Marcus Swanepoel, co-founder and chief executive officer of Luno, one of the largest cryptocurrency exchanges in Africa, said he is banking on virtual currencies to drive Africa’s economic revival.
Swanepoel disclosed this at the Blockchain Africa Conference in South Africa last week. He observed that money is being lost in the financial system. Centralised systems, for instance, face the big challenge of tracking financial transactions most of which go untraced.
This is hardly the case with cryptocurrencies like Bitcoin which go directly to the individuals involved.
“We believe cryptocurrency is going to come from a grassroots level,” he said. “Most importantly, anyone can innovate on it and to a large extent, it is neutral. It is trustless and in many cases, it is more secure than the existing financial system. And more important, cryptocurrencies are very versatile.”
Just as people no longer need to rely on paid systems to transport messages across the world because free and cheap services such as Skype and IM have replaced postal fees, so do people carrying out financial transactions that no longer need to rely on costly and bureaucratic central systems when cryptocurrencies provide cheaper and more convenient options.
Over 2.5 million people use Luno’s platform to carry out activities such as selling and buying of bitcoin and Ethereum. But more important is the investment the company is making in addressing the educational needs of the market. Through Learning Portal, Luno provides valuable informative materials for end-users ensuring they have all the knowledge they need to make informed decisions and also protect their investments. Luno also invests in Webinars, Meetups and Crypto events to bridge the learning gap both in Nigeria and across Africa, Europe and South east Asia.
Leveraging on users data, Luno can also track and see how much is being used on the dark net for money laundering. Swanepoel added that Luno have a lot more visibility than the existing financial system.
He says a future of common currency or common financial system in Africa is inevitable and it is tied to cryptocurrencies. Hence the political systems need to be on board with this ideology otherwise blockchain-based currency become difficult to fathom.
Why African governments have been slow to embrace cryptocurrencies, adoption by citizens have been growing steadily. A 2018 report released by Togo-based Ecobank which examined 39 African countries found that most continents are taking the “wait and see” approach, hoping that they can learn from the mistakes of their neighbours before they take action themselves.
While countries like Nigeria have taken a neutral position, only three countries have so far taken a strong position on cryptocurrency with Namibia issuing an outright ban, South Africa and Swaziland, on the other hand, have adopted a generally favourable and permissive stances on the asset class but stopping short of providing them with full legality. But there is pressure on governments to create a common financial system for the continent in order to enable businesses transact within Africa seamlessly.
“This new financial system will be created from the bottom up, not from the top down. It is not going to happen tomorrow. The current financial system was built over thousands of years. It is a new system, it doesn’t come without risk, and we have to acknowledge that,” he said.