* South African township launches bitcoin economy
* Founders hope the cryptocurrency will help fight poverty
* Critics warn of risks to vulnerable users
Nearly every afternoon, surf instructors descend the sandy hill separating their township from South Africa’s Mossel Bay beach to earn bitcoin in exchange for teaching children how to catch its famous waves.
A plunge in cryptocurrency prices this year has driven many small investors to ditch their coins, but the charity surf school coaches receive all their wages in bitcoin as part of a nascent local initiative aimed at boosting financial inclusion. “Before I would spend (money) quickly,” said Luthando Ndabambi, a senior surf instructor at The Surfer Kids charity.
“But now I am saving, I am thinking about the next ten years,” said Ndabambi, seated at the charity’s beachfront office where wetsuits hung up to dry. Crypto investors took a series of batterings this year: bitcoin’s value has fallen by about 60%, while digital coins Luna and TerraUSD collapsed, and the implosion of major crypto exchange FTX left an estimated one million creditors facing billions of dollars in losses.
But as regulators call for tougher controls on crypto, some bitcoin evangelists who believe the coins are a force for good are channeling cash into socially-minded projects. The Bitcoin Ekasi scheme – meaning “Bitcoin in the Township” in local slang – was launched last year by Hermann Vivier, who owns a Mossel Bay tourism firm and runs The Surfer Kids charity.
He said the scheme to encourage bitcoin use among residents of the poor JCC Camp township alongside the beach can help people who struggle to access traditional banking due to fees or practical barriers such as a lack of identity documents. “We are seeing everyday (bitcoin) adoption out of necessity for the unbanked billions,” Vivier told the Thomson Reuters Foundation.
“I wanted to democratise bitcoin, to help people access it so they can have the freedom to transact and think about their future.” However, the volatility in the value of crypto coins means they are a risk for low-income users, said Ashlin Simpson, a responsible tech expert at the University of Cape Town’s Centre for Social Science Research.
“People in already vulnerable financial situations can’t afford to take financial losses,” she said, adding that some may also lack the tech knowledge to fully understand the complex and largely unregulated systems. “Nothing comes without risk and crypto isn’t the panacea for financial freedom.”
BITCOIN BEACH Cryptocurrencies, which allow for “peer-to-peer” transfers between users online without intermediaries, were originally designed to be free of control by governments and central bank authorities.
During the COVID-19 pandemic, Vivier turned to bitcoin donations to keep his surfing outreach work afloat, and from there he launched the wider Bitcoin Ekasi scheme. He was inspired by – and now is partially funded by – the Bitcoin Beach in the El Salvadoran surfer town El Zonte, where businesses began accepting bitcoin payments in 2019, before the digital coin became legal tender in the country last year.
Today, about 10 convenience stores in the JCC Camp township accept bitcoin payments alongside cash. The project uses donations to top up shop owners’ bitcoin savings to their previous rand equivalent if their value slides by more than 30%.
Instructors for The Surfing Kids can also use their bitcoin via apps that allow them to convert it into vouchers for everything from electricity to pizza. Bitcoin Ekasi has founded a free learning centre that pays children in the surf school a weekly bitcoin reward worth about 30 rand ($1.74) for taking lessons in literacy, numeracy and bitcoin basics.
“When I first heard about bitcoin, I thought it was a scam,” said Nomsa Williams, 50, the teacher at the centre, who is also paid in bitcoin. “But I learnt that … it is not just for white people and billionaires.”
Vivier said the scheme is “future-proofing” the township for when bitcoin recovers and becomes more mainstream. “We keep praying bitcoin will go up again … (The drop) hit us small businesses hard,” said Vuyisa Sakela, a police officer and convenience shop owner, who estimates 20% of their payments are in bitcoin.
Despite the uncertainty, Sakela said the digital payments are safer in the crime-ridden township than cash because it is harder to steal digital currency, and that he is glad to be at the forefront of financial innovation. ‘BITCOIN FOR FAIRNESS’
Sub-Saharan Africa accounts for just 2% of cryptocurrency transactions globally, but countries like Nigeria, Kenya and South Africa have developed sophisticated markets using it for “everyday financial activity”, according to blockchain research firm Chainalysis. It found African users commonly aim to avoid fees on remittances, protect their money from high inflation, or to make money due to the lack of job opportunities.
Surfing instructor Ndabambi said bank fees often ate into what little he was able to save in the past. “Now my dreams for the future are different,” said Ndabambi.
“I want to open up a township restaurant where customers can pay with bitcoin.” Elsewhere in Africa, nonprofit Bitcoin for Fairness educates people in countries such as Zambia, Ghana, Zimbabwe and Nigeria on the currency, while a blogger used bitcoin to support people displaced by a volcano eruption in the Democratic Republic of Congo in May.
Still, about three-quarters of crypto users worldwide have lost money, according to an estimate by the Bank for International Settlements (BIS) that highlighted “multiple boom-bust cycles”. In JCC Camp township, Vivier and Bitcoin Ekasi members said they believed the currency would bounce back.
“Sometimes you crash but you get back up,” said Ndabambi, comparing it to surfing. “Bitcoin will be up again and my plan is to stick with it.”
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)