Africa has come a long way in technology and connectivity. Before the start of the decade, few knew what a smartphone was. However, according to data from The GSM Association, around 250 million Africans own a smartphone as of last year. The number of mobile internet subscribers has quadrupled in the last nine years, with growth expected to be even more aggressive in the next five years.

And yet, despite the accelerated growth, Africa is still miles away from universal internet connectivity. While some countries have made huge strides, a majority of African countries lag behind their European, American and Asian counterparts.

In Burundi, according to some reports, only 6 percent of the population is connected to the internet. In the Central African Republic it’s just 4 percent; in Guinea it’s 11 percent; while in Niger it’s 10 percent.

Granted, the increased use of smartphones has had a dramatic effect on the number of internet users. However, the continent is still in its infant stage when it comes to access to the internet. This presents a unique challenge for the use of cryptocurrencies.

In many developed countries, mainstream crypto use is hindered by regulatory hurdles. In the U.S, the SEC has been putting a check on many startups for selling unregistered securities. In countries like Japan, a major challenge has been hacking attacks, with one of exchange losing $500 million worth of cryptos to cybercriminals. In China, cryptos have been heavily restricted by the government.

In most African countries, the challenge is unique. While many citizens would like to use cryptocurrencies, internet penetration is quite low. Most cryptocurrencies require an internet connection to buy, sell, send or spend.

Many mobile applications have sprung up, all offering innovative solutions that rely on cryptos including cheap and fast remittances. However, they all require an internet connection.

This lack of internet access has kept many potential crypto users in Africa out. This is despite many surveys and real-world cases proving just how big an appetite there is in Africa for innovative financial solutions, and crypto is up there.

South Africa, for instance, leads the world in crypto ownership in relation to the number of internet users. Nigeria was the biggest source of revenue for Paxful, an international crypto trading platform.

 Angus Brown is the CEO of Centbee, a cryptocurrency wallet startup based in Johannesburg, South Africa.  While he admits that internet connectivity is a challenge for any crypto startup in Africa, Brown is optimistic about the uptake in smartphones around the continent. He told me:

“Mobile phone penetration in Africa has grown explosively, and almost all adults (and many teenagers) now have access to a mobile phone. In South Africa there are ±100 million active SIM cards for a population of 55 million. Over half of those phones are smartphones, although many are quite basic phones – and Android dominates as the operating system. The real challenge is the cost of data, which is much higher in South Africa than it need be. […]However there are many other African countries where mobile data costs are much lower and making m-Commerce and P2P payments quickly ubiquitous.”

The connectivity challenge has inspired some innovative solutions. One of these is cryptos via text, an initiative that could help Africans without an internet connection access cryptocurrencies easily. Dash has been one of the pioneers of this innovative solution through Dash Text. Unfortunately, it has yet to support African countries, and currently is only available in Colombia and Venezuela.

Dash Text makes it possible to send, receive and check the balance on your Dash wallet, without needing an internet connection. One need only send a text with the command “CREATE” to create a Dash wallet. To send Dash to another user, you just type in the number of the recipient and the amount of Dash you wish to send and in an instant, it’s done. You can also check the balance using USSD commands. The entire process is completely free.

According to its website, there are currently over 3,400 wallets created using Dash Text.

And while African countries need the service, Venezuela is just as critical a place to start. The country has experienced unrest in the wake of a struggle for power between the incumbent Nicolas Maduro and opposition leader Juan Guaido.

The unrest has led to frequent internet disruptions throughout this year. In January, internet freedom groups held protests after the government allegedly shut down the internet. In March, the country experienced one of the largest internet blackouts in the world, with 91 percent of Venezuelans reported to be disconnected from the internet.

For those dependent on cryptos for daily activities, the blackout would have crippled their operations, making the case for offline usability of cryptos even stronger.

And it’s not just cryptos via text and USSD that are serving the unconnected. In South Africa, Centbee is pioneering an innovative solution that lets its clients take advantage of internet connectivity for a short while and spend their cryptos whenever they wish, even when offline.

The startup launched crypto vouchers, a product that seeks to foster the growth of cryptos even in remote areas. Brown explained:

“A Centbee customer can create a barcode voucher when they have connectivity (say at work or at home). They don’t need to be online when they show that voucher in the store, saving them the cost of data. The stores are always connected, as their POS databases are in the cloud and they need connectivity to bank systems.”

Offline crypto access will go a long way to delivering Africans from the stranglehold that the banks and other institutions have on them. However, there’s a lot more that must be looked at before it becomes completely feasible. According to Brown, one of the pertinent challenges is security.

“Although a very clunky interface, USSD has been useful because of its low cost and simplicity. As it is unencrypted it is not really secure enough for payment transactions though. Although intriguing, the challenge with unencrypted messaging such as crypto-text and USSD is that the wallet provider is custodial. Custodial wallets should be managed by very competent people who have years of experience at deterring hackers.”

And while the users might take to USSD transactions, it will not be effective enough if the retailers don’t accept cryptocurrencies. As such, it’s just as important to onboard merchants.

“Africa is cash-intensive and what is absolutely required is a retailer cash load capability,” Brown said. “To complete the circle the retailers should also then accept payment with Bitcoin.”

The power that comes with connecting users who are offline has been well documented by M-Pesa in Kenya. Unlike Venmo in the U.S, WeChat Pay in China and Monzo in the U.K, M-Pesa allows its users to send, receive and pay for goods without an internet connection.

The crypto revolution will go beyond just payments, Brown believes.

“An issue that is often overlooked in emerging markets is access to a reliable form of identity – and traditional financial systems exclude them,” he said. ” Bitcoin (to some degree) can help resolve this, as Bitcoin service providers are typically not banks and have some latitude (and incentive) to create new authentication models.”

As Africans strive to meet global standards in internet connectivity, offline crypto access could drive the adoption of digital currencies to unprecedented heights.

The post Sending Crypto While Offline: Solving Africa’s Connectivity Challenge appeared first on Crypto Briefing.

Similar to Notcoin - Blum - Airdrops In 2024

origin »

155 +