blockchain

Towards a Cashless and Inclusive Society in South Africa – Interledger Summit 2024

- Julian Kanjere

The 2024 edition of the Interledger Summit by the Interledger Foundation took place in Cape Town, South Africa on the 26th and 27th of October 2024, with the theme – Bridging Worlds: Unleashing the Power of Interledger. The summit explored the ways of strengthening the United Nations initiative towards healthier digital public infrastructure (DPI), creating a more responsible financial ecosystem and and increasing economic participation for communities around the world, leveraging emerging technologies, including Interledger’s technology (e.g. Open Payments protocol).

Representing Mandla Money, I participated in a panel discussion with Dr Allan Davids (Director of the University of Cape Town’s (UCTs) Financial Innovation Hub, and fellow UCT MPhil in Financial Technology alumnus, Kungela Mzuku, in which we explored how to drive digital payments and digital inclusion in informal economies, and unpacked why the use of cash remains prevalent in South Africa (watch on YouTube). Official statistics suggest that financial inclusion in South Africa is high (~80%). However, this statistic is somewhat misleading, if viewed out of context because it does not account for whether an individual is underbanked or not. An underbanked individual will have access to a cheque account but not access to credit, and the cheque account typically has a low frequency of use on a monthly basis (e.g. once a month to draw all the cash, pay a single transaction fee and then use cash throughout the month). The underbanked phenomenon is key to understanding why cash remains prevalent and mobile money has been slow to take off.

Cash is Convenient

Cash remains king because it is convenient for consumers. A consumer that withdraws cash after receiving their salary knows that it is universally accepted by merchants. Merchants, informal communities typically accept cash and card payments, but they often will impose minimum spend requirements for card payments in order to offset the high costs of transacting with Point-of-Sale (PoS) devices. Another reason why consumers withdraw all of their cash in one go, post pay day is to avoid paying high service fees from repeated bank account usage. One bulk withdrawal, one service charge, and no further service charges when transacting with cash.

Mobile Money – South Africa vs Zimbabwe

Tackling the elephant in the room, why has mobile money been slow to take off in South Africa, especially compared to Kenya (M-PESA) and Zimbabwe (EcoCash)? There are variations of mobile money in South Africa, including MTN’s MoMo and FNB’s eWallet, eWallet is arguably the defacto leader at present. One can argue that South Africa’s financial services system is developed and sufficiently distributed – payment systems are accessible via different channels – mobile, online, ATMs, retail supermarkets etc. – and a variety of payment methods are accepted by merchants – cards, cash, QR codes. In fact, I would argue that a lot of the retail FinTech innovation has been focused on convenience and not a fundamental enablement of payments e.g. Zapper & SnapScan. Looking at the case of Zimbabwe, between 2007 and 2009, Zimbabwe suffered severe hyperinflation, which resulted in cash shortages (and cash withdrawal limits at ATMS). This, and a lack of trust in the financial system created a conducive environment for mobile money, and the birth of EcoCash. As the old adage goes, necessity is the mother of invention, and at present, South Africa does not have strong enough endogenous push factors towards mobile money as Zimbabwe (and Kenya) did.

Mobile Money v2 and Mandla WhatsApp Wallet

Instead of asking why mobile money has not taken off in South Africa (or other sub-Saharan / emerging economies), perhaps the better question to ask is what financial services solutions can we come up with that allow consumers and merchants to transact digitally, whilst leveraging existing infrastructure and public spaces. We know that hardware is improving and becoming cheaper (Moore’s law). Connectivity is improving, low-cost smartphones are available, open banking APIs are becoming more common.

At Mandla Money, our approach to this has been enabling peer-to-peer payments and access to retail financial services via WhatsApp, stablecoins and open banking APIs. At the end of the day, making payments should not feel too different from sending a message (case in point, WhatsApp), and it should not matter which mobile network operator you are with!

