"How do we restore crypto's reputation in Africa?" He asked. [Read the newsletter in your browser.](=.YBUEN6S2XVUgsmscV0_EUS8S_C8kN2DuOkNGjUzD41o) [Next Wave Logo] 9 April 2023 Next Wave: Cryptoâs quick-money promise for Africa is collapsing
[Midjourney prompt: A bitcoin house with one big slight crack running down the wall --ar 9:4 --v 5] Photo Abraham Augustine via Midjourney. See "alt" for prompt [Lire en Français](=.J7eKVbHrGz84fE6EgWf1Fs4XzI5Me0osX3rkcN4kBoY) Despite what was advertised, the unspoken (in public ads and Twitter) case for crypto in Africa, was to get richâand quick. Recent events are showing the cracks and will hopefully introduce some humility. In the last three years, Africa has developed its class of crypto preachers who have joined the global refrain to sing the praises of blockchain money. Since Bankman-Friedâs Icarus Act, the trajectory of the crypto moon ride globally has inverted. And even in Africa, the love affair with crypto was mostly a ZIRP (zero-interest-rate phenomenon). That does not mean that the camelâs back has been broken yet. It just means that it's a lot easier to call BS. Farcical crypto stories now fail to take in many of the formerly credulous. Except for the ultra-hooked. âMany Africans have integrated crypto into everyday life,â [reported](=.bZ7D8NHrpNxJyIC6iMLT3lTpbExX0tdh-4-V8bcLtHI) the crypto-focused publication, CoinDesk in 2022. Coindeskâs source was a report published by Chainalysis, the crypto research firm. The report claimed that $100.6 billion in transactions were recorded on-chain between July 2021 and June 2022. According to Chainalysis, âCrypto usage is driven by everyday necessity, as opposed to speculation by the already well-off ⦠especially in countries where the values of local fiat currencies are dropping, as weâve seen in Nigeria and Kenya.â Any African can tell you that this is patently not true. Crypto in Africa was supposed to have stronger use cases. Bitcoin could hedge against punishing and unyielding inflation in Africa. Crypto would protect usersâ wealth as the value of currencies dropped. But more importantly, Africans could now âparticipate in the global economyâ by trading all sorts of crypto derivatives and products. If you were enterprising enoughâlike the gentlemen who founded Wakanda Inuâyou could even create and sell your tokens. Wakanda Inu, Africaâs âanswerâ to the popular meme token, Shiba Inu, has gone the way of all pyramid schemes, which is to say, the toilet. Instead, Africaâs crypto path has been riddled with blundering regulation, an abundance of grift, scams and the like. And plenty of condescension from larger global crypto exchanges and figureheads, who talk fondly, almost paternally about the âglobal southâ need of crypto while routinely offering poor service to African crypto users or outright denying them service. The result is predictable. More scams and grifts. I remember sitting at a coffee shop two years ago, and discovering over a casual chat with my neighbour that she was in the early stages of creating a new token and she tried to recruit me. I joined her âprojectâsâ Telegram group to witness first-hand the makings of a crypto âprojectâ. Needless to say, her project, I forget the name now, failed to take off, despite vigorous campaigning by her and her foreign and local partners. Several popular peer-to-peer crypto marketplaces' have shut-down operations recently. | Infographic: Ayomide Agbaje â TechCabal Insights Far from being a simple store of value or a hedge against inflation and currency depreciation, cryptocurrencies fuelled an epidemic of speculation in Africa. WhatsApp groups burst at the seams as young Africans piled on, hoping to get trade âsignalsâ to guide their margin trades. And prophets predicted trade swings on social media. Outside the stablecoin model, the cryptocurrency craze in Africa, like its cousins anywhere else on earth, was built on zero utility and plenty of hopium. It made a few rich and popular. But it did not do much else. Even though for some reason, CNBC thinks Bitcoin will, [âblow up Africaâs $86 billion banking system.â](=.EKVyQvD4xcmjgOEh_XzHCgyRmG0HXLwXTsltGP5-SI8) Instead, in the last six months, the lack of cheap money occasioned by rate increases from central banks is forcing the cracks in cryptoâs carefully designed exterior to crack. After FTX, which had a large ground game in Africa, complete with university ambassadors and a rural outreach programme, collapsed, three other Africa-focused crypto exchanges have shut down recently, including Localcryptos, Localbitcoins and most recently, Paxful. Partner Content: [Google Workspace subscriptions are increasing but FOUND NG is making access cheaper for Nigerians](=.3XggQWqaVjVmUjvGjgopao_p4W0ahl2A4GzM9iebeZw) Another one bites the dust When Paxful announced it was shutting down last week, 46-year-old Ray Youssef, who served as founder and CEO, blamed âkey staff departuresâ and âregulatory challengesâ for the decision. What he did not say was that issues with his co-founder, Artur Schaback, had gotten to a head. Schaback had sued his partner and co-founder in January this year for, among other things, âan illegal plan to avoid international sanctions on transactions into and out of Russiaâ. Other details of Paxfulâs sordid backyard are contained in [this CoinDesk report](=.HP-3c-mouYxY4JUtvfMpozvMB84ErrgiFCJXabd03Zg). But it is instructive to note that until the sudden announcement of the exchangeâs closure, Youssef gave no indication of trouble, as he put out Bitcoin platitude after platitude sprinkled with political tweets, mostly aligning with one of Nigeriaâs presidential candidates, Peter Obi. A substantial portion of Obiâs supporters is predominantly young dwellers in citiesâthe same demographic of users targeted by Paxful and other crypto services. Several African countries are exploring the use of central bank digital currencies to enhance payment systems. | Map: Ayomide Agbaje â TechCabal Insights One can argue that one of the most significant impact of cryptocurrenciesâgloballyâis the acceleration of retail central bank digital money a.k.a CBDCs. Indeed the excesses of the crypto-verse plus the growing desire of governments to control every inch of how their respective governed masses live is part of the motive behind (and justification of) CBDCs. â. If you want to use digital assets, use eNaira. It has all the properties of a digital asset,â one central bank official quipped in Nigeria. Like FTX, the sudden shutdown of Paxful, which was closer to its users in Nigeria and Kenya, may force crypto users in Africa to second-guess their investments. Or it may not (for the most committed or most grifting). What is important is that it is one less blocker in the conversation about how absurd the story of crypto in Africa has been sold. It may make it easier to call out the outright rackets that have never been called out. Thatâs me being hopeful. If the crypto group I am in is any indication, the addiction to fixes from crypto wins grift is still too strong. Partner Message
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