Binance development manager in Nigeria, Emmanuel Babalola talks about how cryptocurrencies are affecting the unbanked in Africa and how they are changing the way remittances are made into the continent. He also gives an insight into Binance’s recent acquisition of Coinmarketcap.com in this exclusive Q&A.
Pizza: For many years now, the numbers of the unbanked in Africa including Nigeria is said to be over 40% on the average. Do you think blockchain, especially cryptocurrencies, have a role to play in helping to significantly improve financial inclusion in Africa?
Emmanuel: Yes, I believe that cryptocurrencies by their nature are already beginning to impact how africans access financial services, in Nigeria today we have well over 60 million of our people being underbanked or completely unbanked, mostly managing their finances through cash transactions outside the purview of a formal banking system, and as mobile phone penetration continues to climb, we will see more awareness and adoption of cryptocurrencies like Bitcoin, BUSD and Others as store of value, payments, remittances
Pizza: A lot of people have been talking about the immense potential of the blockchain across sectors, including the financial services industry, one wonders if it’s all hype. What impact is this new technology really having on people out there, especially access to finance?
Emmanuel: We’ve definitely seen a lot of hype around blockchain, most of them untrue. A Blockchain is a decentralized, distributed append only ledger, its a database that works like google docs where only majority supported comment edits gets added to the doc, if the rest don’t like it they can just go ahead and copy the sheet following their own rules in a new tab. If you understand it this way you’ll see that blockchains will only be useful in any sectors if records (Identities, health information, transactions/votes, etc) need to be stored in a really secure and trusted way. If I told you I have found the most secure way to do a ledger of course the first application would be in finance, that’s why you see the first use case of a blockchain being cryptocurrency (Bitcoin). Blockchain makes cryptocurrencies like Bitcoin possible. Today people can now transact and do business directly with one another without involving a third party(bank). I was also curious to find out that Africa is the most expensive place to send money, sometimes charged as high as 15%, in fact we also see censorship playout when Paypal announced restrictions on the use of their service by Nigerians. Sons and daughters abroad can now send money home directly to their parents for free without any form of restrictions on amount or country.
Pizza: Since Satoshi Nakamoto invented bitcoin in 2009, we have seen the proliferation of thousands of cryptocurrencies and tokens in the ecosystem. Do you think, especially from a consumer angle, this is good or healthy for the growth of the cryptocurrency or token economy?
Emmanuel: Bitcoin was created to seperate money from state, It challenges the very foundations of what people perceive value to mean. It was never intended to be the world currency but to show an alternative to the current monetary system. Now anyone anywhere can create his/her own cryptocurrency and if enough people believe it’s valuable then it’ll be,this is a good thing overall. However there are several downsides to this, most are intended to be scam, e.g TBC, Bitconnect, etc and many others unintentionally fail due to bad token economics (monetary policies). That’s why when you look at historical snapshots on coinmarketcap.com year after year you will see mostly new coins/project every year listed with Bitcoin but many eventually do not last.
Pizza: Let’s talk about access to credits. The lack of access to credit by most entrepreneurs in the developing world, compared to their western or eastern counterparts, has been identified by experts to be one of the major reasons why Africa is not developing fast enough. Is blockchain changing this in any way?
Emmanuel: Blockchain technology is dramatically affecting the way credits and fund raising is approached by entrepreneurs, over hundreds of years the options available to access funds have expanded from self funding, peer – to – peer loans, bank loans, angel investors, VCs and internet based crowdfunding(GoFundMe). Today blockchain based crowding, be it ICOs, STOs, and more recently IEOs pioneered by Binance have all presented a new; more transparent, efficient, global, and flexible way to access capital even without middlemen.
Pizza: In the present digital economy where we see a lot of mobility and cross-border transactions, more and more people now demand more and more means of making payments. Is the blockchain technology helping to provide these options or is it also limited in some way?