Panel discussion – Towards an inclusive cashless society

Blockchain and Insurance 4.0 – Insurance Institute of South Africa

- Julian Kanjere

Background

At the start of July 2024, I had the opportunity to share my thoughts on blockchain technology and its potential impact in the short-term insurance vertical with South African Insurance companies (e.g. Alexander Forbes, Sanlam…) during a webinar organised by the Insurance Institute of South Africa (IISA). In this post, I summarise the talk, which was geared primarily for a business audience.

A Primer on Blockchain Technology

Blockchain technology is one of the building blocks of the “much acclaimed” fourth industrial revolution (“4IR”). If you know anything about me, I cringe at how the term 4IR is loosely thrown around, even in scenarios where it is just but simply vague (do you agree?). However, be that as it may, the 4IR is characterised by parallel development and interplay of independent technologies, each with world changing potential. These include cloud technology, blockchain, internet of things (telematics), artificial intelligence and machine learning, augmented reality, virtual reality, 3D printing etc. I like to stratify these across connectivity, data, and computational power; analytics and intelligence; human-machine interaction and advanced engineering. An over simplification is that the hardware and connectivity is becoming more advanced and accessible (the cost is decreasing), the time to market for new technology and products (hardware or software) is accelerating rapidly. For instance, ChatGPT took a week to get to a million users, where household applications such as Facebook or Instagram took months. Coming back to blockchain technology, it is one of the 4IR technologies and there is an expectation that this technology will become embedded in data exchanges and transactions in the near future.

So what exactly is blockchain technology? It is a shared, tamper-proof ledger (think database) that allows exchange of value and data between transacting parties.

Illustration of blocks (of data) chained together, hence the term blockchain. (Source: Author).

Where then does blockchain – an emerging technology, meet insurance – an age-old and slow turning elephant? Although blockchain technology is largely associated with payments and financial innovation/chicanery, it provides a single source of truth across the multiple stakeholders in a value chain and unlocks automation via smart contracts, and efficiency gains from reduced intermediaries, which in the insurance value chain, contributes to Insurance 4.0 – digitally transformed insurance.

Insurance Value Chain

A good place to start with mapping the application of blockchain technology to insurance is by looking at a type-agnostic insurance value chain and its core activities which include sales, underwriting, contract administration, customer service, claims management, and risk management. This is shown below.

Insurance-specific value chain based on Porter (1985) and Rahlfs (2007).

Further, the table below shows the primary activities of the insurance value chain, juxtaposed with corresponding 4IR technologies. It is worth noting that although the technology of interest is blockchain, these 4IR technologies go hand in hand, and can be applied to the value chain.

Primary insurance activities and 4IR potential. (Source: Author).

An example of blockchain in insurance

A promising application of blockchain technology in insurance is that of parametric insurance (also referred to as index insurance). A parametric type of insurance that pays out based on an index being triggered (via a strike event) instead of the traditional loss assessment triggered by a policy holder’s claim. An example of a weather index platform is Bima, a blockchain-enabled weather index platform for smallholder farmers in emerging markets.

Sensor data graphs and readings fed into Bima – a parametric index insurance prototype. (Source: Tatenda Muvhu).

This was developed by Tatenda Muvhu for his MPhil in Financial Technology thesis at the University of Cape Town. Bima utilises the Algorand blockchain and demonstrates (i) digitisation of an insurance policy management on chain; (ii) use of sensors to collect weather data (i.e. an oracle) and publish to blockchain; and (iii) automation of insurance payouts via blockchain. The insurance value-chain primary activities ticked by Bima include underwriting, contract administration and claims management.

Summary

Using 4IR technologies, and blockchain in particular, we can achieve the following in insurance

• Reduced information asymmetry.

• Improved customer segmentation and risk pooling.

• Increased efficiency.

• Increased trust & transparency.

To sum it up, insurance (in this case, short-term), the elephant in the room can turn faster, with the use of 4IR technologies – and more specifically, with blockchain providing a foundational and trusted single source of data and automation layer.

Apex XRPL Developer Summit Amsterdam 2023

- Julian Kanjere

The 2023 edition of the annual Apex XRPL Developer Summit hosted by Ripple and the XRPL Foundation took place on 7th & 8th September in Amsterdam. The summit brought together developers, innovators, businesses, and investors for an inspiring two days, to exchange ideas on all things  blockchain technology and the XRP Ledger.

