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Bitcoin is pushing the boundaries of economic change in Africa. In East Africa, a new deal between digital currency exchange Bitpesa and a Japanese firm shows Kenyans are using bitcoin to pay for used Japanese cars, cosmetics and electrical gadgets. In Nigeria, Sure Remit is helping make cash transfers cheaper and in Zimbabwe, TV subscriptions, university fees, and second-hand car imports.
Bitcoin as A Cure for Africa’s Cash Addiction
When Elisha Owusu Akyam bought his Macbook Pro laptop using bitcoin (BTC) earlier this year, he wasn’t just fulfilling a long-time desire – he was making a statement of change in a continent hooked on cash.
“Making payments in bitcoin is easier than existing methods,” the 17 year-old cryptocurrency investor from Accra, Ghana, told news.Bitcoin.com.
“Barriers exist for financial inclusion on the continent. Bitcoin eradicates these barriers,” said Owusu Akyam, founder and chief executive of Token Media, a startup that has helped other emerging businesses raise millions of dollars in token sales through its marketing services.
“For instance, the purchase I made in just one payment would not have been possible without bitcoin. I would have had to make payments in parts for a couple of days. This wastes time and costs money,” he said.
Although Africa has been touted as the cradle of mobile money payments, mobile is effectively only widely used in a few countries like Kenya and Zimbabwe, where about 30 million people combined use cell phones to pay for goods and services. In most countries, cash is still king.
But bitcoin and other cryptocurrencies are starting to catch on, not only as a means of payment, but also for remittances and as a store of value.
Ghana is one of a number of countries in Africa whose economies are currently being reshaped by cryptocurrency. In the West African country, the crypto market is still very small, with issues around regulation casting a shadow over the market’s future, but it “has seen a lot of growth lately,” according to Elisha Owusu Akyam.
Adoption, Regulation, Fraud
Some small businesses have started to accept payment in bitcoin, Owusu Akyam says, while digital currency exchanges are flourishing, with about 15 different platforms, mainly over-the-counter exchanges, allowing Ghanians to buy and sell cryptocurrency.
Basic services like buying mobile phone airtime and data can also be done with the use of bitcoin, he added. At some point in 2016, the highest number of bitcoin searches on Google originated from Ghana, though that in itself didn’t mean much.
“This awareness doesn’t translate into the understanding of bitcoin and other cryptocurrencies as many think it is a scam or fraud,” explained Owusu Akyam, via email. And then there are the issues around regulation.
“The closest we have come to [regulation] is a statement by the Bank of Ghana, cautioning the public on the use of bitcoin as an unregulated activity,” he said. “This unregulated environment has led to the spread of several scams and fake investment schemes that are hurting the image of the cryptocurrency industry as a whole in Ghana.”
Kenyans Use Bitcoin to Import Beauty Products
In Kenya, a new deal agreed between local digital currency exchange and payments platform Bitpesa and Japanese firm SBI Remit shows that Kenyans are using bitcoin for a number of things, including to make payment for beauty products from overseas, through the exchange, at lower cost and faster.
Elizabeth Rossiello, co-founder and chief executive of Bitpesa, says payments will also include used Japanese cars – a multi-million-dollar industry in Africa – and electrical gadgets. Kenyans intending to make a purchase overseas deposit their local Shillings into Bitpesa’s Kenya bank account before payments are facilitated on the bitcoin blockchain to SBI Remit, which in turn makes the final payment in Japan.
The entire process is completed within a matter of hours, at half the cost in transfer fees, compared to about two weeks that it usually takes when payment is made via conventional banking methods, for around 7% in fees of the total amount involved, she said.
“If it makes sense for us to settle using cryptocurrency or fiat currencies, then we do. And in this case, we’re happy that SBI feels the same way, so we’re open to using digital or fiat currencies to settle between us,” Rossiello was quoted as saying.
The new service will be available to people in all eight of the African countries where Bitpesa has operations: Democratic Republic of Congo, Ghana, Kenya, Morocco, Nigeria, Senegal, Tanzania and Uganda.
A Store Of Value
In Nigeria, Sure Remit is helping people send money through bitcoin after the startup earlier this year raised $ 7 million in an initial coin offering that reached its hard cap within a matter of days. The remittance business is a common feature across all African countries where bitcoin has gained traction, from South Africa to Nigeria, Kenya to Angola.
Even though the number of Africans in the diaspora sending money home continues to swell, with the continent accounting for just 6.4% of the more than $ 610 billion global remittances market, according to the World Bank, the remittance business in Africa should only grow from here. The World Bank estimates that growth to reach about 7%m to over $ 40 billion this year.
In Zimbabwe, bitcoin is being used to pay for TV subscriptions and accommodation rentals. But above all, it is looked at more as a store of value against fiat currency devaluation, rising inflation and policy uncertainty, as indeed is the case is across much of Africa, including Owusu Akyam’s Ghana.
“The major use of bitcoin is as a store of value or investment. Bitcoin protects Ghanaians against inflation since the Ghana cedi depreciates in value against the US dollar,” said Owusu Akyam, who in many ways represents the face of bitcoin and cryptocurrency entrepreneurship in Africa – youth.
