Last Friday, I attended a fireside chat hosted by SafariDAO and Borderless Africa. This post is a product of questions that were asked directly to me during some catching up with Kenyan crypto industry acquaintances (including, do you still write?) and during the fireside chat that followed.
The one question that drove a long conversation among the group was: What is the web3 community in Nairobi like?
Initially, the answers were focused on the web3 developer community in Kenya, which is not surprising given the context. However, the questioner, Yoseph Ayele, rephrased the question to ask about the reality on the ground. I listened to the interesting takes from different people without raising a hand, mostly because I rarely talk to a large group of people. While I agreed with a lot of what was said, I also disagreed with some points. Having lived through the web3 revolution and seen it unravel in front of me (crypto even gave me a husband), here are some key points about the state of web3 in Kenya, the journey it has come, and where it seems to be headed.
By the way, this web3 phrase only became a thing people use all the time about two years ago. I will mostly use crypto in this piece.
Scams popularized crypto in Kenya
Mention crypto to most people in Kenya and you will likely have them rolling their eyes or recounting an experience from someone they know who was scammed. That is the reality and this was brought up by Joan Jerop, a SafariDAO core contributor.
Back in the day when I was running customer comms at BitPesa, early adopters stumbled upon bitcoin as traders. This was in 2014. BitPesa’s initial offering was a cheap way to send money from the UK to Kenya via M-Pesa. We described it as the bridge from Bitcoin to M-Pesa, thus the name. However, this B2C cross-border play did not pick up at all since Bitcoin was still very technical to the layman, including myself who had to really immerse myself in it to serve customers. Indeed, Wave was already making waves in that sector by then.
The product that actually picked up big time when we launched it at the end of 2014 was buying bitcoins. However, things took a new turn in 2016. 90% of customers came to us to buy bitcoin for some weird outfits like MMM, BitClub and D9. That was the reality in 2016-2017. Most people became aware of Bitcoin and, in extension crypto, from scams. It was so bad, we had to put up disclaimers everywhere, including on the website that we were not part of these scams nor did we endorse them.
The positive side of it is that there are many people who became serious traders and crypto experts after experiencing scams. One of the biggest Nigerian traders who moved millions daily in those years learnt about crypto from initially being scammed. Sad but real. In fact, the first time I heard of the now popular Worldcoin, I immediately thought: SCAM. This was in February 2022, when a cousin of mine who is always asking me to confirm if an outfit is scammy brought it to my attention. I looked it up and it seemed legit. Especially because it had Sam Altman’s name on it. I told my cousin to proceed with caution and left it at that. More on this later.
We’re still very technical…
We have never really found a way to explain crypto and crypto products to people in an easy way. In fact, we tend to call them normies. Someone did during the fireside chat. The moment we fall into this trap, we lose sight of the goal and remain the weirdos who are pushing this “scammy” thing. It’s the “normies” who need to get on board the web3 train. The only way we can do this is by solving problems and simplifying the terminologies. Web2 only took off when social media changed the game and made it a part of everyday life. Services on the web became easier and cheaper communication tools. Backed by more technologies like cheaper phones and data availability. Think about it. When was the last time you sent an SMS? Last year, you said? But when was the last time you chatted with someone on WhatsApp? A few minutes ago? There you go.
Perhaps this is what needs to happen in web3. Something like Worldcoin that has onboarded people with free money. It hits critical mass and suddenly, people are sharing and Worldcoining each other within that World App. Other cryptos can be transacted within it. And then it is all systems go from there.
Make it easy. Make it simple. Solve a problem. Think M-Pesa. No one knows what tech it runs on. No one cares. All we know is that it makes payments a breeze. And everyone uses it. Critical mass. Even when it fails, we are still waiting for it to come back on.