Offline Payments, Stablecoins and retail-CBDC

Last year, at Apex 2022, I spoke about how we (Mandla Money) are building low-tech digital asset wallets for financial inclusion and universal access leveraging the XRPL. This year at Apex 2023, I had the opportunity to give a talk on the more practical and operational considerations of administering an offline wallet that supports XRPL native and issued assets, and utilises capabilities of the ledger such as the decentralised exchange (DEX). In my talk, I discussed what desiderata for offline payments (the Mandla Wallet is an SMS wallet and I really should refer to this as semi-offline payments before I upset central bankers and economists), our approach to administering stablecoins (and by extension retail CBDC) in an “offline” setting and setting transaction limits for users based on their know-your-customer (KYC) level. I ended the talk with a demo of the corresponding features, and interoperability between the Mandla Wallet and other wallets in the XRPL ecosystem (I used Xumm wallet to illustrate this).

Here is a video of the talk.

Conference Highlights

The other highlights from the conference included:

  • Announcement of upcoming XRPL features:
    • Decentralised identity on XRPL (XLS-40d) – native support for world wide web consortium (W3C) decentralised identifiers (DIDs) on XRP Ledger. Decentralised identity (also known as self-sovereign identity) specifies a lifetime portable digital identity that does not depend on any centralised authority and fulfills requirements such as persistence, global resolvability, cryptographic verifiability, and decentralisation. This will allow XRPL account holder to  create, and manage their decentralised identifiers while having complete control over the private keys and contents of the identity object.
    • Automated market maker (AMM) on XRPL (XLS-30d) – An automated market maker (AMM) is a protocol for a decentralised exchange (DEX) that prices assets through an algorithm, rather than using an order book like a traditional exchange. Currently, the XRPL DEX provides liquidity exclusively by manual market making and order books. Introducing a native AMM will allow users to trade at a certain exchange rate on a DEX without having to find a counterparty e.g. instead of having to find a neighbour who is willing to trade USD for ZAR, or go to the airport currency exchange counter, the AMM allows one to exchange tokens freely.
  • A presentation on efforts and initiatives to grow and support the XRPL community including XRPL foundation, XRPL accelerator, XRPL grants and XRPL commons.
  • A breakout session on payments in emerging markets (e.g. Brazil).

All in all, I find Apex to be a great opportunity to network with the XRPL community and this year was no different – perhaps a little more special given the tailwind the community is currently riding given the glimpses of regulatory clarity around the XRP asset that is starting to emerge!

Teaching Blockchain at the FabLab Solidaire

Hands-on Blockchain Skills Development in Madagascar

- Julian Kanjere

Over the course of 5th June – 16th June 2023, I had the opportunity to teach a Financial Technology and Blockchain postgraduate course to a group of students enrolled in the newly launched Master of Mathematics and Theoretical Computer Science degree at the University of Antananarivo, the leading academic institution in Madagascar. The opportunity to teach the course was a result of a collaboration between the University of Antananarivo, the University of Cape Town’s Financial Innovation Hub and the Algorand Foundation.

The cohort of 20 students comprised a mix of working professionals and students with backgrounds in mathematics, economics, statistics and engineering. During the course, the students learnt about financial systems, innovation and disruption, blockchain fundamentals and a hands on deep dive into the Algorand blockchain – including the Algorand Python SDK and smart contracts (using PyTeal). Reflecting on the teaching experience, I appreciated that in this digital age, development of blockchain skills at tertiary level is absolutely necessary (and is the bare minimum), especially if Africa is going to realise its potential and produce locally grown solutions to provide employment and economic agency. It was an incredible privilege to be part of this initiative, and to be involved in hands-on skills development and knowledge transfer in Madagascar.