How are people in your area making use of bitcoin? Let us know what you think in the comments section below.
Images courtesy of Shutterstock
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WSJ.com: US Business
Bitcoin and cryptocurrency mining has become a growing industry, and mining operations continue to compete by making faster chips and purchasing large quantities of land to host data facilities all over the world. Data recorded from around the globe shows the mining economy is booming and the venture has become very profitable for many mining operations and chip manufacturers. For instance, this week it was revealed by regional reports that the Chinese firm, Bitmain Technologies, raked in 14.3 billion yuan ($ 2.3billion USD) in revenue last year from sales.
Mining Proves to Be One of Cryptocurrency’s Most Profitable Sectors
Mining cryptocurrencies like bitcoin has become very profitable for those who know how to obtain cheap electricity and operate a sound business. The ecosystem has spread as Graphics processing unit (GPU), and Application-specific integrated circuit (ASIC) chip manufacturers are making lots of money from the mining industry.
Public shares from companies like AMD, the Taiwan Semiconductor Manufacturing Co (TSMC), and many others have spiked considerably this past year. It turns out, that still to this day, churning out complicated math problems to find blocks is one of the hottest sectors in the cryptocurrency space, and this phenomenon will likely continue. One example is the 16-nanometer mining chip that has been an industry standard for quite some time, but now 12nm, 10nm, and 7nm chips are coming in the near future.
China’s Two Dominant Mining Manufacturing Businesses
One firm, Bitmain Technologies, has been a top mining chip manufacturer for a very long time delivering mass-produced ASIC rigs featuring 28nm, 16nm semiconductors. A recent disclosure from China’s Digitimes details that Bitmain had reportedly ordered 100,000 12nm chips from TSMC and the order was marked “urgent.” Alongside the order, according to the publications 8BTC and Applancer, the Chinese mining firm Bitmain Technologies revenue in 2017 was 14.3 billion yuan ($ 2.3billion USD). The report says that “Bitmain has become China’s second largest IC design company, ranked only second to Hisilicon.” With many companies entering the industry, Bitmain is relentlessly holding its top position in the cryptocurrency mining economy.
Another company that’s done very well last year is China’s Canaan Creative a firm that also creates digital currency miners. The Avalon bitcoin mining chip manufacturer attracted investors in May of last year raising 300m yuan ($ 43Mn USD). A week later Canaan acquired the first document timestamping service for the bitcoin core blockchain called Proof of Existence. According to the reports, Canaan has been developing 7nm semiconductor chip designs and has plans to enter the Artificial Intelligence (AI) market. Coincidently Bitmain is also attempting to enter the AI market with its custom-designed semiconductor hardware.
Bitfury Is Still Dabbling In the Mining Industry
The blockchain firm Bitfury created in 2011 has said it has been making a lot of money this year as the company claims to be generating $ 100Mn USD annually. Although, it’s also been reported that the company doesn’t like to be referred to as a ‘mining company’ anymore, but still seems to dabble in the industry.
Nevertheless, the company still has a mining pool, but it doesn’t command the hashrate it used to years ago, capturing only 1.7 percent of the network’s processing power. Further, the company’s website sells a mobile bitcoin mining unit called the ‘Blockbox,’ and it still sells custom 16nm semiconductor chips. The company hasn’t shown any signs of designing a new semiconductor smaller than the 16nm. Bitfury has also pivoted its business in many different directions with ideas like lightbulbs that mine bitcoin, and blockchain surveillance services. At the same time, the firm has recently claimed to be building the biggest mining operation in North America.
New Fish or Sharks Will Swim Among the Whales
All of these current mining conglomerates have some competition coming soon as there are a few companies aiming to join the mining industry with superior technology. For instance, the Japanese firm, GMO Internet Inc, just recently announced the successful completion of 12nm Fin FET Compact (FFC) semiconductor chips. After completing this task, GMO says the feat has brought them closer “towards realizing a […] 7 NM process technology for mining chips.”
Another Japanese firm that is making waves in the mining industry is the e-commerce and internet conglomerate DMM Group. The firm has started its own mining operations and a “crypto mining lab” that plans to research and develop “the highest per unit hash power” in custom DMM machines.
According to reports last week, the well known Korean electronics manufacturer Samsung is entering the bitcoin hardware and semiconductor market. Allegedly Samsung’s foundry is manufacturing 10-nanometer chips for both GPU and ASIC devices.
It’s safe to say the mining industry will continue to be a very lucrative business, but there have been many failed operations along the way like Butterfly Labs, Black Arrow Software, Hashfast, Vmc, and Cointerra. Some of the older companies like Canaan and Bitmain still have to keep their guard up as new entrants come into the market with faster processors. However, the revenues and funding these existing companies received this year continues to give them a competitive edge until the newcomers prove their devices and semiconductors are what they claim.
What do you think about the competitive mining industry and how lucrative these businesses are? Do you think the new companies claiming to have faster chips will change the mining industry? Let us know what you think in the comments below.
Images via Pixabay, DMM, GMO, Atlas data, PwC, McLean Reports, Bitfury, Canaan Creative, and Bitmain Technologies.
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