APRIL 4, 2021 This newsletter is a weekly in-depth analysis of tech and innovation in Africa that will serve as a post-pandemic guide. Subscribe here to get it directly in your inbox every Sunday at 3 pm WAT
Coca-Cola is a useful example of how a thing is invented for one purpose but drifts into other uses based on popular adaptation. The soldier who invented it needed an alternative for his morphine addiction. Instead, he gave the world a soft drink consumed by children and adults alike – with a trail of health issues to boot.
Enthusiasts of blockchain technology swear it will change our digital lives forever. They scream the promise of “decentralization” with conviction. NFTs, which enable creators to monetize on the blockchain, are supposed to be the best example yet of how this promise will be fulfilled.
But are NFTs in fact living up to this destiny, or have they veered off to satisfy a different addiction?
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Now, let’s dive in.
Beeple’s $69 million auction was the event that set off opposing alarm bells about NFTs.
On the one hand, it was an exhilarating example for independent, hardworking creators. The message was partly You can work your way up to grand heights with little steps. Unlike Beeple, you don’t need 5,000 days of work to get started. Come as you are.
That message has resonated in Nigeria where different types of creators are reaching international audiences with their art in ways that were perhaps not previously possible.
Two weeks ago, one artist made his first NFT drop on Rarible; it sold in less than 12 hours. His story inspired another artist to make a drop; that sold within a short time too. “Nothing but Joy” by one female artist sold today for 0.5 ETH. One of Africa’s biggest hip hop acts has said his next album will be an NFT.
Great buzz all round. But the backlash has begun and it is coming from all interest groups; creators, collectors, and some of the brains behind the first iterations of NFTs. Under more intense scrutiny, the technology is showing many of the weaknesses it boasts to overcome in the offline world.
Boluwatife Sanwo/TC Insights
Within the space of three days in March, at least three Nigerian artists raised alarms over the theft of their art.
In each case, someone appeared to lift their works to mint them as NFTs. The drops were eventually taken down by the platforms where they were minted but it showed that NFTs’ promise of creator ownership and control was not water-tight.
“This NFT art thing is so problematic on so many levels,” said the owner of an art gallery where one of the affected artist’s works are currently being exhibited.
Heists aren’t the only problems. NFTs are reminding people of the dutch tulip mania.
Yes, some collectors are buying NFTs for the love of art and whatnot. But let’s not imagine away the fact that some of the outrageous prices being paid at the moment are driven by speculators. “Don’t buy NFTs for thousands of dollars unless you realize this is a super speculative short term game,” says the investment advisory group Benzinga.
What then? To throw NFTs away with the bath water? That doesn’t seem likely nor necessary because, as Shira Ovide says in the New York Times, “there is a good idea in there somewhere if we slow down and resist the hype.”
If we slow down… Beyond tantalizing coverage about how much money it makes for creators, we should see all sides of this new tech before crowning it as the saviour of the creator economy. If we are to replace former addictions with new fantasies, at least let’s know what the recipe is, in its entirety.
FROM THE CABAL
In Nigeria, telcos and banks have been at loggerheads over settlements for USSD charges. Hostilities have come to a new battlefront in the past week, with MTN at the center stage. It appears the South Africa-owned company is now partnering with a fintech to power its codes. Here is the gist in two minutes.
East Africa has a thing for asset financing companies, doesn’t it? You probably already know M-KOPA whose model somewhat focuses on giving low-income people access to solar-powered electronics. Now, meet Tugende, a Uganda-based startup that announced a $3.6m raise to close a sumptuous Series A. How much in total? Details here.
Apple Pay launched in South Africa last week, in partnership with three banks. We’ll be checking in to see how that’s going, seeing as Samsung Pay already had strong standing there.
“Just like the internet came and shaped the world, so also will blockchain technology significantly change the world and the way people carry out business in the future,” said Jehiel Oliver, founder and CEO of Hello Tractor, an African agritech company connecting tractor owners to smallholder farmers using blockchain technology.
From finance to education, blockchain is used to service various needs across the continent. This is largely due to its decentralized nature.
Boluwatife Sanwo/TC Insights
It isn’t surprising that the majority of blockchain solutions are centred around improving financial services. There are three factors in Africa that contribute to this.
One, Africa has the highest unbanked population for any region. Two, its population is the fastest-growing population in the world. Three, Africa has the highest adoption rate for mobile money; and more than half of the registered mobile money accounts on the continent are in East Africa.
Cryptocurrency, perhaps the biggest application of blockchain has had wide usage in Africa, an interesting fact considering that as of 2020, only five African countries had progressive cryptocurrency regulation.
With 60,215 bitcoin traded within five years, Nigeria has the second-largest bitcoin market in the world and the largest in Africa, yet the country does not fall within the ‘progressive regulation category’. Although innovators are always seeking ways around it, there are only so many ways you can bypass a stifling environment.
Asides regulatory problems, the growth of blockchain is challenged by technical challenges as well . Blockchain-based systems require reliable internet connectivity, among other key infrastructure. This remains a limitation for businesses operating in Africa.
Also, due to the size limitations that come with most blocks, there is a limit to the number of transactions that can be completed per time. Thus, the speed of transaction can often be slow. It can take weeks to complete a bitcoin transaction.
Yet, blockchain heralds a new wave of possibilities on the continent. Startups like BitPesa are taking advantage of this, but blockchain can do so much more than removing transaction roadblocks.
HouseAfrica, for instance, has developed the first blockchain-based land and property registry in Africa. RideSafe is a blockchain-driven emergency response platform focused on enabling motorcycle safety.
Blockchain has an uncommon versatility, and it makes sense for innovators to continue to explore how it can be applied within our local context. But there’s only so much that can be done with limited infrastructure and regressive regulation.