There is one developer who talked about this very point at the fireside chat. He didn’t mention his name but I wish I got it. (I agreed with everything he was saying so much, I feel I owe him lunch or something. If someone knows him, tell him I am looking for him.) He talked about how Sam Altman conceived OpenAI, the company building ChatGPT many years ago. We have only known about it since late 2022. And we are all waxing lyrical about how it’s changed our lives at work. Sam Altman started somewhere. He didn’t give up. Neither should we. As long as we focus on solving problems, the people will come.
Worldcoin knows something we don’t, and we better take notes.
Speaking of Sam Altman, perhaps he is also years ahead of the crypto revolution with Worldcoin. Everyone and their mother in Kenya now knows it after it launched last week Monday. Even for us in the crypto world, we had not really taken it seriously until now. Why? They are addressing an actual need. Which need? We’re in tough economic times and the average mwananchi, including you and me, does not mind earning some extra coins somewhere. People want money. No one said this when that reality question was asked but that is the plain truth. If we’re going to solve problems, we better look at them from our own lens.
This tweet is a snapshot of the reality of our Kenyan Shilling.
Word from the Worldcoin team in Kenya is they actually didn’t think it was going to go as viral as it has. It doesn’t mean that the Orbs are not located in cities in the developed world by the way. They are. They just don’t have the same problems we have to drive people to queue in that mind boggling fashion. In addition to launching at just this right time of need, the other thing Worldcoin has done that no other crypto company has ever been able to do at scale is the way they onboard. Which other crypto company have you seen going out into the public to sign people up outside your local supermarket? Well, the only other one is Binance, another game changer that won where BitPesa, Luno (formerly BitX) and others could not. I once talked to their team at their booth near Carrefour at Two Rivers. Worldcoin had also pitched camp at the same location before that. The team was also at ETHSafari in September last year.
Now, you may think that the people onboarded will not go back to the app once they cash out their free money, but is that the case? I am sure the marketing team at Worldcoin has a long game to keep people incentivized long enough to achieve the whole World ID goal. Indeed, it has only launched in 35 cities so far. And as far as pilots go, this is one super successful pilot.
On the other hand, do we know what Worldcoin will end up doing with all that data? We do know it’s all on a mission to make proof-of-personhood a thing in a web being taken over by bots but do we know if it’s going to be monetized by Sam and co at scale? Is the promise to eventually be decentralized even true? And is this money really free? Not quite. It’s the same way you get incentivized to invite friends and family to services to get offers and discounts. It’s Worldcoin’s CAC (Customer Acquisition Cost). In fact, there is a very interesting quote that closes this article for Rest of the World “Do you know how often people lose their data without getting anything back? That’s the reality.” Meta and Google have done a great job at monetizing all the data we give them. And we gave it all for free. If you are not paying for the product, you are the product. Tafakari hayo.
And in case you are wondering whether Worldcoin in Kenya has been doing things by the book, it has. Tools for Humanity, the company running Worldcoin, is very much registered with the Office of the Data Protection Commissioner (ODPC). However, while I was wrapping up this post, the Ministry of Interior suddenly suspended Worldcoin operations. Which brings me to the next point.
The regulatory battle
Let’s go back to the point about Binance winning where other companies could not. It is always about regulations. Binance is renowned the world over for skirting around regulations and being smart about them. And there is nothing wrong with that. For starters, they started out not dealing with fiat. In Kenya, for instance, it facilitates peer to peer KES transactions. They have begun making headway as a regulated exchange with licences in various jurisdictions across the globe.
I learnt a bit about this regulation game at BitPesa where I would wake up many times thinking we would go down, but our CEO, Elizabeth Rossiello, would always find a way to keep us moving by pivoting and being smart about loopholes here and there. And I also learnt an important lesson that I am sure a lot of fintech founders in Kenya have embraced since back then when Elizabet: Unregulated is not illegal. Elizabeth would say this a lot. M-Pesa was not really regulated at the beginning. Regulations kept coming up later on as the use case became more and more clear. You can only break through the barriers by walking these less travelled paths to pave way for regulation. Otherwise no one will ever bother to do anything to make things better.
