Bitcoin is undoubtedly the biggest name in cryptocurrency, but it is by no means the only one. There are now thousands from which to choose, and the sheer number of businesses looking to cash in on this new economic frontier has also grown exponentially. All over the world, as people currently work to create, provide and mine value from cryptocurrencies, Uganda proves no exception. As the idea has become more popular and skepticism waned, Ugandans are increasingly more comfortable using currency like Bitcoin for everyday transactions. So far, we have seen restaurants accepting Bitcoin as payment, and doctors in Kampala buying medical equipment online with the cryptocurrency to avoid expensive transaction fees.
In October 2018, we saw the world’s largest cryptocurrency exchange by trading volume, Binance, launch its first exchange here, which also happens to be Binance’s only fiat-to-crypto exchange. The CEO of Binance, Changpeng Zhao, currently worth $1.4 billion, tweeted that their goal in establishing a Ugandan trading exchange was no less than ‘to support Uganda’s economic transformation and youth employment through [the] blockchain, embracing the fourth industrial revolution. We will do this [by] creating thousands of jobs and bringing investments to Uganda’.
They have also partnered with a company called CryptoSavannah, a company based in Kampala, to run the exchange. The blockchain is the technology that underpins nearly all decentralised digital currencies like Bitcoin, Litecoin, Monero and Ethereum. Blockchain technology is also referred to as distributed ledger technology, meaning that all transactions using a cryptocurrency are publicly recorded on millions of ledgers at once, instead of only one ledger owned by a private organisation like a bank. The benefit is that no one can counterfeit your transaction if verified in a million places rather than one.
Already, many life-saving endeavours have come out of digital currencies, with an example being the chance meeting between Victor Ramdin and Vanbex CEO Kevin Hobbs, which led to Vanbex funding Ramdin’s annual charity mission called the Guyana Watch Foundation. The Guyana Watch Foundation aims to provide medical treatment and heart surgeries for children in Guyana, South America.
The hopes for cryptocurrencies in Africa are high, with experts stating that the conditions on the continent may be ideal for digital currencies to flourish. That is mainly the case in countries that are affected by hyperinflation such as Zimbabwe where in 2015, inflation skyrocketed, and the central banks ended up printing $100 trillion notes, each worth about $40 (USD) (as reported by UN.org). Such has led many Zimbabweans to turn to Bitcoin and other cryptocurrencies for their day-to-day transactions. As cryptocurrency is internet-based, it means that rates are the same all over the world, and unlike traditional currencies, it is not centered in a specific region and controlled by a central bank, so it is not affected by financial policies of governments.
In addition, by 2020, estimates suggest that over 725 million Africans will have subscribed to mobile phone services and all that is necessary to transact in Bitcoin as is a mobile phone and an internet connection.
Ugandan Member of Parliament Mathias Mpuuga recently addressed the government stepping in to regulate the growing crypto marketplace with the finance minister and is quoted by The Independent as saying, ‘There are several agencies posing as cryptocurrency dealers, such as RipCoin, Namecoin and Bitcoin. The challenge is that while this is taking place, there is no legal framework for supervising these players’.
Over the past few months, the Ugandan Parliament has been looking into the possibility of providing some regulation in the growing cryptocurrency industry. Regulation, however, may prove to be as much of a challenge in Uganda as it has been elsewhere. The Apex Bank of Nigeria recently advised they could not control or regulate Bitcoin, ‘just the same way no one is going to control or regulate the internet. We don’t own it’.
A central part of the appeal with cryptocurrency is that it is not owned or regulated by a single institution, or government, or country. Partly due to this lack of governmental oversight and partly to good investment practice and due diligence, it is critical for anybody wanting to invest in cryptocurrencies to research it first to have a comfortable understanding of the basic principles and choose reputable providers. Cryptocurrency in Africa looks promising. However, it is still speculative and may not have reached sound foundations yet. As Stephen Kaboyo of Ugandan financial firm Alpha Capital Partners recently stated, though it is unwise to dismiss cryptocurrencies at this stage, crypto investors must understand the risks before investing in what is still right now a ‘hugely speculative asset’.
Why was the Bitcoin feeling cold? Because it left its wallet open!