The African Blockchain Opportunity Revised 1st Edition

THE BLOCKCHAIN
OPPORTUNITY
How Crypto-Currencies and Tokens could scale
Disruptive Solutions across Africa
A Report by BitHub.Africa
Copyright
The Blockchain Opportunity, revised edition of a report by BitHub Africa,
Self published by BitHub Africa trading as Space Kenya Networks Limited (2010).
© 2016-2017, BitHub Africa and John Wainaina Samson Karanja.
All rights reserved. No portion of this may be reproduced in any form without permission from the pub-
lisher, except as permitted by Kenyan copyright law. For permissions contact:
Copyright includes editions 1-8 which were peer reviewed between July 2016 and February 2017.
Email: karanja@BitHub.co.ke
Tel: +254 725 274191
Website: www.BitHubAfrica.com
1
FOREWORD
I am Alakanani Itireleng, the founder of Satoshi
Centre a Blockchain incubator based in Gaborone
Botswana. I believe blockchain is one of the most
promising technologies that Africa cannot afford to
ignore. It is on this basis I commend BitHub Africa
for producing this relevant report for the people in
Africa. The report looks at various opportunities and
existing blockchain projects that offer interesting
solutions within Africa.
Africa is faced with so many challenges like poor record keeping, which I believe can be easily
solved by the blockchain, It is such technologies that we need to take to the masses. Block-
chain technology can also be useful in neutralizing the political instability that has hampered
Africa’s. The ability of the blockchain ledger, crypto-currencies and tokens go beyond financial
ecosystem and can be deployed in Agricultural, Energy and Governance sectors.
You can follow Alakanani on the following platforms:
Website: www.satoshicentre.tech
Email: a.itireleng@satoshicentre.tech
Twitter: @BitcoinLady
2
APPRECIATION
We would like to take this opportunity to thank all those who have supported BitHub
Africa from its inception in December 2015. They include our clients, our partners and our
family, friends and fans.
Special thanks to Kakoba our community lead, Kendi our associate researcher, Mbuthia
our associate writer, Njahira who compiled feedback from our peer review, Curtis and the
Brand Africa team for their excellent design services.
More special thanks to all our interviewees and all Bitcoin and blockchain Innovators es-
pecially Satoshi Nakamoto for the great promise of the blockchain opportunity.
We stand on the shoulders of giants.
This publication is dedicated to the African woman who has for a long time carried the
struggle on her back. She is our hero!
3
TESTIMONIALS
We asked some friends and colleagues in the Crypto-currency space to peer review this
publication and here are some of the testimonials we got.
Kristine Stone, Head of Partnerships Coinbase
The Blockchain Opportunity is a clear picture of the disruptive solutions at the finger tips of Af-
rica. Evaluating trends and data John provides a holistic view of opportunities and challenges
blockchain technology will face. In this stimulating book the reader is provided a window into
how blockchain will change the way we live not only in Africa, but the world at large.
Max Kordek, Founder and C.E.O Lisk

The blockchain opportunity report by BitHub Africa is the first step towards a broader market
adoption of blockchain technology in Africa. We are happy that Lisk is right in the middle of this
movement and looking forward to strengthen the local communities with the Lisk ecosystem.
Sean Moroney, Chairman AITEC Africa
BitHub Africa is doing great work advancing the growth of Blockchain technology across Africa.
The blockchain opportunity report provides a lot of insight on emerging blockchain technolo-
gies that offer interesting solutions to many challenges across Africa.
Sinclair Skinner, Founder BitMari
An illuminating piece on cutting edge blockchain technology like Bitcoin that will emancipate
previously financially excluded people like the African farmer.
We would love to hear what you think about our first publication. Come back and Send us
your testimonial http://bithub.co.ke/contact-us.
4
PAYMENT & ROADMAP

If you have not already made payment and you have derived value from our work, do tip
us any amount you wish through the quick response (QR) Code or Bitcoin address listed
below. We trust our research has helped you get ahead of the curve as a blockchain enthu-
siast. Proceeds go to funding our roadmap, which includes the following activities:
1. Connecting as many innovators and developers to mentors and investors through

our platform and meet-ups across Africa.
2. Implementing local blockchain research and development.
3. Hosting nodes for the most relevant blockchain projects.

4. Incubating startups at our hub in Nairobi.
Read more here http://BitHub.co.ke/roadmap.
Your purchase will enable you to receive subsequent revisions of this edition and gain
access to our community resource here: http://BitHub.co.ke/my-account.
1CucinVK34txDn6Lxp1VjTpzi2J8FLXxe7
If you wish to pay via Paypal, Credit card, M-Pesa or any other available payment gateway,
kindly visit the report landing page http://opportunity.BitHubAfrica.com.
5
DISCLAIMER
BitHub Africa strives to ensure that all information posted on this platform is accurate and
updated. We do not accept liability for use of technologies highlighted in this publication
or featured on our online platforms. The reader is advised to do their own due diligence
on safety, economic model and local regulatory compliance on platforms, organizations
and entities featured in the report. This publication does not offer investment advice; on
the contrary, we strive to accurately present facts and opinions and according to the re-
search undertaken by our team.
The reader should note that most of the technologies covered in the book including Bit-
coin are still in the experimental stage and they represent high-risk ventures at this stage.
The aim of the report is to provide a technical analysis of the technologies where infor-
mation is available, and to stimulate thinking based on the ideas and promise these plat-
forms offer.
This publication will be updated in subsequent editions with updates on the progress of
the featured projects.
This publication is dated 26th February 2017 and revokes previous versions that were peer
reviewed and which are numbered master copy 001 – 007.
This publication is covered by our terms of service and privacy policy available on our
website at this url http://BitHub.co.ke/disclaimer.
6
TABLE OF CONTENTS
Foreword........................................................................................................................................................... 1
Appreciation.................................................................................................................................................... 2
Testimonials...................................................................................................................................................... 3
Payment & Roadmap.................................................................................................................................... 4
Disclaimer......................................................................................................................................................... 5
BitHub Africa Profile...................................................................................................................................... 7
Editor’s Profile.................................................................................................................................................. 9
Executive Summary.....................................................................................................................................10
Literature Review & Research Methodology......................................................................................12
Chapter 1: A Brief History Of Bitcoin & Blockchain.........................................................................19
Chapter 2: Micro-Payments Myth or Reality......................................................................................36
Chapter 3: Decentralized Asset Management..................................................................................46
Chapter 4: Decentralized Privacy..........................................................................................................67
Chapter 5: Decentralized Blockchain Applications........................................................................78
Chapter 6: Decentralized E-Commerce...............................................................................................95
Chapter 7: Decentralized Storage Solutions.................................................................................. 109
Chapter 8: Decentralized Identity Management.......................................................................... 117
Chapter 9: Decentralized Communication Apps.......................................................................... 122
Conclusion................................................................................................................................................... 128
References.................................................................................................................................................... 131
Table of Figures.......................................................................................................................................... 133
Glossary of Terms....................................................................................................................................... 136

7
BITHUB AFRICA PROFILE

BitHub Africa is a commercial blockchain accelerator that is driving the adoption of block-
chain technology and solutions across Africa.
Our focus is incubating the development of innovative and relevant solutions using block-
chain technology. We believe that blockchain solutions will make substantial contribu-
tions to rethinking and improving existing structures in the following areas:
1. Legal and Governance services
2. Identity Management
3. Data Management and Storage

4. Financial Services
5. Internet of Things (IoT)
BitHub Africa is bringing together expertise to drive the development and adoption of
blockchain technologies with a focus on Kenya and consequently the rest of Africa. This is
because we believe Kenya is the hotbed of innovative and disruptive financial technology
based solutions e.g. M-Pesa. We also believe blockchain solutions will play a significant
part in helping Kenya attain its Vision2030 goals and become a world leader in adopting
of technology.
We provide analytical, development, maintenance and support services for organizations

interested in deploying blockchain solutions. BitHub Africa will also host the best block-
chain developers at our hub in Nairobi creating the best pool of expertise in this area
across the African continent.
BitHub Africa is registered as a business in Kenya and is currently trading as Space Kenya
Networks Limited, which was registered as a Company in 2010.
Space Kenya has also been involved in a number of projects that involve the analysis of
the social impact of ICT in Africa as well as projecting possible growth areas of ICT based
solutions for the continent. In this regard, Space Kenya was awarded the Vision2030 ICT
award 2011 for Innovation in youth and gender sector by the Kenyan Government for our
SMS product.
8
Today Space Kenya is positioning itself as one of the best firms in developing and im-
plementing innovative digital technologies and solutions in Kenya and across the rest
of Africa. Visit BitHub Africa at http://BitHub.co.ke and Space Kenya Networks Limited at
http://SpaceKenya.com.
Follow us on:
¾¾Email: info@bithub.co.ke
¾¾Website: http://www.bithub.co.ke
¾¾Facebook: http://facebook.com/bithubafrica
¾¾Twitter: http://twitter.com/bithubafrica
¾¾LinkedIn: https://www.linkedin.com/company/bithub-africa
¾¾Reddit: https://www.reddit.com/user/bithubafrica
¾¾Android: http://android.bithubafrica.com
¾¾Slack: http://slack.bithubafrica.com
9
EDITOR’S PROFILE
John Karanja is the founder of BitHub.Africa and
is also a director at Space Kenya Networks limited,
which is a company he co-founded in 2008 that pro-
vides workspace for businesses and startups oper-
ating in Nairobi. Notably, John is also the founder of
Whive.com a SMS based social media platform for
Africa. Whive.com was a winner at the Pivot 25 Mo-
bile technology competition in 2011. The Kenyan
Government awarded the Vision2030 ICT Award
2011 to Whive for Innovation in youth and gender Sector. Today BitHub Africa is imple-
menting the Whive project and is seeking to assist businesses scale their products and
services using a decentralized social engine powered by blockchain technology.
John has an MSc in Political Sociology from the University of Oxford, England (2010) and
a Bachelor of Business and Information Technology from Strathmore University, Kenya
(2006). Throughout his career, he has witnessed how African countries are leapfrogging
legacy systems like banks and landline telephony through the adoption of mobile money
platforms like M-Pesa and the Internet. John believes that Bitcoin and blockchain technol-
ogies can provide much needed solutions like cross border money transfer or microloans.
John in recent articles has stated that Bitcoin is not a panacea to African problems but a tech-
nology that drives down costs with respect to transfer of value across all our borders. It is opt-in
and as such allows for open and frictionless innovation. As smartphone technology becomes
more affordable, we should expect the potential for Bitcoin and blockchain solutions to dis-
rupt incumbents to increase especially in Africa where adoption of mobile technology is high.
You can reach John directly through the contacts below:
Web: http://JohnKaranja.com
Twitter: @KaranjaJohn
LinkedIn: https://ke.linkedin.com/in/johnkaranja
Email: karanja@BitHub.co.ke
10
Executive Summary
Africa is leapfrogging the adoption of traditional legacy banking and payments systems in
use in much of the developed world through fast adoption of mobile and internet based
technology. Disruptive blockchain technology such as Bitcoin has great potential in cre-
ating efficiency and disrupting traditional mechanisms for international trade, resource
management, and governance where current transaction costs are high due to existing
bottlenecks such as poor infrastructure, corruption, and mismanagement.
However, huge challenges remain which create obstacles in the adoption of these innova-
tive technologies to solve these pressing problems.
Digital currencies and in particular crypto-currencies in general, have evolved rapidly

