Preconditions for Blockchain use. . . as regulators are reluctant to embrace Bitcoin

Zimbabwe has in the past few months had the highest price of Bitcoin the world over

Kudzai M. Mubaiwa
Most people at the “bottom of the pyramid” in the Global South (or developing nations), for example Zimbabwe, are not familiar with the blockchain technology concept however useful it may be.

At best, they are aware of Bitcoin because it’s familiar to mobile money, which is hugely popular in the country. Zimbabwe has in the past few months had the highest price of Bitcoin the world over. Interest in Bitcoin is high because the country has no currency of its own and the central bank is not trusted.

Mobile penetration in the country is at peak levels, exceeding 100 percent and internet penetration is limited but growing, at just over 50 percent.

Zimbabwe has high literacy rates and a large percent of the population is young and may be considered ‘digital natives’. These indicators should make the concept of blockchain an easy sell, but it has proved difficult so far. What is the optimal way to break it down and get more people aware and involved when they do not know it may be good for them? What are the necessary preconditions? Are there any learning points from the progression of mobile money in Zimbabwe? I am inclined to think so.

My first interaction with mobile payment solutions was in 2011, because a certain telecommunications company was offering a free dollar of airtime for everyone that signed up.

It was a sweet deal, but I did not as yet imagine that I would end up such a heavy user of mobile payments, even though I had foreseen the trend in my 2005 university research project on banking and technology. I had a bank account — several actually — and no need for another. In my view mobile banking was a solution for the financially excluded, and the costs were not worth it for me.

My first interaction with blockchain technology was through a similar payment solution, Bitcoin, and a colleague introduced me in 2014. I was immediately sold, even though I had several bank accounts, I could see a strong use case especially with regards to remittances and international payments. I am convinced my 2011 experience helped set the foundation for the 2014 one because I had seen how mobile payments had become significant in all locations urban and rural and thought Bitcoin would follow. It has not been the case necessarily.

Policy in Zimbabwe is tentative when it comes to cryptocurrency alone, and I have strong doubts that the financial regulatory authorities understand it, let alone the underlying technology of the blockchain. It is the nature of government to govern, but Bitcoin decentralises power.

In fact, in Zimbabwe the Reserve Bank issued a warning to the transacting public, saying it is not legal tender in the country, and those dabbling in it would not have recourse in the event of any losses.

The funny and perhaps ironic bit is that Bitcoin was popularised by the estimated 66 000 people who were part of a pyramid scheme and this engagement gave them exposure to what cryptocurrency could do and the problems it could solve in a country with no currency.

Further irony was that the central bank, not a very trusted institution presently, was warning against a technology built to solve the problem of trust. With such a view of Bitcoin and by extension, blockchain technology, uptake will be slow never mind that Zimbabwe has one of the best use cases of it. No one beats government on scale and reach. We will need a pro-technology and innovation authority at the highest levels so that we can, as a nation, start looking into how best we can leverage blockchain technology for our small business transactions.

The people with the pedigree are available, but there must be political will to explore in that direction, even cautiously. Mobile payments had the full support of Government, and the same is required if blockchain is to become a thing. We must start to participate actively in African platforms such as ‘Smart Africa’ held this past week and exchange notes with other countries.

Assuming that there is positive feeling towards blockchain from the highest level, the next important element for its proliferation is the basic infrastructure. Mobile payments rode on existing infrastructure for general telecommunications — that ordinary folks had mobile phones however simple, because they had SIM cards for calling and texting.

Blockchain requires that ordinary people have decent internet, not just mobile internet but proper bandwidth and the physical gadgets that enable people to create and build on blockchain platforms.

Naturally, power, electrical power becomes an issue. Computers, or indeed any other devices, require charging as they are used for both creation and consumption. We need such basics to be available consistently for blockchain use to even be considered.

Mobile payments were huge because mobile banking works on any kind of a phone. The minimum requirements for blockchain would be at the very least an entry level smartphone, thankfully within reach for most small business owners.

Awareness is another critical success factor. The solutions proffered by blockchain start-ups are only as useful as they are known. Mobile payments took off due to huge marketing budgets, but more so through the strength of word of mouth by happy users. Sadly, most emerging start-ups in that space will not have pockets as deep as the mobile companies did, they will have to be content to grow slowly but steadily and build up trust over time. We already have some with functional products in Zimbabwe, and some have been wise enough to invest a lot in financial and digital literacy — helping ordinary folks appreciate how the technology works.

Small business owners are usually aware of their inadequacies and will need people that continuously train them on the terminology and functionality of blockchain, as well the specific use cases per sector. It is a mammoth task educating an entire nation, but if people could learn to use mobile payments just seven years ago, and even use WhatsApp, they can surely learn new things if the value proposition is right.

The best way to learn is by doing, and to start small business owners off, we will share some of the common terms in blockchain and Bitcoin in the next column. The next generation of small business owners must be tech savvy and move the country forward, even leapfrogging or disrupting existing industries. We have nothing to lose!

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