Keynote: The next 10 years of Web3 in Africa

[Music] [Music] hello everyone good to see you all today uh I want to start off by asking who is here from the continent of Africa can you please raise your hand can you guys please stand up can you guys please stand up let's give this guys a big round of applause because like many of our folks have gone through crazy lengths to get themselves here with visas and everything and this is the Defcon that has the largest uh African Builder concentration in one place um and my talk today is around what can we expect over the next 10 years in terms of crypto Innovation and is very much inspired by a lot of what I have learned from all these folks and many more of what are the things that have been built today and what can we expect coming up so two years ago at Defcon we established the fact that it's actually the crypto ecosystem that needs Africa to reach its full potential of reaching Mass adoption and utility driven building to scale it to billions of people and we covered the fact that we are the most populist part of the world and we're growing really fast that is going to be where all the young people in the world are going to be based at even today we have about 600 million Africans who are the under the age of 14 that's out of 1.5 billion people and we also discussed around the technology rails that exist that have allowed us to basically skip generations of innovation such as mobile phone skipping landlines or mobile money where that has close to trillion bill trillion dollars worth of transactions a year um and we're jumping traditional banking with crypto um two years ago when we discussed a lot of this what was the reality is that mostly many of us were doing cryptopia transactions doing payments savings and storing resources or investing using predominantly centralized exchanges and a lot of centralized exchanges are actually not made to be Banks they're trading platforms but we kind of figured a way to do that by having various liquidity providers like people like you and I providing liquidity on peer-to-peer exchanges to drive a lot of a lot of the value for normal people to access traditional forms of banking that we need so where are we today two years from from then well the one reality is that in the traditional World we're still in the same place that we're communicating value over walls that the internet as amazing as it's been at connecting us and letting communication flow communication of value which is through mon systems are actually very much gated the internet continues to be very gated the same way back in the days you would have an operator basically connecting two calls by manually calling the other side and seeing can we trust the other operator that's the same process that we have today so we are still working through walls in the traditional system the other aspect of where we still are today is that a huge part of our economy is happening in the informal sector that includes our GDP of like our predominant GDP is backed by uh uh microenterprises uh a huge part of our employment is in the informal economy a huge part of our GDP is also drived uh by by the informal economy and also a lot of our money movement happens outside of the banking system this is a very important context for us to understand why crypto is thriving so much on the continent another big also lenses that we have a systemic US dollar problem some of these numbers are a bit outdated but we're importing more than what what we're exporting we're taking a lot of debt a lot of African countries debt has doubled in the last 10 years and we're paying that debt plus interest in dollars and we're trading with each other as neighbors using dollars um and when our currencies fluctuate so much then we move our money to Dollar so that creates a demand Supply and and and on the uh supply pressure we have have a lot of exports remittance people sending money there's a thing called brick some of you guys might know about it around some countries deciding to settle outside of the dollar system which is creating a bit less pressure on the dollar and there's a lot of Aid and loans that come in do dollars so what is the consequence of this is that basically the US dollars are being rationed by the central banks the demand for dollars is higher than what they have there so what you end up having is the bifurcation of the bank rate and the black market rate or how I call it the actual market rate um and in worst economies you see that being very large in well-managed economies it's very small but we're living in in parallel systems and also that makes the dollar a commodity so people do unnatural things in order to access dollars because the upside on trading the dollar is higher than the the trade on the commodity itself which creates very you know weird dysfunctions in in in our in our system um and some countries have also created rules of how who can own dollars and how much you can transfer it until very recently the Ethiopian government actually made it illegal meaning you can go to prison for it for holding more than $500 with you at any given point many of my friends and family's houses were raid just people looking for dollars and that's because the central banks don't have enough dollars and what that means we borrow more money and then just rinse and repeat so we have a systemic dollar problem and so you look at that and say okay well what is crypto doing well fundamentally what crypto has provided us is basically a digital version of the dollar US dollar stable coins that allow for large scale liquidity coordination mechanism in the informal economy where a lot of dollars have been circulating physically or through uh various networks like the haala networks that call each other and basically move numbers around what do that as last does is basically for early stage startups to be able to aggregate more