during the past eight years since the advent of Bitcoin; the world’s first truly decentralized
crypto-currency invented in the year 2008 by an anonymous person or entity known as
Satoshi Nakamoto. Bitcoin (Satoshi 2008), has forever revolutionized the way the transfer
of value occurs between two or more parties who do not trust each other.
The space continues to evolve rapidly with hundreds, perhaps thousands of crypto-cur-
rencies being created every day, most of which are either irrelevant or scams that offer
little or no value to society. We at BitHub Africa have spent the past six months researching
and looking into different crypto-currencies and platforms to determine which ones offer
either a unique value proposition or innovative solutions to common placed problems
that exist in Africa.
11
THE BLOCKCHAIN OPPORTUNITY - EDITION 1 - BITHUBAFRICA
This report looks at the prevalent situation in Africa concentrating on advances made in
the financial space in countries such as Kenya. The mobile money platform M-Pesa has
had a profound effect on the economy of the East African nation transmitting about 40%
of its gross domestic product (GDP) annually. Indeed mobile money has now become a
platform for innovation with third party applications such as micro-lending and insurance
built on the M-Pesa platform.
We examine the advent and evolution of peer-to-peer technologies that underlie the de-
centralized nature of promising blockchain solutions in the privacy, e-commerce, identity,
storage, communication, and financial arenas. In particular, crypto-currencies and tokens
offer huge potential in developing African economies where new business models facili-
tated by micro-payments promise to monetize startups in sectors such as entertainment
and even smart energy. These technologies are mainly developed in an open and trans-
parent manner with thousands of developers across the world using and contributing to
these projects. There is an opportunity for technology enthusiasts and entrepreneurs to
experiment with new technologies and solve many problems on the continent today.
Our focus is to analyze the relevance of these projects in the African context and thereby
offer guidance to developers, researchers, entrepreneurs, investors, and enthusiasts in this
new blockchain space.
We look forward to the reader’s feedback and participation in the ongoing discussion of
The Blockchain Opportunity on our online platform – http://BitHubAfrica.com.
12
EXECUTIVE SUMMARY
Literature Review &

Research Methodology
Ever since the advent of Bitcoin the world’s first decentralized crypto-currency and blockchain
platform there have been hundreds and perhaps thousands of crypto-currencies or blockchain
platforms that have been created all over the world. Most of these projects are created with the
sole purpose of scamming or siphoning speculators of their hard-earned money. However, there
are some projects that have innovated interesting solutions using blockchain technology. We
sought out to establish which the projects would be useful with problem solving within the Af-
rican ecosystem and also developing various opportunities as well. We reviewed some of the
most developed blockchain platforms as well as surveyed developers working in these projects.
A. Project Review
In total, we reviewed 16 of the most interesting blockchain projects that have been exis-
tence for at least 9 months and that also scored the highest upon appraising them based
on the following aspects:
I. Team
We looked at the collective team experience of each crypto-currency project as well as the
leadership and governance mechanism.
II. Innovation
We looked at the unique value proposition of the crypto-currency project, specifically
how it adds value or solves any particular problem.
13
III. Coin/Token Specifications

We have looked at the number of coins issued and the inflation rate of newly issued coins
or tokens.
IV. User Experience

We have tested the wallets and applications built by the crypto-currency projects where
possible, keeping in mind that it is still very early days for many of the projects.
V. Target Market
We looked at the size of target market and the solution being provided by each cryp-
to-currency project and if these markets would grow in the future.
VI. Potential
We looked at the potential some projects have immediate use cases and others have long-
term outlooks so we assessed the projects based on this criteria.
B. Resources
We also surveyed 17 project leads with the use of a questionnaire, which has not been done
before. There are not many publications available on the crypto-currency projects. Therefore, we
have relied on their websites, blogs, and social media platforms to crowd-source information. We
have referenced sources of information for every project. We have also endeavored to test all the
project software we could find to ascertain the claims of the project founders. Where we found
no software, we have given justification why we believe the project to be innovative.
I. Featured Crypto-currencies/Platforms/Applications
• Bitcoin • Steem
• Ethereum • Factom
• Dash • Syscoin
• Bitcoindark • Lisk
• NXT • Bitshares
• Ardor • Openbazaar
• SIA • Parkbyte
• Supernet • Waves platform
14
LITERATURE REVIEW & RESEARCH METHODOLOGY
II. Non-Blockchain Case Studies

• M-Pesa and M-Shwari
III. Non-Blockchain Mentions

• Micro-Lending: Tala, Branch.co
• Payment Platforms: Kopokopo, Lipisha, Pesapal, Jambopay, iPay
• Ecommerce Platforms: Jumia, Crowdpesa
C. Blockchain Opportunity Feasibility Study 2016

Research Objective
At the beginning of the year 2016, BitHub Africa conducted a feasibility study on how
blockchain technology like Bitcoin could be harnessed to create new opportunities to
solve problems in Africa. Our objective was to ascertain if indeed blockchain technology
was relevant in solving some of the challenges faced in Kenya and by extension Africa. We
also sought to determine if the technology is associated which certain risks of adoption.
This was particularly important given the decision by Kenyan Central Bank (Central Bank
of Kenya 2015) to issue a warning against Bitcoin in December 2016. We surveyed 96 peo-
ple who are already in the African Bitcoin Community using a questionnaire. What follows
is a summary of the feasibility study we undertook in December 2015.
Country (96 responses)
Kenya
South Africa
92.7 % Democratic Republic of Congo
Uganda
Tanzania
Figure 1: Pie chart depicting distribution of African countries surveyed.

15
As shown in figure 1 above 92% of our respondents were from Kenya. This was because of
Kenya being our initial focus as most of our contacts are located there.
However, we were able to get some significant responses from the following countries:
• Democratic Republic of Congo • Tanzania

• South Africa • Nigeria
• Uganda
Gender (95 responses)
10.5 %
Male
89.5 % Female
Figure 2: Pie chart depicting gender distribution between male and female categories
As shown in figure 2 above about 89.5% of the respondents were male with 10.5% being female
showing the huge gender divide in the blockchain sector today. This observation is not unique
to Africa as there is a similar adoption rate of this technology in other regions of the world.
16
LITERATURE REVIEW & RESEARCH
METHODOLOGY
Interests (96 responses)

FinTech Services —37 (38.5%)
ForEx —27 (28.1%)
Digital Currencies —56 (58.3%)
Academic Resea... —23 (24%)
Technology Innov... —50 (52.1%)
Startups —65 (67.7%)
Altchains & Altco... —18 (18.8%)
Intellectual Prope... —23 (24%)
Cultural Rights —10 (10.4%)
Governance Solu... —23 (24%)
BioTechnology —13 (13.5%)
Mining - Crypto C... —29 (30.2%)
Banking Services —32 (33.3%)
Gaming —20 (20.8%)
MultiMedia - Mus... —12 (12.5%)
Notary Services —7 (7.3%)
Blochchain Accel... —36 (37.5%)
Other —8 (8.3%)
0 10 20 30 40 50 60
Figure 3: Bar chart depicting interests of surveyed enthusiasts
Figure 3 above shows that the majority of the respondents i.e. 67.7% and 58.3% of the re-
spondents are interested in startups and digital currencies respectively. This suggests that
startups could be looking into monetizing their ideas or businesses using digital currencies.
The survey showed 52% of the respondents are interested in technology innovations per-
haps. Approximately 38.5% and 37.5% of the respondents are interested in both Financial
Technology (FinTech) service. Fintech services have been growing rapidly in Kenya. The
sector has had substantial success in Kenya spearheaded by M-Pesa a mobile money pay-
ment service used by majority of Kenyans for local money transfer and bill payment.
Banking services and mining had 33% and 30% respectively of the respondents. This is not
surprising as there is substantial awareness of key aspects on Bitcoin technology as pertain-
17
ing it being used for storage of value as well as rewarding miners who keep these distribut-
ed networks running. Indeed, there are a few miners in Kenya’s Bitcoin community.
Notary services and cultural rights have the least amount of interest at 7% and 10% re-
spectively. This goes to show that it is still not clear from an African perspective how block-
chain technology can be utilized in this area.
Here are some of the comments on Bitcoin by the respondents.
• Disruptive technology • Simply awesome

• This is revolutionary • The future of online trade
• It’s the future of digital currencies • It is the next big thing
• Internet back in 95 • Fantastic
In conclusion, the respondents from this survey clearly lean towards blockchain technology
providing opportunity in disrupting businesses mostly in the financial sector and offering new
growth for startups across the region. While the respondents sample is small we can conclude
that adoption of this technology is quite feasible. This is particularly the case in Kenya.
D. Blockchain Opportunity Survey