Julian speaking at DevConf 2023

A Blockchain Primer at DevConf 2023

- Julian Kanjere

At the end of May 2023, I had the opportunity to speak on blockchain technology in Cape Town and Pretoria at DevConf 2023.  DevConf – the largest and premier developer conference in South Africa – brings together South Africa’s tech community (corporates, startups, consultants etc) to share learnings, network and inspire on all things tech and software development. This year’s edition took place on the 23rd (Cape Town) and 25th (Pretoria) of May 2023, and featured a wide range of talks – on various themes such as performance optimisations, software testing, developer wellbeing and tech leadership – delivered by a diverse range of local and international speakers.

My talk, titled “Building a vaccine register on the Ethereum blockchain” featured a primer on blockchain technology (think intro to blockchain, wallets, accounts, transactions etc) and the Ethereum ecosystem tools (MetaMask, Ganache, Truffle & Solidity), as well as a walkthrough and live demo of a proof-of-concept vaccine register – an Express web app with SQLite database and a solidity smart contract. 

The motivation for my talk was 3-fold: (i) it is the talk I wished I could have seen when I started developing blockchain solutions, (ii) to give a zero-to-hero overview in 45 minutes for any developers that are curious about blockchain technology; and (iii) an attempt to spark a conversation on whether there is utility in using blockchain for record-keeping or we’re better off using a standard database.

Overall, the talk was well received and I fielded some questions at the end of the talk ranging from gas price considerations and optimisations e.g. batching transactions to smart contract version management etc. And most importantly, as someone that errs on the side of caution and usually gives pre-recorded demos instead of live demos, I’m super relieved that the demo gods smiled kindly and live demo was without a glitch! Check out the video below.

Alternatively, you can access the video recording here – https://www.youtube.com/watch?v=VzD6uaYEFdM – and be the judge whether there really is utility in using blockchain for record-keeping or as earlier mentioned, we’re better off using a standard database!

Special shout out to Candice Mesk and Robert Maclean for organising the stellar conference, and all the sponsors that made the event happen. 

PS – I have to mention that my 1st talk which was in Cape Town was on the 23rd of May, a day after World Bitcoin Pizza day. So naturally, one of the takeaways from my talk was maybe buying pizza using bitcoin is not such a great idea! But, just so I have said it, this is my personal view and should not be misconstrued as financial advice!

Julian CV Summit Africa

African Blockchain Ecosystem showcased at CV Summit Africa 2023

- Julian Kanjere

At the beginning of May 2023, I attended the inaugural CV Summit Africa 2023. The summit was the inaugural African edition of CV Summit Zug, and showcased the current state of the emerging African blockchain ecosystem, and glimpses of its future. Over the course of 2 days – 4 and 5 May – the summit featured over 40 speakers and 330 attendees, at Workshop 17 in Cape Town’s iconic V&A Waterfront. 

Highlights from the event included:

  • educational and innovation initiatives to position Africa as the next web3 powerhouse (such as the University of Cape Town’s Financial Innovation Hub)
  • a panel discussion on the need for regulatory clarity particularly for crypto asset service providers, with panelists from leading crypto exchanges (including VALR, Revix) and local government
  • The NODO-CV VC Pitching Competition a pitching competition in which 6 startups from across the continent (@pravicasuite, @riskbloq, @Web3Sanctuary, @SafiProtocol, @HelixaTCG, and @fastagger) showcased their solutions, and the crowd voted on the winner (@Web3Sanctuary)

In addition, I also chaired a panel discussion on “Sustainability in and through Web3” with panelists George Mosomi, Max Kordek and Oyedeji Oluwoye. The thread running through this discussion was the need for a long term mindset (e.g. if building a protocol, what does this look like in 10 years for the community, the environment, the team working on the protocol…) to realise sustainability in blockchain ecosystems and through blockchain innovation.

Shout out to CV Labs for hosting the event and all the sponsors that made the event possible!

2023 Blockchain Summer School – Monash University Blockchain Technology Centre

- Julian Kanjere

At the beginning of February 2023, I attended the Monash University Blockchain Summer School hosted by the Algorand Centre of Excellence on Sustainability Informatics for the Pacific (ACE-SIP). It was a two-days well spent at my alma mater as I got the lay of the land for all things blockchain – innovation, research and regulation – in Australia and the pacific region.  