liquidity than what a bank can in a very short period of time and then settle that payment in a much shorter period of time and this has been a fundamental value proposition of crypto so as a result of that crypto has been thriving it's been growing even in the bare Market crypto transactions have been growing in on the continent chysis says we've had $125 billion worth of transaction last year when I talk to the analyst and the builders it's that's just the tip of the iceberg there's there's much more dollar that's been transacted be be behind that Nigeria of course is the second most uh popular place for crypto and Nigeria Ethiopia Kenya we search crypto on online because it is solving fundamental problems for us and so but this is not just centralized exchanges this is happening in other rails that have been built so actually some of the builders here in this this room I've buil some of these stacks these are from the builders in magma from wallet infrastructure so actually making like SDK wallets that you can embed into your fintech application or your crypto application so you can use crypto and Fiat aggregating liquidity onchain and offchain which is actually not very easy to do and and simplify the on andof run process through that different types of wallets that are being created um and all types of payments from B2B b2c B2B Toc serving like small businesses medium large mediumsized businesses oil and gas companies and even Banks and payment service providers who are now using these startups to facilitate International payments and people even issuing debit cards on top of your digital wallet in order to be able to pay online without having any limitations because some of our banks say I'm so sorry you can only pay $10 a month well if you have some resource you want to buy a book from Amazon how can you buy it with $10 Amazon is more expensive than that so you you're actually using crypto projects in order to do that and so some of these projects are like way advanced than where I see a lot of on andof Rams and so bluntly speaking if Devcon was held in one of the countries that were mentioned in Africa the Defcon organizing team can pay all their bills using crypto all of us would basically be using our crypto to make payments with Fiat without even needing a Fiat wallet paying directly just using the applications that I've been built today so there's been a lot of work that has happened in terms of making the user experience a lot easier and if you're curious about it just talk to many of the builders who are in this room so with that in mind what can we expect in the next 10 years what are some of the innovations that we can expect to have well fundamentally I think the most interesting part of crypto to me is bringing whole economies and empowering them by decentralized systems part of that is basically changing the foundations of our existing economy and part of it is like opening up new economic activities that we did not know existed before um and this is where I think ethereum comes in because that's the most robust and the most resilient decentralized system that we have right now so it's it's it's a beautiful merge here and when we think about re writing a lot of the foundations of our economies we got to think about both hyper globalization and Hyper localization we talked a lot about US dollar stable coins right so the answer is not let's dollarize the entire African economy everyone uses dollars dollars for everyone that's not the answer I don't think that helps us and it doesn't help the global economy so we got to also think very locally and one idea I love to dive deeper on is this idea of actually local currency stable coins at the moment when we think about stable coins it's kind of synonymous with US dollar stable coins how about actually having our Kenyan Nigerian Shillings Kenyan shillings Nigerian naira Ethiopian Burr a lot of our local currencies having a digital version of them onchain what does that allow well onchain Forex that makes it a lot more efficient we'll double click on that cheaper local payments in a crazy way today with blobs it is cheaper to run uh transactions on a layer two at least four five to 10 times than it is on mobile money or banking which is quite crazy well that doesn't mean blobs will scale infinitely but it's just an interesting data point of what we can even do today and the last part of the value here that we can think of at this stage is that it gives us programmable money and that opens up a whole lot of opportunities and innovations that can happen I really want to double click on the onchain Forex well today k and Tanzania are neighboring countries right next to each other we even speak similar languages and both our currencies are called Shillings but in order to make a payment from Kenya to Tanzania you actually have to convert it to the dollar dollar has to go through the Str system it has to floor through London or New York or somewhere it can take a few days and depending on the volume it can take even weeks it's a very long process and long system it's it's it's it doesn't make sense that we're having to do this as neighbors right with local stable coins you could potentially move from the Kenyan Shing stable coin to a Tanzanian Shing stable coin both denominated in value against the dollar but not actually touching the dollar so this helps us move the US dollar from just being a medium of exchange to being a unit of account which is a very interesting use case for it so one way that can work is pre building a pair of of liquidity where some an importer is putting money uh into the the pool from the Kenyan side and Export is pulling money out of it and the person does the exact same thing on the Tanzanian front and because every trade does not fully balanced you use dollars to basically rebalance the pool by adding local currency on the other side this is just one