BitHub Africa undertook a qualitative study using a survey as the research tool where we in-
terviewed 17 project leads from the shortlisted blockchain and crypto-currency platforms.
18
LITERATURE REVIEW & RESEARCH
METHODOLOGY
Areas of Concern for your Project (14 responses)

FinTech Services —10 (71.4%)
ForEx —3 (21.4%)
Academic Resea... —5 (35.7%)
Startups —12 (85.7%)
Intellectual Prope... —6 (42.9%)
Cultural Rights —3 (21.4%)
Governance Solu... —8 (57.1%)
BioTechnology —3 (21.4%)
Mining - Crypto C... —5 (35.7%)
Banking Services —8 (57.1%)
Gaming —5 (35.7%)
MultiMedia - Mus... —8 (57.1%)
Notary Services —4 (28.6%) —9 (64.3%)
Blochchain Accel... —9 (64.3%)
Other —4 (28.6%)
0 1 2 3 4 5 6 7 8 9 10 11 12
Figure 4: Bar chart depicting interests of surveyed blockchain project leads
The results from Figure 4 shows that 85.7% of the project leads are interested in startups
probably because many are building blockchain platforms that allow startups to build
applications. These applications extend the functionality of the platforms and therefore
help in driving adoption.
Additionally, 71.4% of the projects leads are interested in the financial technology (Fin-
Tech) sector as this is perhaps the sector where most disruption can occur because of
blockchain technology. Interestingly, 64.3% of the respondents are also interested in the
Internet of things sector where there is room for innovation especially with micropay-
ments, which we shall discuss in this report.
With respect to multimedia, banking, and governance sectors 57.1% of the respondents
were interested in blockchain technology, while 35.7% of the respondents shared similar
interest in mining, gaming, and academic research. Forex trading registered the least level
of interest at 21.4%, which is interesting considering that crypto-currencies are also trad-
ed by speculators many of whom have a Forex background.
19
CHAPTER 1
A Brief History Of Bitcoin

& Blockchain
Blockchain is the distributed open ledger technology that allows for the permanent stor-
age of transactions through the use of cryptographic tokens known as crypto-currency.
Every crypto-currency claiming to be decentralized must primarily be based on block-
chain technology and conversely any blockchain technology that claims to be decentral-
ized must have a mechanism to ensure that transactional records on its distributed ledger
are not altered or removed. This is achieved through tokenization, which provides incen-
tives for those nodes or miners that provide security.
Blockchain technology offers distinct advantages over database technology as it provides

for trustless recording of transaction data without relying on an existing intermediary like
a bank in the case of financial transactions.
Blockchain technology is becoming quite popular with Banks and other organizations
looking for a way to decentralize storage of information away from traditional databases
like the dominant sequel (SQL) database technology.
1.1 Key Blockchain Concepts

1.1.1 Proof-of-work (POW)
Proof-of-work (Satoshi 2008) is data which is difficult, costly and time-consuming to pro-
duce but easy for others to verify and which satisfies certain requirements. With regard
to crypto-currencies like Bitcoin producing a proof-of-work utilizes electricity and com-
20
A Brief History Of Bitcoin & Blockchain
puting power to solve complex mathematical problems. A hashcash algorithm to solve

a puzzle based on certain difficulty established by the network’s hash power and miners
solving the problem.
1.1.2 Proof-of-stake (POS)

Proof of stake (Andrew 2015) is a proposed alternative to proof of work. Like proof-of-work,
proof-of-stake attempts to provide consensus and double spend prevention. This protocol
secures blockchain by allowing nodes with the highest stakes more rights to secure the
blockchain and therefore earn more tokens as rewards. The logic here is the nodes with the
highest stakes have the most interest in securing the blockchain as they have most to lose
if the blockchain is successfully attacked. In proof-of-stake an attacker will have to accumu-
late more than 51% of the coins or tokens to control the blockchain. Though theoretically
possible, it may be too expensive to do so as the stakeholder would also be the biggest los-
er having spent resources to control the blockchain and then make it valueless. Numerous
crypto-currencies use the proof-of-stake protocol quite successfully as few of them have
been successfully attached. Many variations of proof-of-stake exist, namely:
• Delegated proof-of-stake used by Lisk and Bitshares featured in this publication.

• proof of Importance used by NEM crypto-currency.
The Blackcoin crypto-currency has been at the forefront in securing proof-of-stake with
their 2.0 upgrade that has been adopted by other crypto-currencies.
1.1.3 Proof-of-work vs proof-of-stake

Due to a tragedy of the commons there is the perception that proof-of-work systems can
lead to low network security. This has led to the majority of crypto-currencies adopting a
proof-of-stake system (Carter 2014). The main challenge with proof-of-work crypto-cur-
rencies like Bitcoin where the payout becomes increasing smaller for Bitcoin miners. This
means that there is less incentive to avoid a 51% attack. In contrast, according to Carter,
proof-of-stake systems makes any 51% attack more expensive. Anyone would have to
own a majority of the coins to double spend and attack the network. The person is likely
to lose a lot due to being the largest stakeholder hence making the attack irrational.
However, proof-of-stake systems without mining find it difficult to create a communi-

ty around your coin. Most coins that adopt proof-of-stake have a proof-of-work period
where the coins are mined to build a community.
21
1.1.4 Smart Contracts

Smart contracts1 are computer protocols that facilitate, verify, or enforce the negotiation
or performance of a contract, or that make a contractual clause unnecessary. Smart con-
tracts can also have a user interface and often emulate the logic of contractual clauses.
Proponents of smart contracts claim that many kinds of contractual clauses may thus be
made partially or fully self-executing, self-enforcing, or both. Smart contracts aim to pro-
vide security superior to traditional contract law and to reduce other transaction costs
associated with contracting.
Blockchain offers unique opportunities to provide new structural frameworks to provide

transparency into property ownership and exchange through a public disturbed ledger
accessible by a country’s citizens or even a company’s shareholders. This can be imple-
mented through a smart contracting platform like Ethereum, which is a public blockchain
program that has some programmable transaction functionality. It uses a programming
language that makes it possible for any developer to build and publish next generation
distributed applications. The system has a centralized machine capable of providing peer-
to-peer contracts. This is done using crypto asset known as Ether. The system runs system-
atically as programmed without any possibility of down time, failure, censorship, fraud or
any third party censorship using apps that run on a custom built blockchain with powerful
infrastructure that can move the value around and represent the ownership of property.
This enables developers to do various things like creating markets, storing lists of debtors,
and moving funds according to the instructions already programmed without involving
middlemen. In a traditional architecture, every app has its own servers that run code in
isolated silos, hence making sharing of data difficult.
1.1.5 Dissecting Bitcoin

Bitcoin is the world’s first decentralized or more accurately distributed digital currency on
the Internet. Bitcoin is also the first successful implementation of blockchain technology,
which is essentially a public open ledger of transactions happening within the distributed
network of nodes (computers) that makes up the Bitcoin network. Bitcoin allows for on-
line payments between parties without the need of a financial institution (Satoshi 2008),

1
Read more: https://en.wikipedia.org/wiki/Smart_contract
22
Figure 5: Screenshot capture depicting a Kenyan user’s Android Bitcoin wallet
Bitcoin the Platform has four key distinct characteristics.
1. Bitcoin the blockchain, which is the open ledger maintained and safeguarded by
the distributed network of miners.
2. Bitcoin the currency, which is the digital token used for transactions and to reward
miners who safeguard the network and blockchain.
3. Bitcoin the payment network/protocol used to carry bitcoin currency transactions

across the network.
4. Bitcoin the software that is open source and allows for extensible and evolution of
the platform in the future.
Indeed Bitcoin the currency is the first successful application of Bitcoin the platform.
Bitcoin as the first decentralized crypto-currency has the largest market capitalization of
over $10 billion.
Today, many companies use Bitcoin in their profit making activities such as:
• Bitcoin exchanges provide currency conversions for fiat to Bitcoin and vice versa.
• Payment service providers allow merchants to receive Bitcoin from buyers by pro-
viding plugin tools.
• Wallet providers allow Bitcoin users to store the private keys of their bitcoins.
• Venture capitalists have invested over 1 billion U.S. dollars into the Bitcoin ecosys-
tem in recent years.
23
• Peer-to-peer lending providers allow borrowers to borrow from lenders and is a

growing industry.
• Miners and cloud mining platforms process transactions on the Bitcoin network.
• Exchange traded funds (ETFs): There are two Bitcoin ETFs set to launch in the Unit-
ed States formalizing the digital currency in the financial sector.
• Over the counter (OTC), traders provide manual trading services for Bitcoin to local
fiat currencies.
• Gambling websites have benefitted immensely from Bitcoin, as it is easy to inte-
grate on their online websites.
• Micropayments providers allow for small sized transactions because Bitcoin fees
are so low.
Affiliate marketers are using Bitcoin to create incentive for marketers and sales agents.
Payment disbursements are easier due to the ease at which the digital currency is trans-
acted on the internet. You can see an example here http://bithub.co.ke/affiliates/.
Prediction markets and betting is now possible using Bitcoin as such applications are easy
to build and scale.
Figure 6: Image depicting a generated Bitcoin paper wallet with a public and private Key
24
Bitcoin has several advantages over fiat currencies which include:
• Censorship resistant: Bitcoin payments can be made from one wallet to another
directly without needing permission from any third party.
• Freedom of payment: It is easy to send money anywhere and at any given time
including across borders and on bank holidays.
• Control and security: Bitcoin users have total control over their transaction. Mer-
chants do not need to charge extra to pay payment processing fees. Bitcoins can be
easily and safely backed up and encrypted to protect the money.
• Transparency: The Bitcoin blockchain is public and transactions can be verified to
have happened quite easily.
• Low fees: Bitcoin transactions have low fees, users can however include higher
fees in order to process the transactions faster.
• Immutability: Transactions cannot be reversed. This is useful for merchants who
lose money to fraudulent and reversed transactions.
The following are the disadvantages of Bitcoin:
• Complexity: Bitcoin is hard to use even for developers as it is dependent on a low

level programming language.
• Lack of both awareness and understanding: Very few people across the world
have heard about Bitcoin and then needs to be some evangelizing about Bitcoin,
which is what we have set out to do at BitHub Africa.
• Risk and volatility: Bitcoin is a risky digital asset to trade because of its relatively
high volatility mostly due to a small market cap and comparably low liquidity as
compared to traditional fiat currencies.
• Immature technology: Bitcoin tools and application layers are still under devel-
opment. So there is some time needed before its applications will go mainstream.
Indeed, there are efforts to scale the platform using efficiency upgrades such as
Segregated Witness (Segwit) and lightening networks which aim to increase the
amount of transactions happening within a block and network respectively.
1.1.5.1 Bitcoin Mining
Bitcoins are created as a reward for payment processing work where users offer their com-
puting power to verify and record payments in a ledger. This process is referred to as min-
ing. It is possible for sellers to sell and receive Bitcoins for optional transaction fee.
The units of account in Bitcoin are commonly represented by the symbols BTC and XBT. The
smallest unit is satoshi. One unit of Bitcoin called a Satoshi represents 0.00000001 Bitcoin.
25
Today thousands of miners and nodes record and ensure transactions happening on the
blockchain are immutable and updated correctly. The miners are rewarded with digital
tokens known as bitcoins.
1.1.5.2 Bitcoin Halvening

