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Using Blockchain for Crowdfunding African Startups. A Decentralized Approach



Crowdfunding using blockchain

Usually, when starting a business, a whole lot of capital is required. Whilst getting a capital might not be a big deal for some business starters, most entrepreneurs have been faced with the issue of getting their startup capital. Again, startups and other new businesses have been observed to have a more difficult time qualifying for business loans.

In light of this, we have crowdfunding, which has become an extremely handy alternative for business owners to raise capital.

However, things are becoming more interesting with the emergence of cryptocurrencies and blockchain technology. The growing popularity of cryptocurrencies has opened the path to the next level of crowdfunding advancement.

What Is Blockchain?

Blockchain, as the name suggests, consists of multiple blocks which are intertwined. At the most basic level, blockchain can be described as a chain of digital information which is stored in a public database.

These digital pieces of information, particularly comprise three parts as indicated below:

  • Information about the transaction. This would include the date, time and amount of the most recent transaction.
  • Information about the participants in the transaction.
  • Information that differentiates a block from other blocks. Each block has a unique code known as “hash”.

In order for a block to be added to the blockchain, a transaction must have occurred. The transaction would be verified and stored on a block which would be given a unique code called a “hash”.

However, the blockchain network alleviates security risks in various ways. One and most important of all is in their storage. New blocks added to the blockchain are usually added to the end of the ledger, thereby, giving it a chronological arrangement.

Every block is connected together like a chain, with every new block bearing its own hash and the hash of the block before it. Altering a single block would result in the need to alter the next one and the next and on and on.

This is important to security because a hacker would need to edit every single hash on the blockchain in order to hack a single block. The possibility of that happening, however, is near impossible.

The Concept Of Crowdfunding

Crowdfunding is the monetary efforts of collective individuals in financing an entrepreneur’s project or business venture. The funds are raised in small amounts by each individual to support a person’s business venture.

Already, so many platforms have been created with the aim of making it easy for investors and entrepreneurs alike to connect. Anyone who has a business idea can easily pitch it on the platform, to any available or interested investor. It is important to note that crowdfunding projects are either reward-based or equity-based.

Crowdfunding is very useful to entrepreneurs because it is a relatively inexpensive and easy way of raising funds for capital, without having to give up control to investors. It also gives investors an opportunity to earn an equity position in a venture.

Crowdfunding Startups Using Blockchain

With crowdfunding, it has become easier for startups to connect with prospective investors. While the traditional crowdfunding involves people with business ideas, pitching their ideas to the community in order to get funds, entrepreneurs now have another way to secure capital.

The emergence and subsequent popularity of cryptocurrencies has opened the way to the next level of crowdfunding’s evolution.

Blockchain-based crowdfunding decentralizes the funding model, creating more opportunities for projects that otherwise wouldn’t get any funding. Many crowdfunding platforms charge 5% of the total funds received, along with the payment of a processing fee which could range from 3-5%. Blockchain makes things easier by removing this hindrance.

Blockchain is totally decentralized and it comes with an advantage which brings investors directly to startups. This means business starters don’t have to depend on any platform to raise funds. Any venture using a blockchain-based crowdfunding can get funded while any person with an internet connection can donate towards any project.

Apart from this, blockchain crowdfunding is aimed towards providing a solution to the security-related issues that can be encountered in crowdfunding.

Ardor Blockchain: A Case Study

In Africa, presently, a few blockchain companies have been working towards the allocation, supervision, and trading of security tokens. One of the most successful so far, is the Ardor Blockchain built and managed by Jelurida, a Switzerland based Blockchain company, with a regional headquarters operating in Lagos, Nigeria is a typical example.

The Ardor blockchain is a developed open-source blockchain platform where users are able to engage, carry out transactions, and even develop apps.

The blockchain platform operates a parent-child chain system where all trades are processed by the Ardor “parent” chain.

The Ardor blockchain operates a decentralized monetary system where users can create cryptocurrencies. While the platform itself comes with an inbuilt coin exchange, all child chains also have their own native token which can be used for transaction payments and also as a unit of value.

The blockchain approach to crowdfunding is different from the norm where the inventors or entrepreneurs in question are required to offer their products or equity in the company in exchange for financial assistance.

The Ardor blockchain makes the funding process safe, and offers a totally translucent access from anywhere around the globe. With the help of a favorable regulatory framework in the developed market, startups can now make and sell their own crypto to potential investors. Blockchain provides an immutable record to account for these tokens. Since the records would be impossible to modify, it ultimately provides security.

Blockchain, amongst all its benefits, is creating new and interesting opportunities in crowdfunding. With the integration of the crowdfunding system into blockchain technology, crowdfunding can become easy, and more importantly, a legitimate standard of financing a wide range of businesses and projects.



Nigeria’s Central Bank Digital Currency e-Naira Gain Traction




According to Governor Godwin Emefiele, the Central Bank of Nigeria’s (CBN) digital currency, the eNaira, which was officially revealed on Monday, has garnered immense interest and a positive response from both within and beyond Nigeria, with 33 banks fully integrated on the platform. The CBN has successfully minted $500 million, with N200 million going to financial institutions, according to Emefiele, who spoke at President Buhari’s historic launch in Abuja.

In addition, over 2,000 clients have been added to the eNaira platform, and over 120 merchants have successfully enrolled. Since its launch, the eNaira website has had approximately 2.5 million daily views. Customers who download the eNaira Speed Wallet App will be able to complete the onboarding process and build their wallet, locate their eNaira wallet from their bank account, transfer eNaira from one wallet to another, and make payments at registered merchant locations.