model I am sure we can come up with way multip way more complex and more interesting models to structure this but bringing Forex on chain is one of the most interesting problems for us to solve using local stable coins now when we think about that we can think you know in a few million dollar value or we can think about half economies and I think the most important thing that we keep missing in the space when we like look at the full potential of crypto is that we're not always looking at like how can have an economy run on what we're building and what needs to be true for us to get there and the reason why I'm saying that is because you know many of you know Mesa right Mesa is one of the best best success stories that has come out of Kenya half the Kenyan economy runs on impesa what impesa is is just a private Ledger it's a spreadsheet where this they put some fat in the bank and the numbers move from different account names and at the end of the day it's basically settled at the bank layer that's somehow a version of what we're talking about but what we're talking about is putting that on chain and a much more open transparent system right for us to get to that level of scale at a much faster Peri period we got to think about from different principles and and one lens that I can think of is using government bonds to back our local stable coins you convert the local Bond into a real world asset that can either be coll fully collateralized through a CDP or a better model that we can come up with and by the way if you do I love to chat with you um and basically use that to uh distribute local currency through existing and new rails around the Forex on chain is one of the much like lowest hanging fruit examples of where we can go but we can bring so many other values to that and in the future it doesn't just need to be uh government bonds to do this we can bring other types of assets like local land productive land or protected land or gold and silver and precious metals we're generating so much of that from Africa at the moment or we can do other types of Commodities like this is such an open book in terms of what we back our local currencies with with another pillar after local C coins that I love to chat about is simple Finance as a stack now here in the ethereum world we talk about decentralization a lot well for us on the continent decentralization is is actually a very practical solution to a very practical problem we have a lot of banking rails to build for hundreds of millions of people and many of them have not been born yet to do that try to build that in a monolithic way as a centralized company as one piece like alipe or witchat or grab for 54 jurisdictions and scale that in a very short period of time is almost impossible to execute so the best way for us to do that in my view is just to build a connected web of tools different pieces of the Lego that form a financial stack that come together that offer users a better experience and better options right I think building this in a much more decentralized way it to me is like the only way we can get to the level of scale that we need to achieve so for us it's actually a very practical solution a practical way of getting there and we can build interoperable monies with network effects remember the walls the operator we can just bypass that and keep moving value across different populations and people in that way create cash apps with simple user experience powered by crypto but we don't even have to know that it's crypto today we have startups that are doing that but we can scale that to infinity and on the hyper localization lens um there are many ways we can build around existing trust structures across many African countries We have basically cooperatives and little communities of people we call some of them some of us call them table banking some some of us call them Chamas where basically people pull money together to save and lend to each other there's a strong trust infrastructure that exists to enable things like that we don't have to reinvent Trust From Scratch we can leverage those existing trust structures to build very resilient hyperlocal economies and I think that should be part of our road map and Beyond you know so ultimately it's just two people or two companies or two agents having normal Financial transactions right no complexity not much we're not talking about crypto at the front end this is all enabling that other areas of innovation that we can think about is like around credentialing identity reputation credit scoring building bringing things that don't exist on chain to create Trust on chain is are some of the more interesting areas for us to experiment on we don't have time to dive deep into many of these and there's a lot more than other areas of innovation that we can build in the next years but talk to the builders around the table um and the other area bringing assets on chain such as real estate we talked about bonds earlier but different types of Commodities Energy power generating uh structures that we need to fund and and and are actually Revenue generating we can experiment with so many of these that actually Powers the fundamentals of our economies so with all these ideas and directions that we can go you might be wondering how do I help how do I connect how do I participate in this well the first is uh it's an invitation It's actually an invitation because there's there's a lot of building happening on the continent whether we have a lot of Builders coming to defon or not so it's an invitation for you all from infrastructure from research from different ecosystems and chains from Capital allocation from mentorship and support from actually like working with some of the smartest people on the planet there are many ways you can plug in into the movement that is happening in Africa and of course why not bring defon to Africa in two years time who