This is an event that happens every four years as defined by the Bitcoin protocol. It last
happened on Saturday 9th July 2016 where the supply of Bitcoin mined drops by half.
The last halvening dropped the supply from 25 bitcoins every 10 minutes to exactly 12.5
bitcoins every 12 minutes. This also means that the Bitcoin inflation rate dropped signifi-
cantly from about 10% to about 7%.
This process ensures that bitcoins become more and more scarce with each passing day
as the supply of coins entering the market reduce over time.
1.2 Bitcoin and Blockchain in Kenya

Bitcoin the World’s first and most popular digital currency has seemingly reached a cross
road with a huge debate on whether it will become a settlement payment layer for the
Internet or truly scale into a global peer-to-peer payment platform competing with the
likes of VISA and Mastercard. Furthermore, most altcoins and blockchain solutions have
been unable to articulate a unique value proposition pertaining to problem solving in
their respective market segments.
Bitcoin in Kenya has in the recent past generated a lot of controversy with the Central
Bank of Kenya (CBK) issuing a public notice warning against the use of Bitcoin as a curren-
cy within the country (Central Bank of Kenya 2015). While currency regulation and mon-
etary policy is within the purview of the Central Bank, it is important to dig deeper into
what could be the most revolutionary technology of our age and how best we can move
forward with ensuring Kenya and indeed the African continent exploits fully the opportu-
nity that is now within our grasp.
Make no mistake Bitcoin and its underlying blockchain technology will disrupt the current
financial order that currently has banking institutions sitting at the top of the food chain.
Incumbents who fail to understand and implement strategies risk being rendered irrele-
vant akin to the manner in which Kodak was rendered irrelevant by the advent of digital
cameras. Indeed, Kenyan banks have already had a taste of this with the arrival in 2004 of
M-Pesa the mobile money platform that revolutionized the way Kenyans transfer money
and pay for services within the country. Already it is estimated that 40% of Kenya’s gross
26
domestic product (GDP) is transacted on the M-Pesa platform. Banks and other financial
institutions will need to evolve once again to keep up with this global trend.
Bitcoin the World’s first decentralized digital currency based on cryptography is quickly
positioning itself as the Internet of Money; a platform that will allow for instantaneous,
immutable and secure exchange of value virtually for free and at any given time.
African regulators should take time to assess the potential of blockchain technology to
reduce costs and enhance transparency within multiple sectors of the economy. For ex-
ample blockchain technology could eventually provide mechanisms to seal corruption
loopholes and track illegal activity such as money laundering at very low costs. The Cen-
tral Bank of Kenya (CBK) has a constitutional role to manage the country’s fiscal and mon-
etary policy and as such regulating entities that utilize Bitcoin the currency is well within
their role. This is important to enhance safeguards that ensures consumer protection, pre-
vents money laundering and also monitor transactions for any terrorist activity. This can
be done without stifling the technological potential of Bitcoin, the protocol that is already
self-regulating and trustless.
Indeed, blockchain technology has in the recent past become quite popular with western
banks and financial institutions seeking a way to decentralize storage of information away
from traditional databases like the dominant SQL technology. Indeed a number of banks
in the United States have formed a consortium called R3 CEV that intends to develop its
own intra-bank blockchain protocol for secure settlement of money transfers between
themselves (Yessi 2015). The World Economic Forum (WEF) in Davos recently hailed the
blockchain technology as a revolutionary platform that will remove costs associated with
intermediaries in the remittance space, saving the consumer billions in transfers and other
associated costs.
Other industries such as the music industry can also benefit from blockchain technolo-
gy by creating a distributed ledger that allows for the permanent recording of copyright
of music created by artistes for both tracking and collection of royalties and purchase
payments of these work of art. Such solutions can help resolve problems associated with
existing institutions such as the Music Society of Kenya (MSCK) which artistes claim is not
a transparent institution and is failing to disburse royalty payments to member artistes.
Furthermore, blockchain technology will also be critical in addressing corruption in the
land sector. Issues such as duplication of title deeds as well as unlawful transfer of land
properties will become difficult if not impossible should a decentralized and distributed
ledger that is public be used to permanently record these transactions. Existing central-
27
ized systems allow intermediaries to tamper with records as their databases can be in-
terfered with quite easily. In this regard, we shall look at some potential solutions in this
publication.
Bitcoin and its underlying blockchain technology therefore offer huge promise in solving
many problems across Africa by creating trustless systems that remove the power from
centralized intermediaries that could otherwise be corrupted or influenced by power. Af-
rican countries have already been able to leapfrog legacy systems like banks and landline
telephony through the adoption of mobile technologies like M-Pesa and the Internet as
well. Bitcoin and other blockchain technologies are no different provided they provide a
much needed solutions like cross border money transfer or microloans. These technolo-
gies can be deployed across many sectors to reduce costs and enhance efficiency. People
should not look at Bitcoin as a currency alone. It is only its first application similar to the
manner in which email was the first pervasive application of the Internet, which has since
developed to include other applications such as web, mobile and even social media ap-
plications.
In conclusion, Bitcoin and other blockchain applications are creating the Internet-of-Value
(IoV) where individuals will become even more empowered. Prudent regulation that pro-
tects consumers by ensuring third parties that build solutions on top of this technology
do not act unfairly is needed. As smartphone technology becomes cheaper, we should ex-
pect the opportunity for Bitcoin and blockchain solutions to disrupt incumbents to grow
not just in Africa but worldwide as well.
Kenya and Africa, once again have the opportunity to lead World in utilizing innovative
and disruptive blockchain technologies such as Bitcoin.
1.3 Growth of Peer-to-Peer Bitcoin Trading

As Bitcoin has become more popular amongst early adopters we have seen the growth of
peer to peer trading on peer to peer trading platforms like localbitcoins.com.
Peer-to-peer Bitcoin exchanges allow buyers and sellers to trade with each other by mediat-
ing disputes and holding escrows for the Bitcoin being traded. For example localbitcoin.com
holds Bitcoin in escrow until the buyer sends fiat currency to the seller of the Bitcoin.
The buyers and sellers are rated according to their reputations based on criteria such as
trustworthiness and speed of trading. Sellers of Bitcoin make profits by adding a margin.
Sellers can undercut each other by setting lowers prices giving the buyers the opportuni-
ty differentiate sellers based on price.
28
Figure 7: Bar chart depicting growth of Bitcoin trading in Kenya on Localbitcoins.com
Figure 72 above depicts the growth of peer-to-peer Bitcoin trading in Kenya since 2013. What is
observed from the graph is an exponential growth of weekly Bitcoin trading on local bitcoins
with a peak of KES 10,000,000 which is about $100,000 traded in the first week in July 2016.
Figure 8: Bar chart depicting growth of Bitcoin trading in South Africa on Localbitcoins.com

2
Read more: https://coin.dance/volume/localBitcoins/KES
29
Figure 83 above shows the growth in Bitcoin trading in South Africa since 2013, the vol-
ume increase is similar to Kenya as Bitcoin continues to become popular around the
World. What is observed from the graph is the weekly Bitcoin trading reached a peak of
26,000,000 Rand in March 2016. The trading subsequently subsided after March probably
due to the growth of Ethereum trading in place of Bitcoin trading.
As depicted from the volume charts it is apparent that trading of Bitcoin has been grow-
ing rapidly in Africa since the invention of blockchain technology. This presents new chal-
lenges and opportunities for creation of a new robust economy based on digital curren-
cies, which we shall examine in this publication. It may also be worthwhile to consider
what use cases are being driven by trading of Bitcoin at increasingly large scales especially
considering concerns with the potential of enabling illegal activities and potential money
laundering.
1.3.1 Using Localbitcoins.com safely
Figure 9: A screenshot of the Localbitcoins.com Website

