Blockchain – A Basic Breakdown and What Does it Mean for Africans?

It’s 2017. If you have not heard the words Blockchain or Bitcoin, best you check your internet connection. It is all the buzz online right now. But what is it? Is it shady (kind of, but not really) and can you actually make money off it?

Let’s imagine we are out to lunch in a group of four friends in total. One of the friends hands you a coin. Everyone at the table sees this transaction. You cannot claim that you have more than the one coin handed to you and the friend cannot claim she still has that same coin. There is accountability as a group since all the transactions are visible to the whole group.

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Ok, now let’s imagine this scenario in a WhatsApp group. Still with you in a group of four friends. In this WhatsApp group, each member has two emoji coins to their name. You can’t share these coins with anyone outside this group and everyone in the group can see the emoji coins next to each member’s name. Again, your friend decides she does not like these emoji coins on her name so she gives them to you. Your friend Rachel could also decide to split the coins between you and another friend in the group. Either way, any means she chooses to give away the coins, the group can see what is happening. Since Rachel decided to give both coins to you, the standing now looks like this:

4bit group

You now have 4 coins. You cannot say to the group you have 5 coins or 3 coins because everyone saw that Rachel gave you her two coins and you still have your original two so everyone knows you have four in total now. Rachel cannot say she has any coins because we all saw her give two coins to you. Thandi and Obasi, the other two friends in the group, still have their original two so they cannot claim to have more or less than that since the group knows their standing on coins. If Rachel decided to split her share: one coin to you and one to Thandi or Obasi, the group would see this and again everyone’s coin standing would be known to the full group.

This WhatsApp group is an analogy for Blockchain. Blockchain is an open source framework, which basically means everyone in the group can see all transactions that take place in the group. Each member holds the others accountable, so it would not be possible for one member to overstate or understate their coin holding since all members of the group can see all the transactions. Every member in the group has some invested interest in it (their own “coin standing”) so if someone where to overstate or understate theirs, at least one member would pick this up and raise a flag.

Here is a really great link about how Blockchain is used in the Diamond industry to prevent the sale of “blood diamonds” which we all know is a major issue for African suppliers of these goods: Basic Blockchain in the Diamond Industry 

In the WhatsApp group, you have the most coins (4 coins) and everyone in the group (Blockchain) can see that. So you have the most buying power. The only way to add more coins to the group is to add another member. Another member would come in with the standard two coins. You have the most power to buy those to coins, perhaps at a cost of 2.5 coins since you have the additional means. But the new member, lets call him Bongani, can decide to give the coins to anyone else in the group at the standard price. This is where trading comes in. In any event of the trade, the entire group can see what transactions are occurring, money cannot leave the group or be generated in the group artificially. We’ll talk about trading and the real value of coins in the next blog

In real life, there are many more people than just the four or five friends involved in our WhatsApp example. Let’s say each person in the group represents one million people. So with the new sign in, we have 5 million people in the group. As much as it is still an open source network and everyone has access plus full view to all the transactions, it will be really tough to administer all these transactions. So there is a team of developers who administer the new sign-ins and ensures that all the transactions are kept open to the community. These are called “miners”, in the next blog we will talk about why they have this name.

Bitcoin which is cryptocurrency is one the the most famous users of blockchain technology. But the technology is also used for other industries, surprisingly many which have direct effect in Africa. One of which is tackling human trafficking. Blockchain technology is being used to implement systems that allocate Identity Numbers to those in rural Asia and Africa where the citizens may not have access to acquiring an ID number and are thus vulnerable to human trafficking. Tracking blood diamonds as shown in the video  above is another application of Blockchain technology. In Ghana, an interesting application call Bitland is using Blockchain technology as a database for titles of land in a country where 78% of the land is not registered.

Globally, the countries in highest use of Blockchain technology are the UK, USA, the Nordics and number one on the charts is the Netherlands. However, it is more popular in the developing world than you would think.

The top five countries in terms of Google search ranks for “Bitcoin” are

5. South Africa

4. Slovenia

3. Estonia

2. Ghana

  1. Nigeria

Nigeria tops the list most likely because of the challenges in international money exchange with the local Naira. For example, PayPal is banned in Nigeria and any foreign currency coming through foreign banks are extremely difficult to administer. In addition, for big multinationals, Nigeria is noted as a high risk trade partner, again making it difficult for the locals to do international trade. Bitcoin, using the Blockchain technology may be a good alternative for the country.

Kenya being the King on the continent for digital e-commerce innovation has already introduced BitPesa, a means for Kenyans to do business with Africa’s main trading partner – China by using blockchain technology. The service which is currently available in Kenya, Tanzania, Nigeria and Uganda also offers an ease of trade between Nigeria and the East African countries.

So how does Bitcoin work and can it actually be used for business or real purchases in Africa?

Find out on the next blog 🙂


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Candice Simone is a digital business developer for NubiaNetwork. She writes content and does the online marketing, research and sales for the agency. Previously she worked in the chemical industry where she was a business developer for the sub-Saharan African region. Her interests are old school hip hop, digital innovation and all things African.

For more blog articles, follow our page or contact us o the Facebook Page NubiaNetwork






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