Duncan Arthur is an independent payments, mobile and African banking professional who has worked at Absa, Standard Bank Africa and Vodacom South Africa. In an exclusive article for HumanIPO, Arthur discusses the emergence of Bitcoin and what it could mean for Africa.
Everybody likes to be paid. I get paid in South African rands mostly. I accept them because I see them as valuable. Everyone else has the same perception of their value. I know that the South African government issues them and that they’re readily exchangeable into other currencies. At any point I can see what their value is relative to other government backed means of exchange.
But why should a government be the only issuer of a currency? Surely if other people see the currency as valuable, with or without a government having been part of the issuing, it should be widely accepted. Even better if it can be easily converted into a traditional currency.
Bitcoin started as a project to see if an internet based currency that isn’t backed or controlled by a state could work. According to an open source and transparent plan, bitcoins started to emerge as technology hobbyists began using them.
Through an easy application, anybody can pay or accept bitcoins anonymously and securely. The transactions are public and the coding ensures the coins can’t be counterfeited or spent more than once. Although still a tiny portion of international trade, cyber currencies are gaining ground and acceptance.
How does one get bitcoins? You swap another currency for them or you earn them by running the app on your computer. You hold them in an e-wallet. It isn’t difficult.
It should also be apparent why bitcoins appeal to criminals. You can’t get caught by counterfeiters and your money can never be seized.
Why does this have any application for Africa? Human innovation originated in Africa. It isn’t surprising that many of the most attractive brokers in terms of bitcoin rates of exchange and convenience are in Africa.
Most seem to be in South Africa at the moment, where a small but growing group of passionate libertarian bitcoin users and evangelists are hard at work.
Increasingly the bitcoin service providers are adding Kenyan, Egyptian and Nigerian, amongst others, indicators onto their domain names. Histories of weak states, failed states and states that only came about because of some colonial whim are combining with technology that recognises criminal ingenuity and a massive jump in terms of information technology into the hands of ordinary people to re-position Africa as the incubator of all things mobile and commerce.
Africa has its share of criminals looking for a way to get paid. More than one dazed looking Somali pirate has found themselves into a New York courtroom. For a guy who’d never seen a proper city to be on trial in Brooklyn could not have been a happy occurrence.
He’d learn through his interpreter that asking for a ransom in US currency brought him against the might of the United States government through the Patriot Act. If he’d had any sense – and if anyone in his village recognised them – he would have demanded Euros. He was there to be made an example of and to spend the rest of his life in a jumpsuit.
Piracy carries much the same risks in terms of moving money as other forms of crime. In much of the rest of the world (and not many people are going to hold Afghanistan up as a paragon of development), bitcoins are used when guns and drugs are traded, people are traded and funds need to be laundered.
It cannot be too long before the owners of a seized ship find themselves turning to YouTube to discover just what these ‘bitcoin things’ are that the unauthorised occupants of their seized container ship are demanding for the safe return of their crew.
