“Can Bitcoin Lift Botswana?” | Writing Sample

2014/10/22 in Journal

Bitcoin is changing the world, but what exactly does that look like? In this essay I wrote for Ripple Labs, I discuss the reality of world-changing technologies outside of first-world societies.

Can Bitcoin Lift Botswana?

Known as Botswana’s first Bitcoiner, Akalanani Itirleng believes the borderless cryptocurrency can lift her people—even if it isn’t quite there yet.

“There is still no platform to buy or sell,” Alakanani said, laying out the state of bitcoin in the sparsely populated, sub-Saharan nation over chat. Alakanani logs onto the Internet through her phone, but the service can be spotty. It took us three attempts over the course of a week to finally connect. Undeterred, she’s ecstatic to share her latest success.

Alakanani is a crypto-missionary—Bitcoin is her good news.

This is Africa, after all, rich in resources and poor in just about everything else. It is at once the origin of mankind but also human civilization’s final frontier. With little to look forward to today, the cryptocurrency movement offers Alakanani hope of a better tomorrow.

As a dreamer and a survivor, her story is grounded in maternal resourcefulness and fueled with unabashed idealism. It also begins with tragedy.

When it became clear that her son’s heart condition was beyond the scope of local clinics and her limited finances, she took to the internet in search of medical information and ways to make money.

At least for the uninitiated, the seduction of getting rich quick has been, for better or worse, one of Bitcoin’s foremost attractions. Alakanani’s introduction to the technology then is one of false promises, landing her on websites of questionable integrity that claimed to pay in crypto for clicks, referrals, and surveys.

If Bitcoin expanded the reaches of digital finance, it did so, too, for online scammers. Despite her efforts, she received endless excuses instead of actual payment. It’s hard to say if paying users was ever part of the plan.

Instead, her payoff became the discovery of Bitcoin itself, as Alakanani quickly devoured educational materials, intoxicated by the prospect of a decentralized, peer-to-peer currency controlled by no one and everyone–including, to her immense glee, herself. Though unable to save her son, who passed away last year at the age of four, Alakanani had inadvertently stumbled upon her calling.

Inspired by the potentially liberating force of revolutionary technology, she became her country’s most visible evangelist, creating Facebook groups, producing YouTube videos, andleading local workshops, tireless efforts that would garner the attention of the media andcharitable organizations.

“I believe I now have a total of seven if not eight people who own a few coins including me,” she said, having acquired her first coins through the generous donations of the community. “This helped me to get more people interested and now some are looking for platforms to have more bitcoins and have even taken the bitcoin gospel to others because of the gift that I gave to them.”

“At first, I started with three people who were very keen in knowing more about bitcoins,” she explained. “And I just wanted to share with them so they can feel the love I felt when I received the coins. I knew that once they could feel that, they will want to learn more and at the same time change their lives and have hope for a better future.”

When pressed for specifics, her message is one of individual empowerment, an idea she believes to be fundamentally lacking in her homeland in the face of, in her eyes, ineffective institutions and stifling bureaucracy.

“I believe Bitcoin is the best compared to regular banking—I mean the freedom, the feeling of ownership and control over my finances is beautiful,” she said.

“The bank can question why I have a certain amount of money in my account, a whole lot of bureaucracy and all,” she explained. “Issues of charges that we incur when we transact at banks are always upsetting. They might look small to some people but our statuses are not the same. [With bitcoin], sending money to one’s parents who live far from towns, cities, or villages is much more easy and with no fees.”

Although Botswana’s economy has progressed remarkably over the past 50 years, recent figures aren’t as encouraging. Both poverty and unemployment sit at around 20 percent, and the nation’s inequality ranking is one of the highest in the world.

For Alakanani, the rising tide of cryptocurrencies and the culture of innovation it would bring could raise all ships—by expanding access to banking services and promoting financial independence, which would presumably create jobs, she believes.

“I might not have a lot of bitcoins” Alakanani said, “but it has given me the opportunity to give people an alternative to what they are used to. I mean the government tries with its poverty eradication programs and back to school programs, but we can have independent people who will not depend on government for handouts if we can integrate Bitcoin in Botswana.”

Because for countless Africans, it’s less about having an alternative but any option at all. Botswana’s relative prosperity finds few peers in the sub-Saharan region, which accounts for 82% of poverty worldwide. A major contributor is the dramatic prevalence of the unbanked—326 million in total—whose inability to access modern savings, lending, and payment services essentially excludes them from participating in the global economy.