Emmanuel: Bitcoin itself was created as an alternative to the current financial system; in other words it has opened to people everywhere a new world of options. Cross-border payments have never been easier, faster and cheaper and If there are any limitations at all it is with the huge censorship present in our more traditional options. Daily limits, KYC that people don’t have, blacklisted accounts and countries, chargebacks, etc. In January $1Billion dollars was moved in minutes with only $0.49 as fee and without anyone knowing who sent it to who here. Truly limitless in this regard.
Pizza: Statistics show that Africans are not doing enough business with Africans within Africa, thus keeping inter-African trade lower than 20%. Do you see the adoption of cryptocurrencies by merchants in Africa helping to boost inter-African trade or this will be a long wait?
Emmanuel: Bitcoin is both “gender neutral” and “race neutral”, no one knows if it’s chinese, American or even african, whether it was created by a man for men or a woman to empower women. The problem of Intra-African trade has been a long standing issue, as we even recently witnessed xenophobic acts across the continent. This truly is a fundamental issue. Bitcoin by nature is money without a country/continent, it unifies “the people of the internet” of all races. That is its goal, we can’t force it to solve all problems of men.Today We also see some cryptocurrencies for Africans which is excellent but in itself does not solve the problem of Africans doing business with Africans as this is a people problem, stemming from faith in for instance the product being paid for or purchased(whether naira or crypto). We even see some Nigerians still prefer foreign rice to our locally grown crop even though the former is more expensive. Usually this question is one of the many hype around cryptocurrencies, as they cannot solve all human problems, so yes this will be a long wait.
Pizza: Nigeria gets the biggest chunk of remittances in Africa, but the remittance market–dominated by Western Union, MoneyGram, and other similar remittance services–appear to be struggling to keep up with the speed. Would you say that bitcoin and other cryptocurrencies provide a fine alternative to traditional windows for remittances? And why?
Emmanuel: Today Africa happens to be the one of the largest markets for global remittance with Nigeria as one of the top nations with over $17.5 Billion last year (nairametrics), and according to a world bank Sub-Saharan Africa remains the most expensive place to send money to, where the average cost is 9.4%. So because of my math background I cannot help but see how this translates to the fact that Nigerians spent almost $2billion on fees for sending money home last year. Being the region needing remittances the most, it is important to fix this and the cryptocurrency alternative presents a much cheaper (less than $1) and quicker way to do this, it removes all middle men involved and by so doing all the fees.
Pizza: Before Pizza lets you go, we must ask: Recently, Binance acquired CoinMarketCap for up to $400 million. While this is certainly one of the biggest deals in the market, there are concerns or fears in the space that this acquisition is not healthy for the market, especially considering that Binance is not only the largest cryptocurrency exchange in the world but also has its own cryptocurrency, BNB. As Binance’s Business Development Manager in Nigeria, what’s your reaction to this?
Emmanuel: Several acquisitions happen in the crypto space, and more are happening daily, probably if it were some VC or other institution that acquired CoinMarketCap there wouldn’t have been a lot of concern, But being a company with an exchange and also a coin, we understand the concern, with that said, we are excited to work more closely with CoinMarketCap, one of the most-cited sources for cryptocurrency prices and exchange trading volume. With that said, CoinMarketCap has maintained independence from external stakeholders since its inception, and it will continue to be run as an independent business entity. While the Binance cryptocurrency exchange and its native token BNB are listed on CoinMarketCap, CoinMarketCap and Binance are separate entities that maintain a strict policy of independence from one another: Binance has no bearing on CoinMarketCap rankings, while CoinMarketCap has no influence over Binance’s operations. CoinMarketCap has pledged to continue providing the highest level of information integrity by ensuring data accuracy and improving its ranking methodologies, critiques are free to keep a close eye on this, I trust time validates all things.
Pizza: Finally, if you are Laszlo Hanyecz, the man who paid 10,000 bitcoins for two pizzas in May 2010, how would you honestly react when you see bitcoin price today at over $6700 per coin?
Emmanuel: Just come and carry me, because my brother I cannot even react.