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Regulation Key to African Fintech Sector Growth — New Study

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Regulation Key to African Fintech Sector Growth — New Study

According to the findings of a study by Afriwise, Kenya, Nigeria, and South Africa have the most developed fintech ecosystems on the continent. The study points to early regulation as one of the reasons for the industry’s success in these countries.

Regulated Fintech Ecosystems Attract Investors

Explaining the key role that regulation has played in the growth of the fintech sector in these three countries, the study states:

The connection between regulations and a flourishing fintech sector is an important one. It is no coincidence that investors and businesses in fintech are drawn to markets with more robust financial regulatory ecosystems. It is one of the reasons that funding remains concentrated in a few markets.

Indeed, the three countries along with Egypt “are recognised as the four fintech hubs in Africa, securing 80% of fundraising in 2020.”

Importance of Regulation

In contrast, investors have steered clear of African countries where there are no fintech regulatory ecosystems. As explained in the report, “the absence of robust regulations can expose both end-users and fintech service providers to a multitude of risks.” Such risks in turn discourage investors from setting up shop.

In addition to the lack of fintech regulatory systems, the study also notes that there is generally “not enough funding allocated toward government training or entities to address regulations for new and constantly evolving sectors.” As a result, regulators often lack the resources to oversee not just fintech but also “cross-border operations for financial service providers.”

Therefore, to overcome these as well as other challenges, the study encourages fintech start-ups to “work directly with regulators, build relationships and ensure they keep up with constantly evolving regulation.” This, in turn, will supposedly ensure that any new regulatory frameworks covering fintech will lead to the growth of the industry.

Do you agree that lack of regulation is hampering the growth of the fintech industry in many countries? Tell us what you think in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Inside the blockchain developer’s mind: Blockchain consensus, Part 1

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Inside the blockchain developer’s mind: Blockchain consensus, Part 1

Cointelegraph is following the development of an entirely new blockchain from inception to mainnet and beyond through its series, Inside the Blockchain Developer’s Mind. In previous parts, Andrew Levine of Koinos Group discussed some of the challenges the team has faced since identifying the key issues they intend to solve and outlined three of the “crises” that are holding back blockchain adoption: upgradeability, scalability, and governance. This series is focused on the consensus algorithm: part one is about proof-of-work, part two is about proof-of-stake and part three is about proof-of-burn. 

In this article, I want to leverage my unique perspective to help the reader gain a deeper understanding of a popular concept in blockchain technology, but also one that is woefully misunderstood: the consensus algorithm.

In order to gain a deep understanding of this component of a blockchain, one of the things I always like to do in these articles is begun by taking a step back and looking at the big picture because the consensus algorithm is just one small part of a much larger system.

Blockchains are a game in which players compete to validate transactions by grouping them into blocks that match the blocks of transactions being created by other players. Cryptography is used to hide the data that would allow these people to cheat. A random process is used to distribute digital tokens to people who play by the rules and produce blocks that match the blocks submitted by other people. These blocks are then chained together to create a verifiable record of all the transactions that were ever performed on the network.

When people produce new blocks with different transactions in them, we call this a “fork” because the chain is now forking off into two different directions. This is the exact opposite of what we want to happen. The whole value of a blockchain stems from the fact that everyone agrees — has come to a consensus — on what transactions happened when. Consensus algorithms are therefore intended to resolve forks.

Satoshi’s real innovation

At the end of the day, what ensures that everyone updates their database to match one another boils down to how they are punished when they do not. The protocols contain rules for the proper ordering of transactions, but if there is no repercussion for violating those rules, they will be ineffective. The real innovation that Satoshi Nakamoto delivered in the Bitcoin (BTC) white paper was his elegant use of economic incentives.

Satoshi Nakamoto did not invent the idea of the “electronic coin.” He created an elegant system for combining cryptography with economics to leverage electronic coins, now called cryptocurrencies, to use incentives to solve problems that algorithms alone cannot solve. His design forced people to sacrifice money in order to mine blocks of transactions. People would have to sacrifice this money over and over and over by playing by the system’s rules and trying to organize transactions into blocks that would be accepted by everyone else in the network. If they did this long enough, they would receive a reward in the currency of the platform.

