It's been 16 years since the invention of Bitcoin, a peer-to-peer electronic cash system, which is permissionless, global, neutral internet money that can be used to send value instantly from and to all places on earth and even in space. It does not need intermediaries to work, which frees it from all sorts of human intervention, censorship risk and regulatory hurdles.
Image: Billboards in Freetown, Sierra Leone by Random Institute; unsplash
It's the perfect solution to move value transnational with low fees in a non-discriminatory manner. Bitcoin just works. I can say this, because I have been using it for eight years now. I sent bitcoin from Zimbabwe to Kenya, from Germany to the USA, from Indonesia to Zambia, from South Africa to Austria and every transaction worked.
Critics point to Bitcoin's price volatility, but for remittances and cross-border payments, the transfer time is measured in seconds to minutes - far less exposure than holding local currencies subject to inflation, devaluation and an instrument of repression.
Sledges cannot copy the properties of a wheel. Bitcoin's decentralization, censorship-resistance and the fact that it works without any intermediaries unleashes transfers of value in a frictionless and privacy preserving manner. The Lightning Network enables instant, low-cost payments while maintaining Bitcoin's core properties. It acts as the glue between on-chain high value settlements in bitcoin and fast and private payments with Lightning bitcoin and Ecash.
"Cash is still king across Africa. Can a new payment platform transform business?" a headline in the Guardian says "Digital system that facilitates instant money transfers touted as potential game-changer for cross-border trade". The Pan-African Payment and Settlement System (Papss), is promising instant transfers of funds from one African country to another.
Papss is just another sledge. If it works - and that is still to be seen - it's kicking down the can of flaws of the current payment systems.
In the many African countries I've visited, everyone has heard of Bitcoin. Sadly mostly in the context of scams. No wonder that individuals shy away from looking into it. Individuals constitute institutions and institutions are adapting slowly, they are big sledges themselves. A lot of misunderstanding keeps those who could make the most out of Bitcoin from using it.
“Payments are an instrument of control … we saw a certain country invade another country and all the payment systems overnight stopped working. We want to keep Africa from such things.”, the CEO of Papss Mike Ogbalu III promising "financial sovereignty".
A wonderful idea, although whose sovereignty is he talking about? Papss is connecting banks with each other, a long chain of intermediaries, who add friction and cost to the service. It offers institutional sovereignty, but not individual sovereignty like Bitcoin does. Of course African institutions prefer a system like Papss, they can hold on to their business model and remain players in the existing power structure.
"If all goes well, such a super-fast system could eventually make sending money across African borders as easy as sending a text."
If all goes well, still lots of money are wasted on developing a system of sledges putting flaws on top of flaws instead of using Bitcoin as the wheel for efficient vehicles. We have seen all of this before. Corporations built their own intranets in the 2000 era, trying to shield their businesses from the wheel of the internet. The cost of delay is not only the sunken costs of building, but also the opportunity costs of missing the rising tide that lifts all boats.
Broken systems cannot be patched, only replaced. The wheel has been invented. The question isn't whether Africa will use it, but how much time and money will be wasted building sledges first. Meanwhile, businesses and individuals across the continent are quietly using bitcoin for remittances, bypassing the sledges entirely.
Based on: Perspectives
Overall increase in Bitcoin trading between 2016 to 2020
In 20202 companies held in total 811,233 BTC, that was 11.8 billion USD on their balance sheets.
The story of Carlo Ponzi's frauds and why Bitcoin is not a Ponzi scheme
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