When they think of blockchain technology, most people imagine a currency run by their peers without any form of control from a central bank in charge. However, that is not the only use case of this innovative tech.
It is easy to see why people see blockchain as a technology for the finance sector— Our Vazi Legal Partner, Modupe Odele, while speaking at the World Bank 2019 Law, Justice, and Development Week, stressed that Africa needs blockchain technology because it has the ability to increase transparency, decrease inefficiencies, and lower prices across many economic sectors. You can read the full text and watch the video here
This post will introduce you to several use cases of blockchain technology and Web3 and how they can help develop the African continent. We will be looking at some of the crypto startups on the continent and how they’ve managed to scale while highlighting their contributions. You will also see how Nigeria is pivotal to how blockchain technology and Web3 will develop Africa.
If you are new to blockchain and Web3 and wondering what these concepts are about, I will go over what they are before I delve into the other issues I plan to discuss.
What is Blockchain Technology?
Blockchain technology is a decentralized network that stores information securely, transparently, and verifiable. The blockchain network comprises thousands of computers worldwide that share the same ledger.
Each transaction is stored as a block containing its unique hash, timestamp, and transaction data. As each new block is created, it becomes part of the existing chain.
This method creates an indelible record of each transaction made on the network. Since no single entity controls the entire chain, there’s no need for third parties or middlemen to verify transactions.
Blockchain technology has been applied to many industries and is currently being developed as a tool for social impact. Experts think the technology can help solve some of Africa’s most pressing problems: corruption, trust and transparency issues, identity theft, and financial inclusion.
What is Web3?
Web3 is the third generation of the World Wide Web. It is a decentralized, trustless internet that runs on peer-to-peer protocols. The goal of Web3 is to create an open and secure platform for users to exchange value without intermediaries.
In 2014, Ethereum co-founder Gavin Wood came up with the idea for Web3, gaining interest from cryptocurrency enthusiasts, large technology companies, and venture capital firms from 2021.
The idea behind Web3 is almost similar to what cryptocurrency is about, which is why they are concepts that you cannot separate in terms of functionality.
Now that we know what Blockchain technology and Web3 are about, let’s go to how the concepts will help take Africa out of the woods into the limelight of global relevance.
How Blockchain Technology and Web3 Will Develop Africa
The potential of blockchain technology and Web3 to improve the lives of African nations is immense. There are many promising ways Africans can use these two to develop the continent. At the moment, some of these are already evident. With more effort, the future is bright for Africa.
The following are areas where Blockchain technology and Web3 will be beneficial to Africa:
Empowerment through Open Source Projects
Open source projects are common in other parts of the world but rarely seen in Africa. The open-source concept adopts the modification and distribution of the source codes of products, platforms, apps, and systems made accessible to the public. People worldwide have used open-source projects to better their lives, create innovative products for their localities, and earn decent profits.
When Africans embrace Blockchain and Web3 technologies, it will herald the rise of decentralized applications (dApps) that offer new ways for people to interact with each other and with businesses without relying on centralized services like Facebook or Google. Africans can create apps and systems for themselves without the interference of other continents.
Blockchain will truly impact Africa, but not in the way many people expect. It would not get the job done but offer systems where Africans can access open source projects to help them develop innovations to better their lives.
Increased Financial Inclusion
Financial inclusion is a process that aims to make financial services more affordable and accessible to all individuals and businesses. The problem of financial inclusion in Africa is widespread, and there are several reasons for it. Some of the reasons Africans do not trust banks and other financial institutions is their distrust towards them due to their alleged corruption. Africans believe financial institutions charge too much to operate bank accounts.
Other reasons for the low financial inclusion ravaging Africa include cultural backgrounds and ideologies, lack of financial institutions, low income, and much more. When Blockchain and Web3 are fully implemented in Africa, banking infrastructures are unnecessary as Africans can access financial services without heavy transaction charges and middlemen.
Tech Firms and Startups will be able to Compete on a Global Scale.
Every time we hear of the launch of new tech or innovative products, it is always attributed to tier-1 and developed countries.
According to USNews, the top 10 countries with the most technical expertise include Switzerland, Israel, Singapore, the United Kingdom, Russia, Germany, the United States, China, South Korea, and Japan. No African country is mentioned in the top 10 list, but Africa is home to millions of tech startups, companies, and products. What’s the problem?
Well, one of the reasons why African tech is not on a global scale is that these companies and startups do not have as many resources and exposure as their counterparts in other regions of the world.
Most African tech startups still use traditional centralized systems that are self-serving and vulnerable to hacks, cyber-attacks, and other security breaches. These systems also cost a lot of money to maintain, which puts most startups at a disadvantage when trying to compete with larger companies that can afford them.
When Blockchain and Web3 are fully incorporated into the fabrics of these startups, it will provide them with the exposure they need and the technologies their businesses require to stand out.
Expanding the Remittance Market
The impact of Blockchain and Web3 technologies will impact several industries across Africa. One of such industries is the African remittance industry, which has been dominated by foreign players like Western Union and MoneyGram. However, with blockchain technology and cryptocurrencies, Africans now have a better alternative to send money back home safely and cheaply.
These technologies can help solve many problems within the remittance industry. Firstly, it makes it easier to perform transactions with improved transparency. Secondly, it will help reduce transfer costs because no banks or middlemen are involved with blockchain transactions. Finally, it provides security against cyber-attacks which are a real threat for those sending money electronically from one country to another.