3
Read more: https://coin.dance/volume/localBitcoins/ZAR
30
Localbitcoins.com is a peer-to-peer service that allows people to connect with each other
to buy and sell bitcoin ‘in person’. This term ‘in person’ is a broad term that doesn’t neces-
sarily mean that the transacting parties have to be in the same geographical location or
space-time continuum. However, it is not to say that they cannot. First, this is wonderful
and sticks to the esprit de corps of the Bitcoin world. The advantages of this are immense.
You should know that unlike online exchanges, there is no waiting period. Your bitcoins
are released instantly after the exchange.
However, I feel strongly that there are things that you need to know: One, exchanging
in person provides more protection of personal information since one does not have to
share delicate private information, as you would do so to online exchanges. Additionally,
meeting with strangers to exchange money is not safe, if you haven’t a clue on mitigating
the risks associated with it. It is also possible to transact on Localbitcoins with traditional
payment methods like your bank account, Paypal and even mobile money.
There are some basic things that will help guide you in starting up and thriving with Lo-
calbitcoins, which are:
While like any other money-related platform, you need to sign up for account. It takes
just a few minutes for a very ‘present-minded sign-up’, all that is needed is a password,
username, and email. Now what I mean with ‘present-minded sign-up’ is a high-level of
caution and detail-orientation when signing up to anything, especially when it comes to
money. Then what you need to know next is that there are several methods to buy or sell
bitcoins on Localbitcoins.
The easiest way is contacting people who have already posted ad (Yes, people do post
ads ascribing to it the amount of bitcoins that they are selling or buying and at what rate).
Once you understand that, go ahead and click on the Sell or Buy tab at the top of the page,
whichever you are engaging in, and this will send you to a page with numerous people
looking to transact. One can customize what they are looking for subsequently, but they
start you off with bids and asks from people in your local area. Once you locate a trade that
interests you, click on the ad and let them know how much you want to sell or buy. For
instance, if you are selling bitcoin, you will need to fill in your Localbitcoins wallet with the
amount you wish to sell, before you are able to contact the buyer. Notably, buyers don’t
need to load any bitcoins.
Afterwards, through LocalBitcoin’s chat function, you can arrange where to meet (if you
must) and what time to do the exchange. After deciding on a place and time, head to the
place at the correct time and location. The person exchanging bitcoins will need to sign
31
into his Localbitcoins account, and click on the trade, accessing their dashboard. There are
several ways to do it, but the person who will be selling his bitcoins will need to need to
release the bitcoins when they are exchanged for cash. Post-transaction, cash or bitcoin,
the parties involved can go the their separate ways.
One can never err on the side of caution with regard to money. Fortune favors the pre-
pared, being prepared, and being knowledgeable on the pertinent details can deter crim-
inals from ever attempting to thieve from you. Don’t be an easy target. Thinking about
this: meeting at night, when visibility is lower and less people around, is a bad idea, unless
you hack it do not do it. The best time to meet is during the daylight, around the noon
hour. You should be aware that it might be difficult to meet at this time for some folks
during the weekdays, that is why the weekends were invented. Not just for debauchery
and all-manner of hedonism, but also for the prudent conduct of business.
The security of the location is very important, and obviously, Wi-Fi is a must or a strong
internet connection (Better get those bundles if things will run smoothly, not to mention
good network coverage). It could be popular spots at a mall, such as ArtCaffe, Java, or Sub-
way, whichever. Even better is when one of these locations has or is adjacent to security
guards. Shopping malls usually have security guards. Those ‘askaris’ (guards) could save
your bitcoins/cash. Moreover, this is blatant as the noon-sun, when picking where to sit,
try to pick a spot that gives both of you plenty of space. A table between both of you is the
best, which allows both participants to feel comfortable.
It is recommended to head to the location a little bit early (run some recon and canvas
the joint). Sign into your Localbitcoins account on their phone or laptop, and be ready to
release the bitcoins. It is important not to send the bitcoins until the physical exchange.
Show the person you are exchanging with that are ready to release the bitcoins. The fiat
being exchanged should be counted and placed on the table. Check the bills to see if they
are counterfeit bills. If they check out, release bitcoins and take the cash. It is important
that you able to tell fake bills, if not, get to knowing them.
It is contra-indicated to stick around in the area after the exchange. Even if you do not
have cash on you, it best to avoid any curious ‘look-arounds’ that may cause problems. On
top of that, you should leave by some means other than walking – bike, car, taxi, or bus.
This will ensure you will not be hassled or rob by anyone who saw the transaction.
Chiefly, make sure the bitcoins being held in your LocalBitcoin’s wallet are safe. LocalBit-
coin’s is a hot wallet, which means it’s security can be compromised. A hot wallet is a bit-
coin wallet that is hosted on the web. The opposite of hot wallets are cold wallets, which
32
are stored offline and have more security. One point of order you should note is that the
Localbitcoins wallet is actually less secure than regular hot wallets because you will regu-
larly be connected to public wifi while logged in. So don’t keep all your eggs in one basket,
only have the amount of bitcoins that you need for the transaction in the wallet.
Please ensure that you use Localbitcoin’s 2-factor authentication. It is one of the simplest
ways to make your account secure. 2-factor authentication uses apps like Authy or Google
Authenticator. These apps sync up with your Localbitcoins account, so when you log in
you will have to provide a second code, other than your password. This code is a random-
ly generated and a temporary string of numbers provided by an 2-factor authentication
app. You will need to type in the 2-factor authentication code and your password each
time you log in. It is almost impossible for hackers to get the 2-factor authentication code
because it is randomly generated, and different each time. This adds a much needed layer
of security.
A lot more people continue to use Localbitcoins globally with the amount of volume gen-
erated. For instance, on the 14th of January 2017, the volume stood at a weekly average of
$22 million with the Kenyan relative figure being at Kenya Shillings (Kshs) 5 million.
If you are starting out on bitcoins, it is a great place to sharpen your skills.
URL: Localbitcoins.com.
1.4 Case Study: M-Pesa the growth of Digital Payments in Kenya.

Kenya, a country located on the east coast of Africa has been acclaimed world over for
M-Pesa, which is a mobile money payment system that revolutionized the way Kenyans
transferred money instantly to each other through their mobile phones. Before the ad-
vent of M-Pesa, Kenya did not have a banking infrastructure that extended significantly
beyond the urban cities and towns to the rural communities. Opening a bank account was
near impossible if one could not be referenced by people who already had bank accounts.
Most Kenyans were locked out of the financial system unable to access not only bank-
ing services, but also credit facilities. If a person wanted to send money to their grand-
mother who lives upcountry approximately 300 Kilometers away from the capital Nairobi,
the person would have had to put cash in an envelope and send it with a trusted courier
(probably a relative),who would have to physically deliver the cash to her. This as you can
imagine was a bit like playing Russian roulette for many people who would have to send
their hard earned and perhaps their only disposable income to their loved ones across the
country in a risky manner.
33
Such challenges have been greatly reduced with the advent of the mobile money ser-
vices. M-Pesa is offered by Safaricom, Kenya’s largest mobile network operator (MNO) with
a registered 26 million plus subscribers. Safaricom is both a privately and publicly owned
company with Vodafone a UK based consortium having 60% shares in the company and
the Kenyan government and public owning the rest of the shares..
According to a study of mobile usage at the base of the pyramid (Infodev 2015), the con-
sensus is that M-Pesa was largely successful in Kenya because of Safaricom’s significant
market dominance, strong branding, and progressive Kenyan regulators. The study also
states that in Kenya 72% of the Kenyan population belongs to the lower class while 24%
belongs to the middle class and about 3.6% belong to the upper class. In recent times,
mobile devices have made much of the Kenyan population more accessible whilst mobile
money is mostly used to pay for micro-work, buying food stuffs, and utilities. Many com-
panies rely on partnerships with the mobile network operators (MNOs) to access these
mobile payment platforms and ensure that there is a seamless experience for users using
this technology.
As of December 2015, according to Safaricom, M-Pesa transacts $42 billion a year and
has 14 million active monthly users in the country. This means M-Pesa has become a ma-
jor driver of the economic expansion of the Kenyan economy empowering the base of
the pyramid like grocery sellers popularly known in Swahili as mama mboga by allowing
her to manage her finances efficiently. Since 2013 M-Pesa has also moved into the retail
commerce space with the Lipa Na M-Pesa partnership (Sandra 2014) with FinTech startup
Kopokopo who have been driving retail sales at merchants all over Kenya.
Today Kenyans pay most of their bills using M-Pesa these include:
• Rental services
• Internet services
• Water bill
• Supermarket shopping
• Employee wages
• Remittances and donations
• Crypto-currency purchases
Despite this huge progress M-Pesa has struggled to move from a mobile money payment
system to an online payment gateway. Safaricom, has not until the year 2016 provided a
seamless open application interface (API), whereby other software developers can build
applications on top of the platform in order to increase utility and reach of this technology.
34
This has not happened even though the legal foundations being in place with adoption
of the ICT bill in late 2015.
Limits of M-Pesa as a cross border and online payment system have already become ap-
parent as every mobile network operator has their own proprietary mobile money sys-
tems that are not interoperable leading to huge integration problems.
M-Pesa has not been able to replicate its Kenyan success in South Africa, which is a more
developed African country than Kenya. Vodacom a South African MNO opted to partner
with Nedbank one of South Africa’s largest banks to provide the financial service on its
platform (Lerato 2016).
The bank catered for middle-class and high-income earners who already had an array of
banking services and platforms through which to conduct their business. South Africa
banks unlike those in Kenya had made significant inroads in both urban and rural areas.
The article quoted that there is a bank, branch or automated teller machine (ATM) within
a 20km (radius in any urban or rural settlement.
The opportunity in South Africa was not about access to financial services, but the ability
to use various technologies to support how people save, spend and invest their money.
The advent of mobile money technology like M-Pesa has led to huge transformation in
Kenya and other African countries. Indeed, the question remains if blockchain technology
can achieve similar levels of impact across markets where people continue to be unde-
served. In this publication we shall examine such potential across key sectors within the
African socio-economic life considering that countries within the continent do face similar
challenges but also face diverse challenges as well.
1.5 Case Study: Micro-lending, loans real quick.

