Despite the global crash in cryptocurrencies, sustained uptake of innovations in Non-Fungible Tokens (NFTs), Decentralised Finance (DeFi), Web 3.0 and the Metaverse in Africa is convincing investors that early adopters of these technologies are well positioned to benefit from the next phase of crypto expansion.
This was revealed during a discussion between Simon Dingle (Chief Executive Officer at Inves Capital) and Steven Sidley (Head: Blockchain and Cryptoverse Research Group at the University of Johannesburg’s Institute for Future Knowledge) at Crypto Fest 2022 – the largest gathering of crypto industry leaders, experts and enthusiasts in South Africa, who met online and in-person at the Grand Africa Café and Beach in Cape Town last week, to explore how the technology is impacting the future of finance, investment, industry, and creativity.
Under the theme of ‘Don’t Look Up’, the event was host to just less than 1,000 entrepreneurs, traders, investors, developers, and pundits alike.
Together, they debated the vast opportunities that cryptocurrencies and their related innovations are creating in the African economy, via a jam-packed day of keynotes, presentations, competitions, product exhibitions, and performances.
Says Sonya Kuhnel, Co-Founder and Director of Bitcoin Events, and organiser of this year’s festival: “The fourth edition of Crypto Fest came at an unprecedented time for both the African economy and crypto market.
Across the continent, industries have been grappling against pandemic-induced shocks exacerbated by the war in Ukraine, which led to one of the worst winters in crypto history.
However, from the discussions that took place, we have learned that it is a very different world for crypto in Africa – with significant uptake in crypto-related technology proving that the utility for Africans is starting to emerge.”
Exploring the uptake and future of cryptocurrency in Africa
In his opening address, Alderman James Vos (Mayoral Committee Member for Economic Growth in the City of Cape Town) expressed that – as Africa’s Tech Capital – Cape Town was an ideal host city for the continent’s leading gathering of innovators, affording them an unmatched opportunity to connect, inspire and accelerate the impact that crypto technologies can have on advancing socio-economic growth in South Africa and abroad.
He continued, saying that: “Cryptocurrencies are exploding in Africa with the World Economic Forum noting that, between July 2020 and June 2021, Africans received $105.6 billion worth of cryptocurrency payments – an increase of 1200% from the year before.
That’s because people across the continent are increasingly finding that cryptocurrency is more accessible than traditional currencies.
As a leading tech hub on the continent, the City of Cape Town will help individuals, entrepreneurs and businesses in learning how these platforms can sustainably empower our communities and continue to create a world where more and more people can access opportunities.”
Proceedings then continued with a keynote address by Mandla Magagula (Chief Technology Officer of Libex), who gave insight into the driving forces and conditions needed for greater crypto adoption in South Africa.
To this, Magagula explained that: “In our country and further afield, there is growing evidence of the need to account for key African challenges, which may inhibit the continued growth of cryptocurrencies across the continent.
This includes issues such as energy security, unequal access to the internet, and limited spending power of consumers. Overcoming these challenges depends on the ability of solutions to meet the needs of the communities they intend to serve, and to meet them at their level.
Among other things, this means that they must cater to offline use, as not all consumers can afford to be always-on; they must be optimized for low-end devices which are more prevalent in African markets; and they must be built in a way that prioritizes intuition and affordability.”
Toward meeting African consumers at the community level, Nolu Mashologu (Business Development at FTX Africa) shared that this was the foundational principle that the leading crypto-exchange, FTX, took when scaling to the African continent.
She described to audience members how the platform prioritizes a “user-first approach”, which accounted for varying levels of consumer awareness and education, and the need to curate a seamless experience to retain consumer interest.
On the future of DeFi in Africa, Michael Jordan (Business Development for Polygon Enterprise), explained that: “Africa is set to be the largest market globally, and to ensure sustainable and inclusive socio-economic growth, we need solutions that empower producers and consumers to do business and to do so with a high level of trust.
This is where blockchain and DeFi come in. The technology is a new and improved method for authenticating finance and proving ownership. In doing so, it reduces fraud, promotes legitimacy, and removes critical inefficiencies.
At the end of the day, they set the stage for a better environment in which to trade and transact – a stage which benefits all industries.”
However, to achieve this, local expert on regulating disruptive innovation in the crypto market and Audit Partner and Digital Asset Lead for Mazars South Africa, Wiehann Olivier, stressed the need for the national government and the South African Revenue Service (SARS) to implement a regulatory framework, to promote consumer protection, combat fraud, and ultimately support greater adoption.
With many legacy businesses in South Africa now accepting cryptocurrencies as valid forms of payment, Olivier explained that, by establishing proactive and enabling regulations, South Africa could leverage the growing number of crypto transactions and deals, to fuel additional tax revenue for the state and fund public investment initiatives.
Disrupting the future of the industry
Among the many highlights of the day’s proceedings were a range of industry-specific discussions, which looked at how crypto and its related technologies are altering the nature of business in key sectors of the African economy.
Of particular interest to attendees was a fireside chat between former South African rugby player, Kyle Brown, and former South African soccer player turned athlete manager, Sean Roberts, who unpacked how cryptocurrency is revolutionizing the world of sport.
Together, they explained that the COVID-19 pandemic had a devastating impact on the incomes of professional sportspeople, as long-standing sponsors opted to defer contract renewals until restrictions on the industry were lifted.
