zimbabwe and Nigeria, there is still an air of skepticism linked to security and accessibility issues.

Hackers in Kenya, for instance, have used it to solicit ransom twice - from NIC Bank and Nairobi University after compromising their systems.

Kaperi suggested that people should look at blockchain outside the cryptocurrency context to understand it better.

Bellaj Badr, a blockchain expert and speaker in Morocco, said, "Even as the number of active Internet users has increased in the continent and the infrastructure has developed enough to promote cryptocurrency adoption, unfortunately, the situation is the opposite. To understand why, we should keep in mind that these technology provides a decentralised payment solution without any regulative institution (central bank)."

He added that the impact of the 2008 financial crisis, which is propelling bitcoin users in other parts of the world, is not enough to push people in Africa to embrace it as a new solution.

Rather, Africans still preserve their confidence in banks and other governmental institutions.

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