Today, the Kenyan government seems to be open to regulatory talks with the community. You see crypto appearing in the now infamous Kenya Finance Bill. We have come a long, long way from waking up to the CBK banning banks from banking crypto companies and releasing notices in the Daily Nation warning the public about crypto. However, don’t be fooled into thinking Kenyan banks allow crypto companies to bank with them. They don’t. But somehow you will find some crypto companies are able to transact with them until the day the bank realizes, oh, actually this is a crypto company. How did we not catch this before? And a company is left looking for another option to move its money ASAP until the next loophole is found.
This, unfortunately, has still not changed since 2015. The point about the government suspending Worldcoin operations in the country is proof. And it’s also proof that none of it is going away anytime soon. They have been trying to kill crypto since 2015. A whole eight years ago. Don’t tire.
The most common crypto use case is still trading – assets.
Like I mentioned previously, we have to start from somewhere and go from there. Trading is still the only actual real life application that is more widespread than any other. At BitPesa we tried to make cross-border payments faster and cheaper, but on-ramping and off-ramping (moving money to and from the traditional banking system) became an expensive issue. So it became easier to not use bitcoin anymore. To just hold fiat accounts in the different countries and balance the float within those borders. In fact, the only big companies who used bitcoin did it without touching it themselves and I guess it said something to be on the cutting edge of technology. Remember back then, the term Blockchain was all the range. You were cooler saying blockchain than crypto. It had less baggage. But really, it was the Bitcoin asset bridging the transactions anyway.
Now if the web3 crowd wants to keep hating on trading and claim that trading is not part of web3, we’ll just keep being the closed cliquey community that will always be ostracized, because we want to sound smart. There is nothing wrong with being in crypto for the trading aspect of it. And there is nothing wrong with being in web3 to build on it. Just different sides of the coin. Patrick McCorry from Arbitrum asked attendees at the fireside chat to raise their hands if they had ever been paid in crypto, and over half the room raised their hands, including myself. Which is not a surprise because it was a crypto crowd anyway. That is an actual use case, which Patrick reminded devs who kept saying there are no real life applications.
Big shout out to Elizabeth Rosiello and Charlene Chen for introducing me to the crypto world before people were building apps on top of it. And a big shoutout to Jason Eisen for introducing me to this other side of it where building is the name of the game – DeFi and dApps. This side is still very much in the nascent stage but we will begin to see the fruits in coming years.
Where we are and where we are going: Post-COVID
Something changed after COVID. For starters, the cliques have really broken up, especially with the events that began to come up after the success of ETHSafari. The fragmentation and gatekeeping that has always existed in the crypto ecosystem in Kenya is breaking away. “Crypto influencers” are beginning to see that they need to talk to other people now. They don’t know everything. Information is more available now. Free workshops and bootcamps. Very young people are making headway in places we never did.
I think events have taken on a new meaning in general after we all went through that whole phase of not meeting up for close to two years. The number of events both offline and online is amazing. I can assure you this was not the case in 2015. We put out a word for people to come for a day of free meals and a seminar to learn how to trade Bitcoin and the people (men) who showed up were not even close to 20. Yep.
There is also a new zeal. New jobs in the web3 space. New remote opportunities. You can run an organization with a whole team without ever meeting them. I know that life. SafariDAO, for instance, consists of some people I have never met, yet. I didn’t really pay much attention to DAOs (Decentralized Autonomous Organizations) until, again, Jason introduced me to the concept. I am about to start running ads purely funded by the execution of a DAO proposal on the Polygon network. How cool is that? All the same, I still had to cash it out to fiat, but as I have kept saying throughout this post, we have to start somewhere.
I mean, who would have thought you would see crypto billboards pre-COVID? We saw Yellow Card do that in Kenya. And Paxful in Nigeria. I had even given up telling people what I did for a living. I honestly don’t even know what I used to tell them. Only like 5 people got it. Today, I will have my uncle telling me that he read somewhere that the elections were run on the blockchain. LOL. Never mind that that is obviously not true, but the fact that he knows about it is amazing.
To be continued…