Ever since the advent of M-Pesa a plethora of mobile based applications have risen to
build value on top of the platform. We have seen whole range of applications from pay-
ment integrators such as Lipisha, Pesapal, Jambopay and E-commerce applications like
CrowdPesa, Jumia, and Rupu. These applications have faced numerous challenges some
of which we will address in the chapter on e-commerce. However, one class of applica-
tions namely micro-lending solutions have experienced rapid growth and utilization and
unsurprisingly these are applications that are tightly integrated with M-Pesa or leverage
on data from M-Pesa transactions.
Recently micro lending services have also grown substantially with mobile applications
such as M-Shwari, Tala formerly Mkopo Rahisi and Branch (Otiato 2016). These credit fa-
35
cilities have found significant usage with borrowers interested in getting instant loans
for their personal and business needs. Among these new applications, the most popular
lending application in Kenya is M-Shwari which is a default application that comes with
the M-Pesa application. M-Shwari was launched in November 2014 in a partnership with
Commercial Bank of Africa (CBA) as a SIM based application and is easy to set up if the user
already has M-Pesa (Tamara 2015).
The application allows you to save and borrow money instantly using M-Pesa. The applica-
tion gives loans as low as USD 20. The amount loaned is based on the M-Pesa subscriber’s
transaction history as calculated by the parameters set by the M-Pesa platform. This appli-
cation is revolutionary as it provides access to credit on daily basis to people who did not
enjoy such facilities in the past.
The interest rate for such loans is about 14.5% to be paid within 30 days after which de-
faulters incur penalties as high as 10% of the originally borrowed sum. Payments rates for
these loans tend to be impressively high which has debunked the myth that people at the
base of the pyramid are likely to default.
M-Shwari has inspired a plethora of other internet based lending applications like Tala,
Branch, and KCB-M-Pesa. These applications leverage on Internet application stores like
the Google Play store for Android based smartphones. While smartphone adoption has
increased exponentially in recent years, this has created a market for these applications.
With the exception of KCB M-Pesa, which is an application launched by Kenya Commercial
Bank that has partnered with M-Pesa, the other applications leverage on Internet to mar-
ket and reach their consumers. This is still a challenge given the fact that smartphones are
yet to be substantially adopted by much of the Kenyan market.
Internet based lending applications in Kenya have three major challenges. These are:
• Reliance on M-Pesa for Integration

• Smaller liquidity compared to Safaricom or banks, which hold huge sums of cash
in reserve
• Need to spend marketing dollars to push application to public as compared to
M-Pesa apps which are already dominant
Blockchain based lending are advantageous for these three reasons:
• Lower marketing costs

• More transparency and accountability due to distributed ledger
• More interoperability and can port into other services
36
CHAPTER 2
Micro-Payments Myth
or Reality.
There has been a lot of discussion in the past few years about the emergence of new busi-
ness models driven by micro-payments. Ever since the arrival of the first iphone launched
by Steve Jobs in 2007 and the Apple itunes music and app store, entrepreneurs and de-
velopers have been able to monetize their content by selling it directly to the mobile con-
sumer. Thus, it has become clear there was a huge opportunity for emergence of a digital
economy based on online payments.
Developers across the developing world and especially in Africa have struggled to monetize their
applications due to a lack of an open and accessible global payment network, until Bitcoin. Cur-
rent prevalent payment systems like credit cards, Paypal and even M-Pesa have restrictions and
barriers to entry for young developers who do not have the resources to comply with necessary
rules and regulations enforced by the corporations or governing jurisdictions. Such obstacles
make it difficult to interface with these platforms technologically due to such prohibitive costs.
In Kenya and much of Africa micropayments has been in existence through payment for
digital goods such as music downloads, where payments are billed through Short Mes-
saging Service (SMS) and Unstructured Supplementary Service Data (USSD) platforms,
which are provided by the Mobile Network Operators (MNOs).
This has resulted in these operators having a lot of power as gatekeepers as startups and
businesses cannot hope to monetize their applications without collaborating with them.
This situation has been further exacerbated by the fact that these MNOs also control the
mobile money platforms such as M-Pesa.
37
The potential for a digital economy based on micropayment platforms is huge not just for
the content based industries but also for daily utilities.
One of the challenges faced by people in urban areas across Africa is the shortage of park-
ing facilities in towns and cities. As such as payment of parking fees has been a huge
problem in much of the World. This is because most of the time this is left in the hands
of the local city or county council which are governmental bodies usually encumbered
by corruption and lack of transparency problems. Indeed in Nairobi the capital of Kenya
there have been huge problems in collection of parking fees until the recent introduction
of a mobile based payment platform that uses M-Pesa for billing powered by a payment
gateway called JamboPay.
The problem with these payment platforms is that they do not allow minute by minute
billing and are prepaid services where the driver has to pay for periods that may be actu-
ally longer than the time he needs the parking. Blockchain platforms can be of huge assis-
tance here as they allow for minute-by-minute billing and transparency for transactions.
This will result in huge savings in time and money spent.
Another huge area with a lot of potential for blockchain based tokens is micro-lending
and micro-insurance which are industries that have huge potentially especially here in
Africa. We cover this in detail in our next chapter.
2.1 Parkbyte
2.1.1 Introduction
Parkbyte was founded on 7th May 2015 to give car parking operators an easy platform to
utilize crypto-currencies for payment of parking fees by drivers. The mission of the Park-
byte is to target the global parking industry through offering an easy to use smartphone
application and backend dashboard that allows car park operators to accept Parkbyte
with minimal set up.
2.1.2 Coin/Token Specifications

There are 4,726,530 units of Parkbyte with the symbol as PKB.
2.1.3 Team
Parkbyte is managed by Parkbyte limited, a company registered in the United Kingdom (UK).
38
Micro-Payments Myth or Reality.
2.1.4 Innovation
Parkbyte has developed both a mobile application and backend platform that allows park-
ing operators in the UK to manage their parking assets and collect parking fees from their
customer on a pay per use model. Parkbyte claims that it is an excellent technology for the
motor vehicle operators because it is very efficient and time saving. Developers can also
contribute to the project by making improvements to the parking-ticketing platform. This
can allow more car operators to use the system around the World.
According to the Parkbyte team the idea of this coin is to lay the foundations to give car
park operators the platform to integrate with crypto-currencies with ease. In the United
Kingdom where Parkbyte is based they are able to pay for parking via companies like
RingGo where they accept credit card, premium SMS methods but not crypto-currency.
These type of companies have in the previous year’s been putting a lot of pressure on con-
ventional coin and ticket machine manufacturers because their system is not cost effec-
tive. Cobalt, RingGo’s parent have now “securely processed over £1 billion across 4,000 sites
across the UK, by more than 60 local authorities, 10 railway operators and numerous private
parking operators”. Cost of running this equipment run into millions of pounds. After having
worked in the Parking Machine Manufacturing Industry for sometime Parkbyte believe that
they can reduce costs of operations of ticketing companies by around 70-80%.
2.1.5 User Experience

Most of the Parkbyte enthusiasts have positive comments regarding this application as a
solution to the parking problem. They indicate that it is a useful platform that parking op-
erators need to join and implement. The more technical users state that SHA cryptograph-
ic encryption method is a good choice for the algorithm to secure the Parkbyte platform.
2.1.6 Target Market

Parkbyte is seeking strategic partnership with parking companies in the United Kingdom
to become their partners who will get 5% of the current PKB supply which is approxi-
mately, 250 000 PKB of 4,629,440 PKB. Parkbyte is looking for other partners who can help
increase adoption of the crypto-currency.
39
2.1.7 Potential
The main aim of the Parkbyte is to laying a foundation for the parking operators to inte-
grate with crypto-currencies with ease. It will therefore be used to process parking trans-
actions at ease.
Figure 10 depicts the entire process flow of the Parkbyte Coinomi android application. The
application allows the user to make payment for utilizing parking payment at designated
locations in which the Parkbyte platform is available. The application works as follows:
• The user opens the application and gets an overview of the wallet balance and
value in British pounds.
• The user can access his/her address including the QR code for toping up Parkbyte
coins from an exchange.
• The user can view historical transactions for accounting purposes.
• The user can select a tariff from multiple bundled options.
• The user can select an offer depending on his/her needs i.e. how much approxi-
mate time parking is needed and the parking zone in which the user is located.
• The user can see the status of his parking order and determine whether he needs
to renew his parking order.
The Parkbyte blockchain platform provides interesting solutions that could be quite use-
ful across rapidly growing urban centres within Africa. In particular, if the solution were to
adopt a mobile centric approach as well as integrate mobile SMS and USSD technology it
could provide a working solution for the fast urbanizing African towns and cities. The pay
as you go model for payments is one that is shown to work quite well within many African
countries.
Parkbyte References:
¾¾Parkbyte Website: http://www.Parkbyte.com/
¾¾Parkbyte Facebook: https://www.facebook.com/Parkbyte
¾¾Parkbyte Twitter: https://twitter.com/Parkbyte_PKB
¾¾Parkbyte Bitcointalk: https://Bitcointalk.org/index.php?topic=1052732.0

40
Figure 10: Image by Parkbyte depicting the Android application process flow
41
2.2 IOTA
IOTA is a lightweight crypto-token that is designed to facilitate micropayments. IOTA is
derived from the acronym IoT which means Internet-of-Things. IOTA expects to be con-
nected to millions of devices making the user experience easy and seamless. IOTA facili-
tates micro transactions between connected devices by paying the miniscule amounts to
each other in a frictionless manner. Micro transactions should integrate well with product
design in order to not compromise service delivery.

