Connecting Africa is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 3099067.

Thinking outside the box with bitcoin in Africa

By Tom JacksonDisrupt Africa

It wasn’t so long ago that “bitcoin for remittances” was the next big thing in Africa.

Yet all that is a thing of the past, as bitcoin for remittances failed to take off. Ghanaian remittances startup Beam ditched bitcoin as a payment method. Nigeria's Bitstake shut up shop. Even the much touted BitPesa, from Kenya, is moving away from focusing on remittances.

Bitcoin in Africa, then, faces an uncertain future. But there are a few companies, notably in South Africa, looking to take advantage of the existing bitcoin community – those that have already adopted the cryptocurrency – to build exciting businesses.

Disrupting digital piracy

Founded by staff at Stellenbosch University and based at the LaunchLab, Custos MediaTechnologies is looking at bitcoin in a very different way.

The startup employs bitcoin bounties as a means of cracking down on piracy of various types of digital media, with Custos currently focused on producers of videos and movies. It embeds bitcoin bounties as watermarks within videos, which can still be watched normally.

If the media passes out of the control of the intended recipient – usually a reviewer offered a pre-released version of the movie – there is a small bitcoin reward that can be collected by one downloader using a free tool. Custos sees this transaction on the blockchain, and informs the media owner, who can then take whatever action they see fit.

Co-founder G-J van Rooyen says that he had seen the potential for bitcoin to do much more than provide an alternative form of finance.

“Cryptocurrency provides a very attractive way of providing an incentive to media recipients to stay honest,” he said.

The need for a solution like Custos is huge. One of Custos’ clients makes movies, and has previously suffered losses prior to box office after sending advance copies to reviewers. It happens to bigger companies too. Last year, Expendables 3 leaked in advance of release, costing the studio behind the film US$10 billion.

“Especially for smaller organisations it can be devastating, they might not be able to recoup their investment,” van Rooyen said.

Investors agree. In January, Custos raised funding from Innovus Technology Transfer, the industry interaction and innovation company of Stellenbosch University, while in April it clinched a second round seed of investment of just under R4 million (US$265,000) to allow it to reach out to high-risk media producers.

Bitcoin for crowdfunding

All of a sudden bitcoin for crowdfunding is a big thing. This can be seen with The Sun Exchange, which is a peer-to-peer lending platform that connects people wanting to invest in solar energy with projects. Founder Abraham Cambridge says the startup was a middleman between potential funders and projects, using bitcoin as a way of making effective remittances.

So remittances still lives in the bitcoin space. But The Sun Exchange is not so much about persuading new people to adopt bitcoin to send money, but tapping into the existing bitcoin community.

“The international bitcoin community wants to fund solar energy,” Cambridge says. “The bitcoin community is used to innovative tech, they are used to the risk, as they are already exposed to volatility. They are also interested in money and doing cool, world-changing stuff.”

 

The Sun Exchange is putting a different slant on already existing bitcoin crowdfunding models. Last year, Cape Town-based social impact incubator RLabs launched mToto, which allows users to donate to projects, focused on the early childhood development (ECD) and education sectors using cryptocurrencies.

mToto allows users to donate bitcoin to a number of projects listed on site, with RLabs founder Marlon Parker telling Disrupt Africa the organisation was looking to help activate ECD projects on the continent by tapping into the power of the blockchain community.

Once donations are made, mToto converts bitcoin into cash and funnels it to the projects in question, with Parker saying RLabs hoped to raise direct bitcoins for around four ECD projects per month.

Another South African company working in the same space is Bankymoon, which has launched a crowdfunding platform that allows public schools in Africa to use blockchain technology to gain electricity credits.

Bankymoon is a bitcoin integration startup that primarily focuses on providing bitcoin payment gateways to smart metering vendors, allowing the vendors to accept bitcoin payments for utilities.



This idea has now extended this idea to create a crowdfunding platform named Usizo for schools in Africa. Schools are supplied with a Bankymoon meter with an assigned bitcoin address, to which donors are able to send funds that are immediately converted into electricity or water credits.