To compensate for this loss of income, Brown shared that athletes, clubs and associations are now exploring the technology’s potential to unlock new revenue streams and afford closer fan interactions via NFT-backed ticketing, merchandise, and the fragmentation of athlete image rights.
Looking at the impact of cryptocurrencies on gaming was a panel between Devon Krantz (Chief Executive Officer of Linum Labs), Glenn Gillis (Chief Executive Officer of Sea Monster Entertainment), and Michael Jordan (Business Development for Polygon Enterprise).
During this session, Gillis described how cryptocurrencies and emerging ‘play-to-earn’ models are key to achieving sustainable growth in South Africa’s interactive entertainment sector.
To this end, he explained that, when players are able to earn digital assets, they are more inclined to continue supporting a game.
Higher player counts will in turn propel investment into locally made games, thereby stimulating increased capital inflows into the economy, and promote further production.
Shifting the focus to artists and musicians, a discussion between Yaliwe Soko (Chairwoman of the United Africa Blockchain Association), Craig Chitima (Freelance Designer), Anushka Soma-Patel (Product Manager of Ecosystems for Atala Prism at Input Output), Jan Hendrik Viljoen (AKA Portchie), and Stephen Young (Chief Executive Officer of NFTfi) found that, with the uptake of cryptocurrencies and NFTs, African artists are able to explore new revenue-generation opportunities – but stressed the need to upskill artists with the necessary skills, knowledge and best-practice, to ensure they can leverage the technology to its full potential.
This was followed by a panel that looked at how investors could manage risk with decentralised finance, featuring Sebastian Stent (Product Marketing Manager for Web3 at Opera), Michael Jordan (Business Development for Polygon Enterprise), Daniel Kimber (Co-Founder of Bakari AG), and Hannes Wessels (Country Head for Southern Africa at Binance).
Together, they unpacked how DeFi would characterize the third iteration of the financial industry, with blockchain technologies working to increase trust and transparency, and catalyze a peer-to-peer market for lending, borrowing and investing, allowing investors to bypass third-party intermediaries.
After a brief networking intermission, proceedings continued with a panel that explored the future of investments in NFTs and the Metaverse between Llew Claasen (Managing Partner at Newtown Partners), Gideon Greaves (Managing Director for Africa at CVVC), Devon Krantz (Chief Executive Officer of Linum Labs), Ahren Posthumus (Chief Executive Officer of Momint), and Dirk van Loggerenberg (Chief Executive Officer of FutureFin).
Both Krantz and Posthumus described how the industry was seeing increased uptake in sectors such as real estate, with the value of virtual property skyrocketing since leading brands the world over have made major investments into the space.
Continuing the discussion around the rise of the metaverse and Web3.0 in Africa was the penultimate panel of the day between Ernest Mbenkum (Founder of the Bantu Blockchain Foundation), Wesley Diphoko (Editor-in-Chief at Fast Company SA), Norbert Adomako (Chief of Communications at Metis), and Modibe Matsepane (Community and Education Manager for Africa at Paxful).
During this session, they described how the metaverse is projected to add billions of dollars to Sub-Saharan Africa’s gross domestic product in a decade’s time – a key contribution as the continent’s population is expected to double by 2050 – but that this growth would depend on mobile technology and efforts to increase internet affordability and accessibility.
Concluding proceedings was an expert discussion into whether the future of payments lies with stablecoins between Badi Sudhakaran (Chief Product Officer at VALR), Rikki Barnes (Head: Crypto and DLT Centre of Expertise at Firstrand), Rayn Derksen (Head: Blockchain and Special Projects at Nedbank),
Adele Jones (Lead Architect: Information Security and Blockchain at Nedbank), and Tobie van der Spuy (Co-Founder at Block Markets Africa). Expanding on the use cases for stablecoins in Africa, Van der Spuy noted that the utility of any stablecoin depends on the ability of everyday consumers to transact using that vehicle for trade and exchange.
He explained that, when trying to encourage the adoption of cryptocurrencies among non-users, one needs to appeal to their base knowledge, habits and understanding of fiat currencies. This means that one must enable Web3.0-type payments in fiat currencies – which is why stablecoins offer far greater utility to most consumers.
Interacting with the world of crypto
Amongst the various keynotes and panel discussions, attendees were also invited to explore the NFT Gallery and Metaverse Gaming Zone – featuring NFTs from local artists such as Arno Carstens and Portchie.
Of particular note was the auction of a title-winning boxing glove belonging to seven-time IBO diamond ring world champion, Kevin Lerena, which sold for R150,000 via the Libex marketplace.
A highlight of the Metaverse Gaming Zone was an installation by Cape Town Tourism and Sea Monster Entertainment, who had an interactive travel experience on exhibition.
Here, attendees could wander local tourist destinations in virtual avatars as part of the City’s #FindYourFreedom campaign to re-inspire travel to the Cape.
Wrapping up the event’s proceedings, Sonya Kuhnel remarks: “This year’s event was undoubtedly a great success, and what a joy it has been to reconnect with so many industry peers after such a tumultuous period.
Like all our attendees who joined us in-person or online, it has been a hugely enriching experience – one that has revealed many new opportunities to be explored – and we look forward to sharing what more we have learnt when we meet again at next year’s festival.”