Of course, there’s no way for the blockchain to know that money was spent in the form of USD, yen, or euro, which is why he used a proxy in the form of meaningless work. He made the mining of blocks unnecessarily hard so that anyone who successfully mined a block necessarily must have spent money on hardware and the energy to run that hardware. So every block successfully mined is backed by money that had been sacrificed not just on the hardware, but on the energy required to run that hardware and produce that block. Whenever there are forks, proof-of-work (PoW) consensus algorithms are an automated system whereby the fork backed by the most work is the “right” fork.

Related: Proof-of-stake vs. proof-of-work: Differences explained

This means that everyone who continues producing blocks on that fork will continue to earn rewards and that everyone who continues producing blocks on the other fork will not earn rewards. Since these people have already spent their money to acquire hardware and run it to produce blocks, the punishment is easy because they’ve already been punished monetarily. They spent their money so if they want to continue producing blocks on the wrong chain, that’s fine. They won’t earn any rewards and they won’t make their money back. They will have sacrificed that money for nothing. Their blocks won’t get accepted by the network and they won’t earn any tokens.

This proof-of-work system ensures that the only way someone who does not want to play by the rules, a malicious actor, is to acquire and run more hardware than everyone else combined, such as by mounting a 51% attack.

This is the elegance behind proof-of-work. The system cannot work without sacrificing ever-increasing amounts of capital. Satoshi combined cryptography and economics to create a ledger of transactions that is so trustworthy, it is trustless.

There are, however, different consensus algorithms that operate in slightly different ways. The most well-known of which is proof-of-stake (PoS), which I’ll be discussing in the next article in this series. After that, I’ll be discussing the algorithm we’ll be using in Koinos which is a first-of-its-kind in a general purpose blockchain.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Andrew Levine is the CEO of Koinos Group, where he and the former development team behind the Steem blockchain build blockchain-based solutions that empower people to take ownership and control over their digital selves. Their foundational product is Koinos, a high-performance blockchain built on an entirely new framework architected to give developers the features they need in order to deliver the user experiences necessary to spread blockchain adoption to the masses.

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6 Questions for Mati Greenspan of Quantum Economics

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6 Questions for Mati Greenspan of Quantum Economics

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and we throw in a few random zingers to keep them on their toes!


This week, our 6 Questions go to Mati Greenspan, a crypto analyst and the founder and CEO of Quantum Economics, an investment analysis and consulting firm for the cryptocurrency space.

Mati is the former senior market analyst at eToro and a licensed money manager in the European Union. He’s the co-author of the e-book The Complete Guide to Fintech Trading and Investments and currently advises publicly for LunarCrush, Electroneum and Luno.


1 — Does it matter if we ever figure out who Satoshi really is or was? Why, or why not?

Even though our team is currently conducting extensive research on this, I don’t think we’ll ever be able to say definitively, and I kind of hope no one ever figures it out. There’s a certain allure to the mystery of Bitcoin’s origin that I think keeps people engaged in the network.

2 — What do you think will be the biggest trend in blockchain for the next 12 months?

It’s really difficult to say that far in advance in an industry that moves this quickly. I’m personally looking forward to seeing more utility-based nonfungible tokens (NFTs). Using them to unlock exclusive content, as event tickets or as part of role-playing games, is extremely exciting.

3 — What’s a problem you think blockchain has a chance to solve but hasn’t been attempted yet?

That’s a fun question. I would say free, fair elections are an issue that many countries face, and I haven’t seen enough effort in the blockchain space to solve this. Perhaps now that crypto-friendly politicians are being elected in the United States, we’ll finally see it happen.

4 — When you tell people you’re in the blockchain industry, how do they react?