Donors are able to view information about students, teachers, infrastructure, focus and estimates of utility usage at certain schools, and make decisions as to who to donate bitcoin to.

Lingering hope

So there is still life in the old dog yet. Though Gilles Ubaghs, financial services analyst at Ovum, says bitcoin is still too complex to explain to many people and thus has not seen sufficient uptake to be relevant in remittances, he says there is still room for bitcoin to take off in ways it was not originally expected.

“A few years or even months ago the talk was of using bitcoin as a total replacement for standard currencies. That looks increasingly unlikely anytime soon, as it is still too complicated for most people,” he said.

“But bitcoin as a service, as a means to send money, or build other services on the bitcoin blockchain network, is showing huge growth and development at quite a staggering pace. Bitcoin won’t replace existing money, but it might just replace the existing infrastructure.”

About Tom Jackson:

Passionate about the vibrant tech startups scene in Africa, Tom can usually be found scoping out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem. He is co-founder of African tech startups news site Disrupt Africa and is based out of Cape Town, Nairobi and Lagos. Tom was a speaker at last year's AfricaCom as well as a Com World Series media partner.

Website: Tom Jackson
Disrupt Africa
Twitter: Tom Jackson
Disrupt Africa
LinkedIn: Tom Jackson
Disrupt Africa

Innovation hub

Story

Moya super app takes aim at SA fintech market

Super app Moya's fintech platform, MoyaPay, aims to be South Africa's most widely used mobile money payments platform.

Story

Hot startup of the month: Kenya's Shamba Pride

This month's hot startup, Shamba Pride, wants to revolutionize the rural agricultural trade ecosystem in Kenya by transforming agro-dealers into franchised 'DigiShops.'

More Innovation hub

Guest Perspectives

Story

Omdia View: April 2022

By Omdia Analysts

This month's Omdia View highlights indicate a shift to digital transformation and operational consolidation to maximize return on investments.

Story

Omdia View: March 2022

By Omdia Analysts

This month's Omdia summary of the biggest stories in the Middle East and Africa focuses on SA's spectrum auction and new submarine cables landing in Kenya and Togo.

More Guest Perspectives

Partner perspectives

All Partner Perspectives

Flash poll

All polls

Latest video

More videos

Archived webinars

Boosting Customer Experience in the Digital Age

From the first interaction to the last payment: convert leads into clients, drive loyalty and grow your bottom line.

The digital age has ushered in a new era of customer engagement. Consumer demands and expectations are higher than ever – where an affordable but seamless online experience is now the norm.

At a time when competition for your customers is fierce, ensuring a client journey that is tailored to their needs has never been more important. The ability to build these bespoke offerings starts with understanding, and that understanding is built on data.

This webinar will explore how gathering insight is key to growing and retaining a strong customer base; we’ll unpack how CRM platforms, mobile payment, lead capture, and online marketing are key factors in building a successful 21st Century digital business.

  • Customer Experience – understanding consumer expectations of today
  • What easy steps can you take to provide a complete, immersive digital customer experience?
  • How to leverage modern digital tools to build customer loyalty

More Webinars

Sponsored video

More videos

AfricaCom perspectives

Story

Digital inclusion as a catalyst for economic empowerment: Mastercard's Imelda Ngunzu

Mastercard's Imelda Ngunzu talks to Connecting Africa about how digital payment solutions and mobile money are transforming the lives of small business owners, women and marginalized groups in East Africa.

Story

Accelerating women in STEM: In conversation with GirlCode's Tinyiko Simbine

GirlCode co-founder and CFO Tinyiko Simbine talks about why it's important to help girls and young women excel in science, technology, engineering and mathematics (STEM) fields.

Story

How Poa Internet is unlocking meaningful connectivity in East Africa

Poa Internet's CEO Andy Halsall shares his views on what it takes to develop last-mile connectivity and get Africans online in a meaningful way.

More AfricaCom perspectives

Like us on Facebook

Newsletter Sign Up


Sign Up