Healthcare is one of the industries most likely to benefit from blockchain technology. The transparency and security offered by blockchain mean that patients can ensure that their medical records are secure. This can lead to better health outcomes, lower costs, more informed decisions, and more trust in the system.
Blockchain can help in many areas within healthcare, including managing the drug supply chain, facilitating the safe transfer of patient medical records, drug development, clinical trials, supply chain traceability, and insurance claims processing.
In countries where Blockchain has been incorporated into the healthcare industry, we see doctors accessing information quickly, so they know exactly what they’re dealing with when treating patients, improving quality of care while reducing costs simultaneously. Doctors can now make more informed decisions about treatment plans based on what is known about a patient instead of relying solely on their knowledge and experience.
Another benefit of using Blockchain and Web3 in the healthcare sector is that when the decentralized ledger feature of the technologies is used to record transactions between parties, it offers a verifiable and permanent solution that prevents anyone from altering data once it has been recorded in the ledger.
Moving further, we will discuss some of the top crypto and Blockchain startups already making waves in Africa and improving the quality of life here in Africa.
Top 5 Crypto Startups in Africa
According to Startup List Africa, the following are the top crypto startups from Africa to look out for:
VALR is a major Blockchain startup in Africa. It was founded with a desire to bridge the gap between traditional financial systems and cryptocurrency. The startup upholds that cryptocurrency is the future and encourages South Africans to embrace it.
Year Founded: 2018
Funding Round: Series B
Total Amount Raised: $54,900,000
From Nigeria comes a FinTech startup using Blockchain to deliver tokenized electricity. OneWattSolar is a blockchain-enabled mobile platform that delivers tokenized digital services and products and is powered by the Internet of Things (IoT) and artificial intelligence (AI).
Year Founded: 2017
Funding Round: Series A
Total Amount Raised: $24,400,000
Pyypl (pronounced as people) is a FinTech industry serving the Middle East, Africa, and Central Asia region. The startup is one of the few from Africa at the center of the world’s fastest-growing digital products markets.
Year Founded: 2017
Funding Round: Series A
Total Amount Raised: $11,000,000
Nestcoin is a Nigerian startup specializing in building, operating, and investing in crypto-native products. The startup offers a web3 application to provide crypto-based products for Nigerians and Africans.
Year Founded: 2021
Funding Round: Pre-Seed
Total Amount Raised: $6,500,000
Fonbnk is a FinTech company that has built a platform that leverages the existing network of mobile phone accounts and anyone with a prepaid mobile SIM card to offer access to the global digital economy.
Year Founded: 2019
Funding Round: Seed
Total Amount Raised: $5,120,000
In every big move, there is always a pivotal element for Blockchain technology, Web3, and Africa, which are the pivotal element in Nigeria. For a long time, Nigeria has been the center of technological developments in Africa, and the country still plays an important role in crypto trading and development. Let’s briefly discuss that role.
The Role Nigeria Play in Crypto Trading and Development
Crypto trading has been gaining popularity in Nigeria since 2009, when the first cryptocurrency was launched. Since Bitcoin was introduced to the world, it has caught the interest of many Nigerians looking for new opportunities.
The cryptocurrency market is still evolving and is expected to grow. Nigeria plays a vital role in the development of crypto trading in Africa. This is because the country has a large population and a growing middle class. In addition, Nigeria has a thriving technology sector with many talented developers and entrepreneurs using blockchain technology to build new businesses.
Furthermore, the market for crypto in Nigeria is easily accessed by people of all ages, thanks to the many crypto startups, exchanges, and platforms in the country. The average youth in Nigeria knows what cryptocurrency is about and has actively begun to participate in the market.
How Does the Web3 Process Work in Blockchain Technology
Web3 is the new generation of the Internet founded due to the rise of blockchain technology. It is a revolutionary concept that provides a set of collectively managed data.
This Internet revolution enables the exchange of values and sending of files in a secure and copy-protected manner. This ideology is the reason why Bitcoin was able to establish a value settlement network.
The management rules of blockchain technology that have been incorporated into Web3 are designed to be formalized in a protocol and secured by most network participants. This ensures that the data is protected and maintained securely. As the backbone of Web3, blockchain technology has created a new data structure designed to allow us to connect to the world.
The concept of the Web3 governance layer is similar to the way the Internet works. It allows people who don’t trust each other to reach agreements on the Web.
Are Web3 and Blockchain the Same?
No. Web3 and Blockchain are two different entities. Blockchain technology is a distributed database or ledger of transactions shared among a computer network’s nodes. This database contains information in digital format, which anyone with access to the network can access.
At the same time, Web3 is the iteration of Web2 with enhancements. It is a term used to describe the collection of technologies, protocols, and applications that enable decentralized applications (DAPPS) to run on top of a blockchain.
I believe that the blockchain and Web3 technologies will be revolutionary in Africa. There are a lot of problems with currency and corruption in Africa. If blockchain technology can solve those problems and help rule by the people instead of ruled by the super-rich, then I think the blockchain will help developing countries grow more quickly and in a much more equal way.
The journey has just begun, and it won’t be easy. But suppose Africa can successfully integrate the latest technologies being developed globally. In that case, building its innovations to meet its unique socio-economic challenges can pave the way for a much brighter future.
We’re excited to see how blockchain technology continues to develop on the continent and how it transforms Africa’s socio-economic landscape. It could be very promising—from Africa to the entire world.