Stablecoins and CBDC

One of the speakers at the event, a representative from Australia & New Zealand Banking Group Limited (ANZ) spoke about how they issued a Australian dollar stablecoin called the A$DC and are involved in a number of central bank digital currency initiatives in the region. Some quick googling revealed that National Australia Bank (NAB), a rival to ANZ Bank has been piloting a stablecoin called the AUDN. Stablecoins are cryptocurrencies whose value is pegged to an underlying fiat (government issued) currency and allow settling of transactions on blockchain technology in real-time. Issuing of stablecoins by ANZ and NAB – both in the ‘big four’ Australian banks – demonstrates one of the roles banks can play in driving innovation in the web3 economy, leveraging their brand visibility, domain knowledge and reputation.

General Innovation 

The summer school, also showcased/mentioned a number of innovative web3 solutions and opportunities for blockchain in the region. Some of these include: 

  • CValid – a credentialing system for education and recruitment from Monash University. This innovative solution is set to revolutionise the education and recruitment industry, providing a secure and efficient way of verifying credentials.
  • Water Ledger – a distributed, all-digital system modernising the way water rights are shared and reported (read more about Australian water rights here – https://www.pc.gov.au/research/completed/water-rights).
  • Powerledger – a peer-to-peer renewable energy blockchain trading platform that allows consumers and producers to track, trace and trade every kilowatt of energy that is produced off-grid. 
  • FreshChain – a blockchain-based system to protect Australian exports and provide assurances to trading partners and consumers about the safety and quality of Australia’s produce. FreshChain is a recipient of the Australia Traceability Grants program.
  • RedBelly blockchain – an Australian blockchain platform developed by the University of Sydney and  the Australian government’s Commonwealth Scientific and Industrial Research Organisation (CSIRO). 

Opportunities

  • The Australian governments Clean energy regulator considering blockchain solutions for “Guarantee of Origin” assurance scheme to verify emissions associated with hydrogen, renewable electricity and potentially other products made in Australia such as metals or biofuels.
  • Sustainable supply chains e.g.tracking and tracing emissions across a supply chain – representing emissions digitally on a blockchain allows supply chain partners to make emissions data readily available and to share it with the next participant in the chain.

Research

Major research themes I observed from the conference included:

  • Formal and quantitative analysis of blockchain platforms i.e. blockchain network benchmarking.
  • Post-quantum computing and blockchain security.
  • Micropayments and streaming payments using channels.

Special mention and thanks to ACE-SIP and the Algorand Foundation for organising the event and the opportunity to participate.

Algorand Centres of Excellence (ACE) Conference Barcelona 2023

- Julian Kanjere

In January 2023, I attended the Algorand Centres of Excellence (ACE) Conference in Barcelona. The event, hosted by the Algorand Foundation, brought together over 120 researchers and students from the various Algorand university hubs across the world to advance blockchain education and research. Universities represented included UC Berkley, Monash University and University of Cape Town.

The sessions at the conference covered a wide range of topics including protocol engineering, security and practical applications of blockchain. I got to present on blockchain use cases in emerging markets and how at FoodPrint Labs we’ve built a WhatsApp bot for that is integrated with the Algorand blockchain for record keeping, traceability and access to financial services by farmers in emerging markets.

I also enjoyed a presentation from UC Berkley on research they are doing on DeFi attacks categorised by protocol type (yields, bridges, lending etc) – although bridges have a low number of attacks compared to other protocol types, they rank high in monetary loss resulting from the attacks (i.e. funds are drained from the bridge pools).

John Woods, CTO at the Algorand Foundation also used the opportunity to announce the release of AlgoKit, which is a one-stop shop tool for developers building on the Algorand network. AlgoKit gets developers of all levels up and running with a familiar, fun and productive development environment in minutes. The release of AlgoKit is inline with the Algorand north star of not only providing a robust ledger but best in class experience for developers building on it.

All in all, attending the conference was a great way to kick-off the year, mingle with university innovation units building on Algorand and exchange ideas!

