It’s no secret that Jack Dorsey, Twitter’s founder, loves Africa. “Africa will define the future (especially the Bitcoin one)”, he tweeted at the end of his trip to Africa in November 2019. Dorsey has also previously come out in favour of Bitcoin, and it’s pretty clear that he thinks that crypto could find a solid foothold in the African market. Still, what’s the deal with Jack Dorsey, the Bitcoin Lightning Network, and Africa? Let’s take a look.
The future of cryptocurrency is in Africa
Bitcoin and other cryptocurrencies haven’t really managed to find a solid place in the developed world. Fiat payments are controlled by a number of institutions (that are relatively corruption free), and there’s good infrastructure in place to facilitate those transactions with ease.
In contrast, the developing world has a much greater need for a P2P payment system. Peer-to-peer systems aren’t new to Africa. In fact, countries like Nigeria, Kenya and South Africa have been using them for a long time. Nigeria has Esusu, Kenya has Chama, and South Africa has Stokvel – all of which have been used to enable P2P transactions and savings, but on the ground level.
Africa needs a digital version of the P2P system that it already knows. While crypto is fairly established on the continent, strict cryptocurrency regulations can make trading over exchanges quite difficult. Nigeria alone has restrictions on sending money outside of its borders, which has led to a lack of Bitcoin liquidity.
Africa is a quickly developing continent that can ultimately offer a lot to the crypto world. Nigeria and South Africa have the largest economies. Nigeria has a $400.6 billion GDP, and SA has a $317 billion GDP, as of 2018.
Basically, Dorsey is right – with growing economies, an openness to cryptocurrency, and an already established grassroots P2P system, Africa is an ideal contender to take on the future of Bitcoin.
Where does the Lightning Network come in?
Now let’s look at how Jack Dorsey, the Bitcoin Lightning Network, and Africa connect.
In January, Dorsey announced his plans to supercharge Bitcoin’s throughput. Square Crypto revealed that its team is developing a Lightning Development Kit (LDK). The Lightning Network is a layer-two solution that’s built on top of the Bitcoin blockchain – making smaller payments faster and cheaper.
While the Lightning Network can process payments in record speed, Bitcoin still suffers from volatility. Merchants may be hesitant to accept a currency that could devalue within only a couple of hours. Dorsey seems to have a solution to this problem.
Messari reported that Dorsey’s Square recently won a patent for a payment network, that will enable users to conduct seamless fiat-to-crypto transactions. The customer can pay in Bitcoin, and the merchant can instantly convert it to fiat.
This could work particularly well in Africa. Crypto regulations can be stringent, and merchants may find that this kind of solution is exactly what is needed to boost crypto on the continent.
With Dorsey reportedly planning to spend 6 months of his year in Africa, we could see Square’s solution implemented on the continent sooner than we think. When it comes to Jack Dorsey, the Bitcoin Lightning Network, and Africa, things are heating up. This decade could be monumental for crypto in the developing world.