Most people I meet already know this, so it isn’t much of a shock anymore. Increasingly, people are becoming more familiar with Bitcoin (BTC) and blockchain, so I suppose it’s becoming more commonplace to have a job in this industry. I always take joy in seeing people quit their square jobs to work for Bitcoin and do my best to help facilitate that.

5 — Do you subscribe to the idea of Bitcoin as a means of payment, as a store of value, as both… or as neither?

Yes, both. For me, very much so. Most of my team at Quantum Economics prefers being paid in Bitcoin. It’s far faster, easier and cheaper to deal with internationally than any payment app or bank. The third part of the trilogy that defines money is a unit of account, which is a bit more difficult to get used to, but more and more we’re starting to think in Bitcoin terms.

6 — What would you like to see tokenized? When — if ever — would you expect this to happen?

Leonardo da Vinci’s “Mona Lisa.” I’ve been tweeting about it to the Louvre Museum for a while now. In my mind, it’s only a matter of time. Could happen any day, really.

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One more Bitcoin price dip? BTC may fall again before ‘slow grind up,’ warns analyst

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One more Bitcoin price dip? BTC may fall again before ‘slow grind up,’ warns analyst

Leverage may be gone but Bitcoin faces an uphill struggle and multiple potential resistance levels on the road back to all-time highs.

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One more Bitcoin price dip? BTC may fall again before 'slow grind up,' warns analyst

Bitcoin (BTC) rebounded to near $50,000 on Dec. 5 as traders continued to take stock of recent events.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Data from Cointelegraph Markets Pro and TradingView followed a less volatile BTC/USD as it rose to $49,777 on Bitstamp before consolidating.

Fresh off a crash to $41,900 early Saturday, the pair stabilized as the market digested what was the latest giant deleveraging event to hit Bitcoin this year.

TLDR of what happened last night:

Open interest being built up for weeks + a regime of positive funding and low weekend liquidity (meaning thin order books) gave a perfect storm for a long liquidation cascade.

These forced sells executed into thin books, thus the drawdown.

— Will Clemente (@WClementeIII) December 4, 2021

For some, however, there was every reason to stay cautious and not discount another sweep of long-term lows.

“We dip one more time. CT loses its shit and sell more. But it miraculously gets bought up,” Lex Moskovski, CIO of Moskovski Capital, predicted in part of comments on Bitcoin’s prospects.

“Consolidation, a slow grind up.”

That slow grind now has no shortage of significant support levels to recapture: $50,000 and the $1 trillion market cap zone just above $53,000, as well as various previous all-time high levels.

Fellow trader and analyst Rekt Capital meanwhile eyed the 200-day exponential moving average (EMA), a support line which had held since August but which was broken in Saturday’s dip, as a potential line in the sand.

#BTC is just below the 200-day EMA right now$BTC #Crypto #Bitcoin https://t.co/ZOVwYBjatH pic.twitter.com/vOlJVSEM6p

— Rekt Capital (@rektcapital) December 5, 2021

Late September, when BTC/USD last traded at the $42,000 level, likewise saw a test of the 200EMA, and Rekt Capital noted that the severity of the dip still pales in comparison to previous ones from history.

“You survived the -84.5% BTC Bear Market. You survived the -63% $BTC crash in March 2020. You survived the -53% BTC crash in May 2021. You’ll survive this crash as well,” he added.

Enough flush?

A look at the status quo on derivatives markets showed funding rates either neutral or slightly negative at the time of writing, a marked difference from just days ago.

Related: Ethereum acts as a ‘hedge’ in Bitcoin price crash as ETH/BTC hits 3-year high

A significant chunk of open interest on futures was wiped out during deleveraging, and over $2.5 billion of crypto accounts were liquidated.

The question for commentators now was whether enough of the froth had been removed to ensure a return to steady growth.

Open Interest flushed enough? pic.twitter.com/jnvrqRPDot

— Nunya Bizniz (@Pladizow) December 4, 2021

The weekly close meanwhile looked set to be Bitcoin’s lowest since the start of October.

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