If you haven't heard of blockchain technology, at least you have heard of cryptocurrency. If not, then at least bitcoin. Bitcoin is largely responsible for making cryptocurrency and blockchain mainstream.
Those involved in bitcoin, cryptocurrency or blockchain argue that one shouldn't ignore it. They even emphasize that especially those involved in fintech must have a strategy for it. Yet, despite the fact bitcoin is grabbing headlines across the world, few seem to understand the applicability of cryptocurrency, let alone what it is.
To be able to understand this in the Ugandan context, we engaged Asindu Willfred from Coinella for a quick interview.
Startup Digest Africa: Many people are talking about bitcoin and cryptocurrency in every corner of the world, Ugandan included. But, what's Cryptocurrency to a layman?
Asindu Willfred: A Cryptocurrency is basically a form of money that is digital in nature just like Mobile Money or Airtime Credit. The difference between it and Mobile Money or Airtime credit is that it is decentralized in nature.
Let me explain what I mean by "decentralized"; For instance, Mobile Money is regulated by "centralized" entities like Telecom companies & financial regulatory bodies. And, they do this for the sound reason of reducing counterparty risk like keeping cheats & fraudsters at bay.
If the system was not regulated this way, companies like MTN would clean your balance to zero and you would have no one to complain to. You can notice there is an element of trust.
As for the decentralized paradigm of Cryptocurrencies, you don't need such a body like a central bank or legal entities to keep track of who own's what or who paid who. Everything is stored in distributed, tamper-proof type of database called the blockchain that depends on of game theory and cryptography.
Related: Blockchain technology could be Ugandan banks’ answer to mobile money
SDA: How can it be applied in Uganda?
AW: The no-brainer application would be that cryptocurrencies can be used to reduce remittance fees. But, some companies have discovered it is not that easy. Bitcoin is currently useless for remittances. I may have to write about this some other time to make it more understandable.
Yet there can be applications around customer loyalty, and in border payments like ticking, the point of sale, crowdfunding, accounting and social banking. The maturing field of smart-contracts can drastically reduce the legal costs in the finance sector.
Some of the application is what Coinella is working on. But for working example's here in Uganda you can check out eSACCO & Clic World. Unfortunately, there are too many scammers like Onecoin/D9 in the space.
SDA: Now that we can see its application in the Ugandan context, when do you think it'll become mainstream in Uganda?
AW: I hate to be the astrologer here. But, my speculative estimation is that it will take a maximum of two years from now for people in this country to take notice of the significant impact brought about by cryptocurrencies.
For instance, this year we had an engagement with the people behind the Stellar Lumens platform. Lots of products including Coinella are building products around this.
SDA: Two years is quite near. So, what should people do to position themselves to take up the opportunities it presents?
AW: It depends on your skill set or interests. Investors, for instance, may want to invest in companies like eSacco, Xente or Coinella that are integrating blockchains to their service. It could also be startups looking forward to launching an ICO (initial Coin Offering). Software developers may also want to look into smart contracts and blockchain protocols like IPFS or Ethereum.
SDA: As we wind up, is there any other notes people in Uganda should know about cryptocurrency?
AW: If you are in Fintech and not doing anything blockchain/cryptocurrency related, you better look for your "blockchain strategy".
Asindu Willfred is a Software developer and founder of Coinella.