Instead of established institutions, the system’s outcast rely on informal means of borrowing and saving. “Unbanked people already use financial services—lots of them,” said financial expert Brigit Helms in her interview with The Guardian. “These options are convenient, but also fundamentally insecure, unpredictable, and often costly.”

Bitcoin, in the eyes of Alakanani, could provide those left out with precisely the kinds of services they need most: a convenient way to send, receive, and store money. The problem, of course, is that technology will never be a panacea for deeply rooted societal issues—at least on its own.

Africa’s structural limitations, for instance, extend to Bitcoin as well—only 13 percent of the Botswana’s population has regular internet access. And with nowhere to spend or trade her digital cash, Alakanani’s stash is largely irrelevant. Outside of budding interest in South Africa, home to the only cryptocurrency exchange, adoption across the continent is predictably nonexistent.

Stringent regulations haven’t helped, stymying the occasional crypto-initiative from taking root. Then there’s the brutal economics of reality. Silicon Valley’s practice of betting on the speculative future of untested technology simply isn’t the kind of luxury afforded to the majority of Africans fighting just to get by.

But that doesn’t mean technological progress can’t help, exemplified best by M-Pesa. Launched in 2007 by Kenya-based Safaricom, the text-powered banking system has been a resounding success by adapting to the needs of the people. While a mere 18 percent of the population is online in sub-Saharan Africa, mobile penetration is at an impressive 86 percent and rising.

A 2010 study by the University of Maryland identified increased money circulation, business expansion, greater employment, and improved wealth security as prominent economic effects of M-Pesa’s widespread adoption. “By lowering the costs of money transfer,” writes Robert Hall for World Bank, “M-Pesa has helped to increase market activity, especially outside cities, and that trend will continue.”

In 2011, M-Pesa partnered with Western union, creating a global network that extends to 95 countries—allowing the billions in overseas remittances to flow quickly to the people that need it most. Safaricom would expand the service to include the savings and loan platform M-Shwari in late 2012. The program’s overwhelming impact prompted Vodafone to bring it to Europe.

Most significantly, M-Pesa opens the doors to financial institutions keen on expanding their customer base in the developing world.

Having proven what’s possible, the network’s limitations—such as relatively high fees—is an invitation for proactive competition.

It’s here that Alakanani’s grand vision may realistically come to fruition—where institutions and innovation come together, rather than in spite of each other. In other words, Bitcoin might not make a difference on its own but through the change it inspires.

While nifty, new technology in and of itself isn’t particularly useful, the integration of crypto-innovations could unlock and expand the potential of existing infrastructure. Digitizing financial platforms would allow faster and cheaper payments across an internationally compatible network, providing financial institutions with the means to create an agile distribution platform to efficiently serve the region.

According to a recent industry report by Accenture, “leveraging the lower cost-to-serve capabilities enabled by the technology-driven transformation of their operating and distribution models” allows forward-looking banks to reach previously inaccessible markets, like “the hundreds of millions of people who remain outside the scope of traditional banking services.”

Subsequently, the hundreds of millions of unbanked in the region represent an enormously profitable yet untapped market. If the region saw the same kind of developments that Kenyans have seen with M-Pesa, the total revenues from digital payments have been estimated to jump from $6.6 to $16 billion dollars, according to a recent report by McKinsey.

The enterprising have already been testing the waters, like Google and its prepaid card serviceBeba, which provides Kenyans a more convenient way to pay bus fares. For the people of Africa, the arrival of outside ventures will only increase the accessibility and affordability of financial services.

Of course, with true believes like Akalanani continuing to spread the virtues of Bitcoin’s grassroots appeal, development on the other end of the spectrum could yet make a meaningful impact—but persistent barriers remain. Kipochi, an early attempt to marry mobile and BTC through M-Pesa, was abruptly terminated—allegedly because decentralized currencies were seen as a source of competition—according to the wallet’s developer, Pelle Braendgaard.

Ultimately, Kipochi’s setback highlights the tribulations of more entrepreneurial efforts. As such, Bitcoin’s presence in Botswana, and Africa as a whole, remains more symbolic than economic.

Alakanani, however, remains steadfast. “I still hold to the belief that many lives can be changed with Bitcoin,” she confided with us over her wobbly connection. “It gives people an opportunity to change their lives and others.”