Bitcoin’s Shoulders: My Vision for Blockchain in Nigeria

What is blockchain?

If you’re reading this, odds are you’ve heard about Bitcoin. And you’ve heard one expression or the other that has described bitcoin using terms similar to: bitcoin is a peer to peer digital currency system that enables users directly engage in transactions, verified by nodes that use an immutable distributed ledger called a blockchain. All that gibberish really means bitcoin is a network of people running software on their computers to track the account balances of everyone in the system. It’s important to note that Bitcoin is different from the blockchain. The blockchain is the underlying technology that bitcoin uses for record keeping and is applicable in not just currency spaces but in all sorts of things from immutable contracts (e.g Ethereum) to immutable records (e.g for land registry) to immutable silly games (e.g. CryptoKitties). A blockchain is a decentralized public ledger (meaning no central record keeper: records are kept and scattered amongst everyone in the system) used by most cryptocurrencies to keep track of transactions (aka activities). Need even more breakdown? Check here — I promise, it’s good ;)

History so far?

The starting point of the blockchain was 2008 when Satoshi Nakamoto released the white paper on Bitcoin, the first application of distributed blockchain technology. It gradually found its way into the mainstream public, primarily gaining adoption in insular circles of the geeky libertarian internet before getting embraced by even established financial institutions. Since 2008, Bitcoin’s cryptoeconomic and ideological philosophy has spun all sorts of projects and is getting positioned for growing influence.

Nigeria’s involvement has been gradual, yet on the rise. Notably, late 2016 saw a boom as Nigerians used bitcoin to funnel funds into the ponzi MMM scheme. Banks attempted to crack down on the ponzi scheme and block funding or make engagement difficult; MMM resorted to the unregulated world of bitcoin. There has also been the advent of all sorts of “crypto scams” including Abjcoin, Swisscoin, Bitconnect, and Onecoin — please stay away from these nonsenses. There is also strong evidence of trading ability as seen by data from localbitcoins (referenced below), the largest trading exchange in Nigeria and as seen by data from Google Trends — it’s crazy!

Weekly Local Bitcoins Volume (spike is an aberrant from August 1 during major hardfork). Source: https://coin.dance/volume/localbitcoins/NGN

Regulators have been very careful in ensuring they do not block the progress of the space but have also put in decent effort to sensitize users. The SEC in January 2017 issued a statement that aptly summarizes regulators’ sentiments:

  • “The Commission, wishes to alert the public that none of the persons, companies or entities promoting cryptocurrencies has been recognized or authorized by it or by other regulatory agencies in Nigeria to receive deposits from the public or to provide any investment or other financial services in or from Nigeria. The public should also be aware that any investment opportunities promoted by these persons, companies or entities are likely to be of a risky nature with a high risk of loss of money, whilst others may be outright fraudulent pyramid schemes.”

Possible Applications?

My hope is that we start building a blockchain ecosystem that jumps in as a global first adopter of this tech to transform our instiutions and build well-adapted applications to some of our challenges. Potential interesting applications include and are not limited to the following:

  • Land title application: one of the more challenging problems in Lagos (Nigeria?) is the storage, access to, and registration of land deeds. It’s very difficult to ascertain ownership and figure the corresponding history of land transfer; the blockchain is the perfect solution for this kind of problem. In fact, many cities are already looking into this including Dubai and Andhra Pradesh, India.

These are but a few broadly defined use cases. Blockchain applications are extensive and they provide even more applications and uses including those listed below. The extent to which these can change socioeconomic structures is exciting and we are in yet infant stages, even at the global level.

  • Currency to replace or complement paper money and fiat.

A lot of the vision for blockchain technology is unclear but this is why it is even more pertinent that we begin to wet our feet.

Risks and Headaches:

There is no technology without risks: ATMs and bank cards meant people could clone your cards and perform other hacks to pilfer your funds; the advent of the internet ushered in Yahoo! Yahoo! There is an increased level of risk as this space and ecosystem evolves:

  • Scams (MMM etc)

Why People should buy crypto:

  • Purist concerns: you might have libertarian dreams of a world with even better governance across industries, economies, and money. You might be tired of the status quo and ready for an Exit. The blockchain seeks to eliminate barriers to entry and attempts to decentralize power by democratizing voting, control and governance. It’s a truly fundamental paradigm shift.

Stakeholders and Roles:

Everyone needs to play a part in safeguarding the ecosystem. We need to develop a culture and community that is very well involved, invested and at the forefront of some of these innovation. In addition, a huge part of decentralization is social and community governance; the network effect nature of the blockchain makes it essential to watch out for the best interest of other users. Different stakeholders have different primary roles to play.

Government: one of the better parts of the emergence of blockchain technology has been the calmness of the world. Putin has been bullish on it, the IRS in the USA has been responsible with guidance, and regulators in Nigeria have taken a very cautious approach: taking a step back, watching and learning and working out the best course of action. These are very laudable steps that should be encouraged and we can only hope regulators continue to be cautious and offer careful guidance to let the ecosystem grow, enable users take advantage of the tech growth and ensure Nigerians have the freedom to build and use these amazing technologies.

Developers: just do what developers do. Build honest products. Shun scams.

Users: users are potentially the most vulnerable segment in the ecosystem. Even the most sophisticated and technical users can quickly find themselves victims of hacks, brutal irrational exuberance, and overwhelming dismay at the deluge of information and complexity in the space (UX of communicating technical Computer Science knowledge is still egregious!). The best option as a user is to pursue knowledge and understanding, avoid day trading (like, just let it go, Sis!) and maintain a conservative portfolio; you’re an Early Majority in a high-risk space, it’s really fine to be risk-avoidant.

Exchanges: at this point, exchanges are potentially the most important entities in this space. They are the gateways to this space for most users and serve as the custodian of their funds, it’s important we always pay special attention to their actions every step of the way; they can make or break culture. Some best practices to foster trust, encourage transparency, and avoid or prevent government anger

  • Open source your code (community reviews help to prevent hacks and ensure more rigorous testing and enhance trust).

We need to create and foster an ecosystem where all these parts work together: developers build beautiful decentralized applications and running experiments, users act as informed agents and pursue rational moves, exchanges are honest actors who understand that users winning is essential for their own success, government gives us more time to mature before they bring their guns, the community self-regulates. It’s a tough world to build but it’s a set of critical moves to make.

Call to Action

What should everyone do?

  • Read

Yours,

Aleph.

Editor’s Note: This is Work-in-Progress and was written ~November 2017 before the new wave of crypto speculative madness.

Cofounder, BuyCoins Africa. Custodian, Aleph Fellowship.

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