Who's down for something like that here right well yeah I think that'll be super cool and you guys will have a blast joining Devcon there but but it's actually not about having another big event on the continent it's actually it gives you a much deeper context to go and see this in practice it is very very hard to explain how broken the world Gardens are until you actually go and experience it in person or is very hard for me to explain to you like what seamless using experience for crypto looks like without actually going and experiencing and making a whole lot of payments in living your life using your crypto wallet without touching physical bills right so it's an invitation for you to actually be part of the movement and work that that we have and lastly because all the ethereum events that have happened around the world have happened in places where it's just very hard to get visas right so to get 177 folks here man that was like a lot of work and it's been a lot of collective effort and there are hundreds and thousands of more that you would absolutely enjoy connecting with and learning with and learning from and so you're invited home welcome guys all right that was awesome presentation you guys we have is a next session so anyone want to put question that's a QR right there just scan it and put a question there we have a lot for you brother yes let's take a look which you want to answer first uh we can talk about the non-financial use cases we talked about them later on yeah this talk focused a lot on finance because it's just a lot to unpack and each topic that we talked around credentialing around bringing assets on chain uh and credit scoring and like gaming and communication there's like there's a lot to unpack there um I will actually invite you guys to talk to some of our Builders here to understand a lot of the nuances but I mean at the moment like 500 million Africans don't have any form of legal ID right and the best that some of our countries are doing is basically having a a data center in one location or two location and putting the entire population's data there it's like a honey pod of sovereign data right that's not the most secure way to do it in my opinion so I think there's a lot lot of ways we can innovate around that kyc is one that really came up like transferable kyc across multiple tools um so the list goes on so the invitation is to actually talk to the builders in the room any question you want to answer we have a lot more here right uh what do you see Africa becoming what do you see Africa becoming a well coordinated road map I want to talk about regulation all right let's because that's that continues to be a Hot Topic and it's really important to us because many of our Innovations are interfacing the traditional world with the crypto world because that that door needs to be very fluid it needs to allow money to keep moving back and forth for a long period of time and until we bring it on chain um and I think that's a that's a very important problem so I talked to a bunch of regulators many of the builders here talk to many Regulators there's there's some curiosity there's some fear because crypto can be a path for Capital flight a lot of value to live in a short period of time right and that's a that's an actual risk um and some of them don't even understand the fundamentals of this technology so what we end up having is some countries like South Africa saying crypto is legal it's a commodity we will allow it and so we have a lot of Builders working there some countries creating uh um uh uh environments for experimentation like sandboxes uh and actually um this a bit of a controversial view but I think creating some sort of tax revenue from crypto transactions for governments is a is a potentially positive thing if it's done well because it moves this category from a a risk basis to an income generating category um and bringing local stable coins on chain is I think one of the biggest value props for governments because what it does is it creates a much more efficient Capital markets for dollars and bonds it brings dollars in and helps reduce the pressure for local trade that can happen so they have an incentive to see something like that but there's a lot of people here doing the hard work of actually informing regulators and we keep building like we keep building even with gray area we keep building like the show doesn't stop um and I think that's something some of us in like the Western World find it hard to kind of navigate around is because like even when Nigeria makes crypto illegal like we still have close to 15% of the country's GDP like proportion transactions happening in crypto right so yeah it makes you kind of Wonder um like what what what some of those kind of guidelines can can actually have an effect I think we have about one or two question more let's let's see what you want to answer am I hiring are you hiring uh I mean the I I don't know guys uh we can jam outside after this and uh recruit more more folks to help answer the question but yeah I guess like what needs to happen before a Defcon happens there is like there's a lot we got to do on the continent we have many communities doing real work uh they need a lot of support and engagement so I think that will bring a lot of value we need to have more hackathons and Builders but like I think our Builder Community like the startups that we have there are from a user experience perspective in my opinion or like way ahead from what we keep talking about around usability making crypto usable for daily life um like whenever I'm in many African countries like I don't use my card I don't use cash I'm just like paying all types of bills using my crypto account um and I think I think that's super cool and that's amazing so like even the Builder Community alone is enough uh to host you all all right keep that Applause for the speaker thank you