IOTA tokens are estimated to number 2.7 peta units, which is 2,700,000,000,000,000 total
units of tokens available. The high number of units is intended to accommodate the mil-
lions of machine-to-machine (M2M) transactions happening on the IOTA network.
2.2.2 Team
IOTA was founded by serial crypto-currency entrepreneurs namely Dominik Schiener and
David Sønstebø who was also formerly a contributor to the NXT project. The IOTA project
spawned out of an IoT hardware start-up that is developing a new ultra low power micro-
processor in 2015 and is in the first launch phase in the middle of 2016.
2.2.3 Innovation
IOTA is specifically developed for the rapidly growing internet of things ecosystem. Unlike
other crypto-currencies, IOTA does not use regular blockchain protocols, which theoreti-
cally makes IOTA more scalable than other crypto-currencies.
The system has features which differentiates it from other crypto-currencies that only use
the blockchain. These include:
2.2.3.1 Tangle
IOTA is made more efficient by the capability of tangle to support off tangle transactions
which can be combined seamlessly without full replacing the blockchain. The primary
function of tangle is to increase security for blockchain by increasing the ability to include
check points for transactions. Tangle can also act as an oracle for smart contract based
systems like Ethereum and Rootstock.
42
2.2.3.2 Comparison between Tangle and blockchain protocols

5. Centralization of control: Miners in POW systems like Bitcoin form large groups in
order to reduce the variation of the reward resulting in centralization of the blockchain.
6. Discrimination of participants: Most crypto-currencies are heterogeneous systems

that distinguish roles between transaction issuers and transaction approvers. This ap-
proach can result in conflicts between the two groups which expends valuable resources.
7. Inability to conduct micropayments: In traditional blockchain systems the trans-

action fee incurred is used to cover minor expenses and mitigate spam attacks.
Also a set minimum amount can be paid. This results in an inability to conduct
micro-payments.
8. Scalability limits: crypto-currencies such as Bitcoin have hard limits that can-
not be removed in a without majoritarian consensus which is difficult to achieve.
Hence, a very low limit may hinder the growth of a user base and on the other side;
a very high limit may open such systems to different types of attack.
9. High requirements for hardware: Proof-of-work crypto-currency platforms have

high requirements for equipment as they use electricity to solve the algorithmic
protocols that govern their protocols.
10. Quantum secure: To offer security IOTA uses algorithms that are quantum resis-
tant and are used for cryptographic and consensus achievement.
11. Lightweight: In order to scale IOTA is lightweight by shaving excess and complex
code from its design.
2.2.3.3 Tangle blockchain interoperability

IOTA can interact with the Bitcoin and Ethereum blockchains. This ensures that IOTA can
work with other platforms. As a result, the blockchain security is strengthened by provid-
ing check points and also acts as an oracle for smart contract.
In conclusion, IOTA is a completely new distributed ledger innovated from scratch. It con-
tains no blocks, instead adopting what we call a Tangle, which is a form of directed acyclic
graph. Here a user sending a transaction verifies previous transactions through a small
amount of proof-of-Work. This means that the verification of the network is not decou-
pled from the network’s users, as is the case in blockchains, thus there are no external par-
ties to be compensated, which means that IOTA got absolutely zero fees on transactions
or data transfer conducted on the secured ledger.
43

IOTA Token user interface is yet to be released as the platform remains in the early phase
of testing.
2.2.5 Target Market & Potential

IOTA has teamed up with numerous companies exploring distributed ledger tech and In-
ternet-of-Things, as well as other projects that require a scalable ledger with no fees. Giv-
en the level of sophistication and promise of this technology, we asked the IOTA team to
give us an idea of how the technology can be used in Africa. They sent us two scenarios in
which their technology will be useful. They are:
2.2.5.1 Nomad businesses: Emergent infrastructure

The most important backbone of a prospering country is that of robust and widespread
infrastructure to act as a foundation one can build on top of, whether it be electricity,
reliable water or internet. IOTA was in large part developed to tackle the infrastructural
hurdles facing Internet-of-Things, by incentivizing the establishment and maintenance
of infrastructural technological resource trade on-demand. With absolutely zero fees on
transactions a brand new landscape of business models become possible as you can
charge per second of usage and in exact increments, removing uncertainty and assump-
tions from the equation.
One way to visualize this is to think of remote locations with small cities and villages with-
out any reliable infrastructure, areas that are not connected to any larger infrastructural
grid which more metropolitan areas enjoy. The main reason that there is so little private
or public effort to extend the infrastructural nervous system into these faraway and often
impoverished areas is that it is prohibitively expensive in terms of amount of infrastruc-
ture required to connect these areas versus the potential monetary benefit of doing so.
This lead to hundreds of millions of people scattered across Africa with almost no infra-
structure and thus little opportunity of changing their circumstances as they do not have
access to any of the great technology that brought about the industrial revolutions in the
west. The solution is to take a distributed and emergent approach. Rather than scaling the
infrastructure from one central point and outwards to these remote areas, it is better to
have the infrastructure emerge from within the areas themselves.
So how may this look in practice? Through IOTA’s unique ability to enable for the first time
ever true micro transactions with zero fees, one can easily envisage a plethora of different
businesses seeing different opportunities. The reason this is so revolutionary is that you
44
can literally sell and buy exact amounts on-demand in real time without having a cut lost
in processing fees, leading to great optimizations in profit margins, as well as lowering the
barrier of entry for potential customers who would not be able to purchase in the tradi-
tional pre-paid system. This means that you can sell even small quantities of a technolog-
ical resource without having your profit margin consumed by a fee.
So let’s imagine that business A decides to set up a solar electricity installment and sell it
per watt in real time to business B, which is a company that saw the potential in selling
sensor data to be used to optimize agriculture, so now business B is selling soil and weath-
er data to business C which is an analytics company that turn the data into useful infor-
mation that it sells to business D which is a farming company that use the info to optimize
their crops. Of course, all of these companies buy their bandwidth from business E which
saw the need for connectivity between these other businesses. A completely self-sustain-
ing and scaling business ecosystem that might previously have been impossible because
the profit margin was non-existent due to fees.
In the aforementioned example we looked at the aspect of IOTA’s zero fees and how it
creates new business models, but there is another aspect of the technology that ought
to be mentioned. In IOTA’s Tangle ledger you can ‘branch off’ from the main Tangle and
create sub-clusters that are not connected to the internet at all times, but may instead
migrate over to on some other local connectivity protocol like bluetooth instead, while
still being able to join the main-Tangle. This means that in areas with little and unreliable
infrastructure IOTA can still operate and enable these ‘nomad businesses’ that emerge in
areas where there is a demand.
2.2.5.2 Ensuring Insurance: Keeping data honest

Africa is fast adopting new technologies and often finds itself on the cusp of innovative
business models to achieve more with less. One such example is that of Internet-of-Things,
Big Data analytics combined with insurance for farmers. As agriculture is an inherently un-
certain business it is no surprise that farmers want to safeguard against events that may
lead to a lower yield than needed to cover cost, or even no yield at all. In Kenya, even farm-
ers with just one acre has started to do this through an innovative insurance model where,
in brief, the farmers pay a premium to safeguard against unfavorable outcomes, then at
the end of the season the weather data from the weather stations in the areas nearby is
used to determine if the farmer had a bad season and thus is entitled to a payout.
This solves the problem of older versions of yield insurance models which simply looked
at yield of crops to determine if the insured farmer was due for a payout, where one could
45
easily be ‘play the system’ by reporting a false yield. However, while this is a brilliant exam-
ple of innovative thinking in the use of technology, it still relies on the data being honest.
There is a significant incentive for both parties to tamper with the data for financial gain.
Enter IOTA’s public distributed ledger. By inputting the data from the weather station’s
data logger directly onto the IOTA tangle, it is auditable by anyone and tamper proof,
meaning that neither the insurance company or the insured can alter the data for profit.
IOTA also opens up new and even more innovative insurance models where the insured
you could pay and be paid out in real time day by day, making the entire system a lot more
reliable and effective, again this portion is all due to IOTA’s flexible nature and lack of fees.
IOTA References:
¾¾IOTA GitHub: https://github.com/IOTAledger
¾¾IOTA Website: http://www.iotatoken.com
¾¾IOTA Twitter: https://twitter.com/iotatoken
¾¾IOTA Chat: chat.iotatoken.com
¾¾IOTA Forum: http://forum.iotatoken.com/

46
CHAPTER 3
Decentralized Asset
Management
The exchange of assets and property has been in the past extremely difficult not just in
places like Africa but also in much of the developing world. This is because many gov-
ernments are plagued with twin challenges of corruption and inefficiency. This is largely
due to lack of infrastructure and technology to set up efficient processes around these
activities.
Consider, Kenya for example, a newly designated middle-income country with a rapidly
growing urban population and dwindling land resources, has witnessed steep apprecia-
tion of land and property values in the past decade. This has resulted in huge competition
for scarce land and the exponential increase in prices of this commodity.
Thus, the land registry has been plagued with inefficiency and corruption leading to dif-
ficulties in addressing land property rights including ability to acquire or sell land easily.
The same inefficiency challenges also apply for other types of assets like a company’s or
corporation’s share listing can be quite an expensive process for any person seeking to
start a business in the formal sector. The legal fees are quite high costing between $200 to
$500 just to set up the company and trade legally.
Many African countries also use archaic colonial laws and legal frameworks to govern
companies. This does not allow for the easy injection of capital and flexibility in issuance
and distribution of shares, which makes it difficult for companies to adapt to business
requirements and situations. If these African countries are to move businesses to the next
47
level then they will need to adapt innovative blockchain asset management solutions to
increase the efficiency in the manner in which these businesses operate.
Indeed, we have recently seen the first distributed autonomous organization dubbed The
DAO raise over $150 million from a myriad of investors based around the world simply
because it was easy for one to invest with the Ethereum ether token and be allocated
ether tokens using the blockchain. These blockchain based funding solutions also face
new challenges and more effort is needed to optimize solutions like the DAO to work
smoothly and integrate seamlessly into corporations and government institutions.
3.1 Crowdfunding with Crypto-currencies.

Crowdfunding with crypto-currencies in recent times has exploded with multiple proj-
ects raising millions of US Dollars from investors across the world. crypto-currencies and
in particular Bitcoin permits frictionless investing where all one has to do is to publish
their Bitcoin address for investors to send their bitcoins as an investment. This means in-
vestors do not need to file any Know Your Customer (KYC) paperwork or even open any
accounts with any intermediaries as the blockchain creates a trustless network that keeps
immutable records on ownership on a transparent ledger.
This has made it possible for projects to raise millions of dollars even within a single day.
There are huge risks involved with some scam projects raising money and then disappear-
ing shortly with investors funds. It is therefore important for any investor to do basic due
diligence on projects they are interested in.
In the US regulatory institutions have already expressed concerns mainly on whose fidu-
ciary duty it is for failing to provide a return on investment for investors who participate in
crowdfunding campaigns (Daniel 2014).
It is in our estimation that crypto-currency crowdfunding will continue to grow exponen-

tially. It also gives a huge opportunity for entrepreneurs in Africa and other parts of the
developing world to raise funds for investment from people around the World.
3.1.1 Biggest crypto-currency crowdfunding campaigns:

¾¾The DAO raised $150 million.
¾¾Waves raised $29 million.
¾¾Ethereum raised $18 million.
¾¾Lisk raised $6 million.

