How Blockchain Technology is Helping Africa


African economies can benefit from blockchain and web3 to combat corruption, identity theft, and lack of trust.

Most African countries are considered developing countries. But on the African continent, there are also countries actively using blockchain technology. How can blockchain technology and web3 contribute to developing the African economy?

Africa is a big market from the perspective of corporations. Above all, Africa has a young population. According to blockchain analysis firm Chainalysis, 70% of sub-Saharan Africans are under 30. But about 66% of the African population has no access to banking, leaving a large credit divide.  The nations’ respective fiat currencies are often volatile and lacking in liquidity. To make matters worse, cross-border payments have an inefficient structure that is slow and expensive. Yet at the same time, as smartphone penetration grows in Africa, the continent is also the third-fastest growth market for cryptocurrencies.

Blockchain technology and Web3

Blockchain technology is a type of distributed network. A blockchain network consists of thousands of computers around the world sharing the same ledger. Each transaction is stored as a block containing a unique hash code, timestamp, and transaction data. Each new block that is created becomes part of the existing chain and each transaction made on the blockchain network is created as an indelible record. Since no single entity controls the entire chain, there is no need for third parties or intermediaries to verify transactions.

Web3 is called the third generation of the World Wide Web. It is a decentralized internet running on a peer-to-peer (P2P) protocol. Web3’s goal is to return data sovereignty to users by building an open and secure platform where users can exchange value without intermediaries. The idea for web3 was first conceived by Ethereum co-founder Gavin Wood in 2014. Since 2021, it has attracted the attention of crypto enthusiasts, large tech companies and venture capitalists alike.

Technological accessibility

Open source refers products, platforms, apps and systems whose code is accessible to the public. This allows people to load and modify code to deploy services.

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While open source projects are common in many parts of the world, they are still rare in Africa. Africans can also use open source projects to create their own apps and systems as decentralized applications (dApps) without interference from other countries. Without having to write code from scratch, open source codes can be used to more easily create innovative products that improve the lives of communities or individuals while at the same time generating significant profit.

Increasing financial inclusion

So, how can blockchain and web3-related technologies be used in Africa? These technologies can help overcome the challenges of corruption, lack of trust and transparency, identity theft, and poor access to finance in Africa.

Among these benefits, financial inclusion is a concept that describes giving cheaper access to financial services to all individuals and companies. Many Africans do no trust banks or other financial institutions. A key reason for this is untrustworthy banks and the fact that they charge hefty fees for managing bank accounts.

The reasons for Africa’s low financial inclusion are complex and include cultural background and principles, a lack of financial institutions and low income. Deploying blockchain and web3-based financial apps in Africa presents a major opportunity because Africans can gain access to financial services without high transaction fees or intermediaries and without having to construct any extra banking infrastructure. Having said that, educating the masses will be a big challenge.

Increasing remittances

Blockchain and Web3 could also impact the African remittance industry.

Currently, the remittance market in Africa is dominated by foreign companies such as Western Union and MoneyGram. Remittances through traditional banks take several days as they have to go through the Swift network and also require a bank account.

But with blockchain technology and crypto, Africans are now presented with cheaper and easier alternatives for sending money. Blockchain-based remittance services generally follow a P2P structure. Because they are not affected by banks or intermediaries, they help lower remittance fees. Also, blockchain has no borders. Even sending money between countries takes a few hours at most over blockchain.

Medical improvements

One of the most promising applications of blockchain technology is to improve obstacles to accessing healthcare. There are many blockchain use cases in healthcare, including drug supply chain management, transmitting patient medical records, drug development, clinical trials, supply chain tracking and insurance claim processing.

Data recorded in the distributed ledger cannot be changed by anyone. This means it can be used to create more verifiable and permanent healthcare information management solutions, which, in turn, allows patients to take ownership of their medical records.

Not only can doctors always access comprehensive and reliable information on their patients, but this also improves the quality of care. Rather than relying on the patient’s memory, treatment plans can be based on actual treatment information. This provides more informed decisions that lead to better health outcomes and lower costs.

In a speech before the World Bank, Modupe Odele, a partner at the law firm Vazi, stressed that Africa needs blockchain technology because it has the ability to increase transparency, decrease inefficiencies, and lower prices across many economic sectors.

Disclaimer

All investment strategies and investments involve risk of loss. Nothing contained in this website should be construed as investment advice. Any reference to an investment’s past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.
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