In terms of maintaining a robust payment system, the Central Bank of Nigeria (CBN) feels that the eNaira will make a big difference to Nigeria and Nigerians. The eNaira will also lower the cost of processing currency, allowing for more direct and transparent welfare interventions for citizens, as well as increased revenue and tax collection, easier diaspora remittances, lower the cost of financial transactions, and improved payment efficiency.

Governor Godwin Emefiele outlined these advantages during the historic debut in Abuja, saying that Nigeria’s Central Bank Digital Currency (CBDC) is the first in Africa and a digital version of the actual Naira. 

What is eNaira?

The eNaira is the same Naira with considerably more possibilities, Emefiele asserted emphatically, guaranteeing that the new payment system is one of the most robust in the world, sufficiently safeguarded, and thus nothing to worry about.

In 2017, the Central Bank of Nigeria (CBN) began an intensive study, consultations, identification of use cases, and testing of the CBDC idea in a Sandbox environment, in response to increased interest in Central Bank Digital Currency (CBDC) around the world.

The goal of the study was to provide a strong argument for the introduction of a digital currency in Nigeria so that all Nigerians can benefit from a more successful and inclusive economy.

Following the completion of preliminary research, the CBN’s researchers and experts were able to clearly establish that a digital currency will promote a more paperless, inclusive, and digital economy, complementing the successes of prior policy initiatives and our rapidly increasing payment systems.

As a result, the CBN decided to create its own CBDC, dubbed the eNaira. Like the physical Naira – eNaira is a legal tender in Nigeria and a liability of the CBN, which will have the same value and always be exchanged at 1 naira to 1 eNaira

To reduce the risk of the process, the CBN has carefully considered the entire payments and financial architecture, and has structured the eNaira to complement and improve these ecosystems, as well as implementing security protections and policies to ensure the financial system’s integrity.

To maintain the integrity and stability of Nigeria’s payment system, strict adherence to anti-money laundering and counter-terrorist financing regulations would be enforced, according to Emefiele.

The eNaira, like other digital revolutions, is a journey, and Nigerians should expect more features in the coming months. Accessibility and onboarding of consumers without BVN, as well as the usage of the eNaria on the phone without access to the internet, are among them. 

Nigeria will be one of the first countries in the world to implement the CBDC using USSD on phones, bypassing the need for internet access. The CBN also plans to use the eNaira platform to onboard revenue collection agencies in order to increase and simplify collections, as well as to create sector-specific tokens to support the Federal Government’s social programs and distribution of targeted welfare schemes in order to lift millions of people out of poverty by 2025.

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Market Watch

Jack Dorsey‘s Square to develop open source Bitcoin mining



Jack Dorsey Bitcoin

On Friday, October 15, Twitter CEO Jack Dorsey announced that American fintech company, Square, would be looking to get into Bitcoin mining. Jack Dorsey who is also Square’s CEO announced this on Twitter which subsequently sent waves through the bitcoin market, surging its price to almost a record high, rising over $62,000 over the weekend. According to the Twitter boss, Square is looking to building an open source Bitcoin mining system that would be available to individuals and businesses.

Sharing his thoughts further on the initiative, he stated that “Mining needs to be more distributed” and that “the more decentralized [mining] is, the more resilient the Bitcoin network becomes. He also mentioned the apparent inaccessibility of mining stating that “Bitcoin mining should be as easy as plugging a rig into a power source.

Dorsey also believes that bitcoin mining “needs to be more efficient and that “clean and efficient energy use” would be undoubtedly beneficial to the digital currency in the long run.

Dorsey ended the thread by saying that a “technical investigation would be undertaken by a Square team led by Jesse Dorogusker, Square’s hardware lead. If successful, this initiative would be another of Square’s bitcoin focused projects which includes a Bitcoin hardware wallet.


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Financial Leaders from G7 Release Guidelines for Central Bank Digital Currency



Source: World Atlas

At a meeting that was held in Washington, yesterday, October 13, G7 leaders discussed central bank digital currency and endorsed 13 public policy principles with regards to their implementation. The financial leaders from G7 agreed that CBDCs would complement cash and should not be detrimental to the monetary system. The G7 leaders have been discussing CBDCs this week concluding that they should do no harm and meet rigorous standards.

It should be noted that G7 includes finance leaders in advanced economic nations comprising of Canada, France, Germany, Italy, Japan, the U.S and the U.K. the G7 leaders make it mandatory that any newly launched CBDC should not harm the central bank’s ability to perform its duty of maintaining financial stability. In a joint statement by the G7 finance ministers and central bankers, they said that, 

“Strong international coordination and cooperation on these issues help to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.” 

The joint statement further states that CBDCs are complements to cash and could serve as a liquid or safe settlement assets with an added advantage of anchoring existing payment systems. CBDCs issuance should be entrenched in a long-standing public commitment to transparency, rule of law, and sound economic governance. The statement added at CBDCs must be so efficient that they are fully interoperable on a cross-border basis. 

The G7 leaders agreed that they had a duty to minimize the incidence of ‘harmful spillovers to the international monetary and financial system” 

The G7 statement reiterated a similar statement earlier made by G20 that no global stablecoin project should begin operation until such a token has addressed legal, regulatory and oversight requirements. 

Countries like China and Nigeria are ahead of the pack with regards to the adoption of digital Yuan and Naira respectively. China’s crackdown on cryptocurrency may be a step forward for the country’s plan to promote its digital Yuan. Nigeria, on the other hand, postponed the launch of its eNaira in deference to the 61st anniversary of Nigerian independence on Oct 1. 

However, countries like the US and the UK are dragging their foot with regards to the introduction of CBDCs to their financial system. There are insinuations that America is in danger of being left behind technologically and financially if it doesn’t get serious with the implementation of CBDC in its financial system.

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