 

 

 

Thoughts on FTX Crypto Exchange Collapse

- Julian Kanjere

2022 has been a “cold” year for the crypto industry – crypto prices collapsed, Terra’s USD stablecoin crashed and last month, the FTX crypto exchange filed for bankruptcy. The resulting contagion affected crypto-lenders such as Genesis Trading, Gemini and Galaxy (and there is a possibility that other crypto trading venues may fail in the near-future).

To the outside observer, it is easy to conflate the FTX failure as a failure of crypto or more broadly blockchain/web3 (perhaps akin to attributing the dot com busts in 2000 as a failure of the internet). In my opinion, this is not the case, the FTX failure was a failure in governance, risk management & fiduciary duty. It was a failure resulting from centralisation and not a failure of blockchain technology.

How can this be avoided in the future? Distributed ledgers do need governance that is responsible and transparent e.g. proof-of-reserves. In particular, centralised exchanges (CEX) as compared to decentralised exchanges (DEX) do require some guardrails of sorts – e.g. periodic stress testing (liquidity risk & counterparty risk) and reporting. The hope is that regulators come forward with sustainable and not draconian measures as a result of knee-jerk reactions, and trading venues move more towards transparent governance and reporting.

One of the recurring questions in the wake of the FTX failure (together with the others from 2022) is whether crypto has any real-life utility. I wrote a post on crypto utility, financial inclusion and stablecoins where I cite real-life projects (Mandla Money, Stellar Aid Assist) that are using stablecoins to drive financial inclusion and/or deliver humanitarian aid – proving that crypto does indeed have utility apart from speculation.

Although much of 2022 has been crypto winter and dominated by bad press, I share the same sentiments with Pershing Square’s Bill Ackman that “crypto technology’s potential for beneficent societal impact may eventually compare with the impact of the telephone and internet on the economy and society.“

Crypto Utility, Financial Inclusion and Stablecoins

- Julian Kanjere

Is there any utility in crypto? This is a recurring question from crypto sceptics, who tend to argue that there is no utility outside of speculation. In this post, I give 2 examples in which crypto can be used to drive financial inclusion in emerging markets – particularly through the use of stablecoins (a cryptocurrency whose value is pegged to another asset class e.g. USD Coin (USDC) which is pegged to USD). Worldwide, there are 2 billion unbanked adults, and these fall into the financially excluded category. According to the South African National Treasury, financial inclusion is the provision and use of affordable and appropriate financial services by those segments of society where financial services are needed but not provided, or they are inadequately delivered.

Case 1 – Mandla Money SMS Wallet. Firstly, in September 2022, I gave a talk at the Apex Developer Conference (hosted by Ripple & XRP Ledger Foundation) in Las Vegas on how crypto-assets can drive financial inclusion in emerging markets (click here to watch). In my talk, I made reference to one of the innovative projects that I have been involved with – Mandla Money SMS Wallet – which is a digital wallet that allows users to receive, transact and store value using digital assets via SMS (text message), with no need for a smartphone or an internet connection. The Mandla Money SMS Wallet is built on top of the XRP Ledger (XRPL) which is a decentralized, public blockchain that is fast, energy efficient, and reliable. By making use of stablecoins issued on the XRPL, together with SMS technology which has been around for a while, anyone with a mobile device (including feature phones) has a means to access previously unavailable financial services.

Case 2 – Stellar Aid Assist. More recently (December 2022), Stellar Development Foundation announced the launch of Stellar Aid Assist which makes use of stablecoins to deliver digital aid at scale (e.g. in Ukraine). According to the Stellar team, cash-based interventions serve as a lifeline to millions worldwide in support of basic needs and Stellar Aid Assist – which is fast to deploy and rapidly scale to meet a moment of crisis – gets money into the hands of those who need it, quickly and at low cost.

Considering that there are 2 billion unbanked adults worldwide and that it is possible to send crypto-assets in low-tech environments (where there are no smartphones or internet access) using blockchains such as XRPL, Algorand & Stellar, it is clear that there is a real opportunity to drive financial inclusion in emerging markets through use of blockchain payment rails and stablecoins. So, is there any utility in crypto – I believe the answer is a resounding YES!