“What I have earned in one-and-a-half years from bitcoin is more than I earned in 10 years as a teacher,” Richard M. Bagorogo told his audience. “I am living on bitcoin because getting a job in this country is not easy.”
Some tech-savvy Africans are embracing bitcoin, the most popular virtual currency, despite the warnings of a few governments, seeing the volatility in its value a better risk than the usual hustle amid the continent’s high unemployment.
Many bitcoin adoptees are professionals aiming to supplement their salaries, but others are jobless millennials hoping to make a living by trading the cryptocurrency, which isn’t tied to any bank or government and, like cash, allows users to spend and receive money anonymously or mostly so.
In Kampala, Uganda’s capital, and elsewhere a small community turns up at events where stars like Bagorogo preach what they call “the gospel of bitcoin.”
Imagine the blockchain as a 21st century form of ledger that is completely digitized, open to the public and impossible to alter. /VCG Photo
Bitcoin and other cryptocurrencies rely on blockchain, or the public, distributed ledgers that track the coins’ ownership. The bitcoin ledger is powered by “miners,” so-called because they throw computational power into the system to discover and verify cryptocurrency units, occasionally receiving — or “mining” — new bitcoins in return.
Bagorogo encourages people to invest in one of over two dozen global mining pools. For many who can’t afford to buy and hoard large amounts, the potential returns, including dividends, can seem promising.
Bitcoin and other forms of cryptocurrency do have their critics.
Uganda’s central bank has warned that investing in bitcoin and other digital currencies “is taking a risk in the financial space where there is neither investor protection nor regulatory purview.”
Kenya and Nigeria have issued similar concerns, and last year Namibia officially banned the use of cryptocurrencies for commercial purposes. But other countries in Africa appear open to the possibilities. Last year Tunisia announced it would launch a digital currency based on blockchain technology and South Africa, Africa’s most developed economy, is researching the technology’s feasibility.
Microsoft founder Bill Gates shared his concerns about bitcoin during a Reddit “Ask Me Anything” discussion.
“The main feature of cryptocurrencies is their anonymity. I don’t think this is a good thing,” Gates said. The [government’s] ability to find money laundering and tax evasion and terrorist funding is a good thing. I think the speculative wave around ICOs and crypto currencies is super risky for those who go long.”
Gates also believes cryptocurrencies have the potential to make illegal activity like drug dealing, kidnapping and cyber crime much more efficient.
In China, where a substantial amount of the world’s supply of bitcoin originates, the government ordered a shutdown of all cryptocurrency mining operations in January. The crackdown, plus hacking attacks leading to the theft of hundreds of millions of dollars’ worth of bitcoin from Japanese transfer Coincheck, contributed to the volatility of the value of a single unit of bitcoin, which rose to $19,000 in December but has since fallen below $9,000.
Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, Feb. 2018. REUTERS
Despite the risks, “it is not wise to dismiss cryptocurrencies at this stage,” said Stephen Kaboyo, a Ugandan analyst who runs the Kampala-based financial services firm Alpha Capital Partners. But those who invest in “a hugely speculative asset” must first understand the risks, he warned.
In Uganda, where per capita income was less than $700 in 2016, bitcoin enthusiasts are mostly unfazed by the volatility. Many of them simply appreciate the convenience of bitcoin in financial transfers.
“I used to want to buy medical equipment online but it was becoming hard. Transacting online is very expensive in Uganda with all the fees,” said Moses Semulya, a doctor at a Kampala hospital. “Bitcoin is changing that, making things easier and faster.”
Semulya said he rues a missed opportunity to invest in bitcoin in 2016 when it was still relatively cheap. Now he holds nearly $800 worth of it in his digital wallet, an amount he hopes will swell as more people in Africa and elsewhere turn to the cryptocurrency.
He concluded: “Right now I would rather invest in bitcoin and watch this space rather than buying a plot of land.”