48
Decentralized Asset Management
3.2 Bitshares & Openledger

Bitshares is a decentralized blockchain network built up from industry research. It con-
tains both a decentralized exchange and distributed autonomous company. It is built to
give users financial services like exchange and banking on a blockchain. It seeks to blend
the freedom of crypto-currency and offer the stability of the world currency the United
States Dollar.
3.2.1 Innovation
Bitshares allows for the launch of decentralized autonomous companies called DACs. The
largest DAC is Bitshares 2.0, which is a financial Smart Contracts platform that enables
trading of digital assets and has market-pegged assets that track the value of their under-
lying asset for example; BitUSD, which tracks the U.S. Dollar. This platform also allows users
to save and trade other crypto assets known as bit assets.

There are 2,558,670,000 units of Bitshares with the symbol as BTS.
The system has some advantages over other network systems, which include:
• It is a fast trading platform with transaction confirmation times taking seconds in-
stead of minutes
• It can solve large-scale economic problems using blockchain technology
• System upgrades do not interfere with existing share distribution
• It can offer tiered management access, which is suitable for corporate environ-
ments
• It offers flexible withdrawal permissions
• Providing incentives through offering rewards in the network ensures growth
• Assets issued can comply with regulations
• It offers self-sustaining funding
• Transactions can be easily and securely executed
• It has a flexible consensus protocol
3.2.3 Team
Bitshares was founded in 2013 by Dan Larimer and has since grown into one of the biggest
blockchain corporations. In recent times to ensure the long-term success of the Bitshares
core team has adopted a corporate structure at Cryptonomex Inc. Bitshares using stake-
holder voting powered by Bitshares 2.0, makes the platform more robust, sustainable, and
49
fair than ever. Open Ledger is a CCEDK company built on the Bitshares open platform.
Both use free software provided to the industry by Cryptonomex. There is no formal rela-
tionship between any of them.

Bitshares has one of the most robust and comprehensive interfaces built under the brand
name Openledger which uses Graphene technology for the platform.
Figure 11: Screen capture depicting the Bitshares Openledger wallet dashboard
As shown in Figure 11 Bitshares platform is accessible through a platform dubbed Open-

ledger which allows a user to trade in different assets on its asset market place as shown
in the figure above. The platform allows a user to create an account to manage their trades
and assets. Bitshares uses a passphrase system known as a brain wallet to secure the ac-
count. Brain wallet passphrases should be no fewer than 12 words in order to secure the
user accounts.
50
Figure 12: Screen capture depicting how to send Bitshares tokens to another account
Figure 12 shows how a user can send tokens to another account user. Bitshares unlike
most crypto-currency platforms allows you to use aliases instead of wallet addresses or
public keys. The parameters displayed on this interface are as follows:
¾¾From: User’s account name
¾¾To: Recipients accounts name
¾¾Memo: Message or note associated with the transaction
¾¾Amount: Transaction amount to be sent

51
Figure 13: Screen capture depicting the Bitshares trading platform
Bitshares also has a market place for buying and selling tokens for assets setup on its
blockchain. The interface in Figure 13 is very similar to what we see on online crypto-cur-
rency exchanges like Poloniex or Bittrex.
The interface contains this main section:
¾¾Buy Orders: A user can place the buy order for any listed asset here
¾¾Sell Orders: A user can place the sell order for any listed asset here
¾¾My Traders: A user’s trades are visible in this section
¾¾Open Orders: Orders that are live and that have not been executed are visible here
52
Figure 14: Screen capture depicting the Bitshares transfer interface and options
Bitshares also allows the user to transfer their assets into the real asset for example trad-
ing Bitcoin on Bitshares is pegged on an asset called OpenBTC the gateway allows you to
convert this to real Bitcoin that can be transferred on a Bitcoin wallet as shown in figure 14.
3.2.5 Target Market

Bitshares is built to operate in the real world of finance and can therefore be used by
corporations and businesses seeking to trade assets using a digital platform secured by
the blockchain. Bitshares has been adapted by BANX.io which is an innovative exchange
that specializes in trading the shares of other startup businesses, including its own shares.
BANX.io is using the Bitshares exchange network to gains access to other members’ prod-
ucts and services including the fiat on/off ramps. The main advantage cited by Banx Capi-
tal CEO and Founder Mark Lyford is the decentralized exchange offers a secure Smartchain
creating a level playing field and backbone asset trading while ensuring customers are
not hacked.
53
3.2.6 Potential
If Bitshares can scale by offering fast transactions and handling huge volumes of transac-
tion per second then its value can grow quickly beyond its current market capitalization.
In an interview with Cointelegraph (Amanda 2015) Bitshares is described as a platform
through its currency BTS can deliver derivatives with zero counterparty risk, and that
makes all the difference. According to the Bitshares team this is because after the financial
crisis in 2008, derivatives have gotten a bad reputation because of the corrupt ways in
which the world’s financial institutions have implemented them. Many of these assets are
not backed by collateral, and there is no transparency about where all the counterparty
risk may lie. The Bitshares addresses this issue through transparent backing by 200% or
more collateral enforced by incorruptible open source software. Bitshares derivatives con-
sequently have zero counterparty risk, and that makes all the difference.
The potential for the Bitshares to provide financial blockchain based instruments tools
and instruments to open up markets in the African context is significant. Perhaps, part-
nerships with financial experts solving problems with the continent can help arrive at
the right format and solutions that can be used to create markets and exchanges for say
African produce and markets. In Kenya, it could be for the World’s biggest tea exchange
in Mombasa and in Ghana it could be an exchange for local producers of the world’s best
cocoa. The Bitshares platform can potentially evolve into a robust solution for digital asset
management.
Bitshares References:
Bitshares Github: https://github.com/Bitshares
Bitshares Website: https://Bitshares.org/
Bitshares Facebook: https://Facebook.com/officialBitshares
Bitshares Twitter: https://Twitter.com/_Bitshares
Bitshares Slack: https://Bitshares-slackin.herokuapp.com/
3.3 Nxt & Ardor Platform

NXT can be defined as an advanced blockchain platform whose function is to build and
improve the functionality of pioneering crypto-currencies by providing a huge feature set
on a blockchain platform. It also provides a powerful, modular toolset that can be used to
build a wide variety of blockchain applications. NXT is currently undergoing an evolution
54
from its current NXT 1.0 platform to NXT 2.0 platform called Ardor, which is a system, that
allows for organizations to create their own child chains for specific applications.

NXT has set a limit of 999,997,096 NXT coins, which were all issued in an initial coin of-
fering by the founder BCNEXT who collected 21 bitcoins from about 70 people who all
received these initial tokens. This has resulted in a lack of trust for the crypto-currency as
many speculators consider this issuance approach to have been a failed launch compared
to the traditional POW mining that occurs with other coins. This issue is currently being
addressed by the pivot into a new platform called Ardor.
3.3.2 Team
NXT was created by BCNEXT an anonymous developer who left the project in the year
2014. Nxt currently has a core team of 6 developers with Jean-Luc and Riker being the
lead developers. NXT interestingly has been the source of many lead developers of other
projects like ComeFromBeyond who now heads up IOTA, Max who is C.E.O of Lisk, JL777
who is the core dev at Supernet and leads founders of other projects like NEM and Waves.
3.3.3 Innovation
According to Nxt it is a blockchain platform that is simple, easy to integrate, and can per-
form a multitude of tasks and greatly reduces overhead costs. Nxt is not energy intensive,
but can operate on very cheap hardware like Raspberry Pi and similar devices bootstrap-
ping devices. With Nxt, it is easy to create applications on a blockchain. It has been func-
tional since late 2013 and all current features are fully functional and can be utilized for
existing projects. Nxt has an active development team that is constantly fine tuning the
code, as well as adding new functionality based on market needs. Nxt is an open source
project. The Nxt developers operate on the internet and are globally dispersed. The Nxt
Foundation acts as an intermediary between the market and the development team and
can also help with connecting businesses with experienced developers for consulting or
development jobs.
The Nxt platform has some unique features that it claims makes it more advanced. These
features are:
• A decentralized asset exchange

• A decentralized voting system
• A decentralized monetary system for coin issuance
55
• A encrypted messaging service

• Nxt uses a brain wallet instead of a local wallet to secure assets
• A decentralized marketplace system for buying and selling goods
• A feature called Aliases that can register people’s names and assign them to web-
site uniform resource locaters (URLs)

Nxt has developed one of the most elaborate user interfaces for any blockchain technolo-
gy in existence. Indeed, it is possible to set up the platform on a standard computer within
a day. The instructions provide on the Nxt website are as follows:
How to get started with Nxt:
• Nxt can be downloaded for Mac and Windows operating systems at NXT.org.
• Unzip and execute the file with run. Bat for Windows and run.sh for Mac devices.
• Launch NXT on a browser client at the following URL http://localhost:7876.
3.3.4.1 Creating a Nxt Account

To create your NXT account, you need to setup a long passphrases for your account. To
ensure it is secure the number of characters should be 35 or more. The network will auto-
matically secure your account after your first transaction.
3.3.4.2 Earning with Nxt

Once you buy the NXT you can then transfer it to your account. NXT is based on the proof-
of-stake method of securing the blockchain and therefore you can earn NXT by simply
keeping your wallet online in a process called forging:
• A user can lease forging power to a forging pool and earn some Nxt
• A user can earn money by minting new coins created in the monetary system in
Nxt using CPU power
• A user can crowdfund money from investors using the Nxt asset exchange
56
Figure 15: Screen capture depicting the NXT version 1.0 dashboard interface
Figure 15 depicts the NXT dashboard where a user can get an overview of the following:
¾¾Account balance: This is the number of Nxt coins held by the user
¾¾Net Asset Value(NAV): This is the total of Nxt assets held on the platform
¾¾Net Monetary System Value: This the total amounts of currencies held
¾¾Marketplace Order Book: Pending sales on the Nxt marketplace

¾¾Pending Messages: Messages received from other Nxt users
¾¾Blockchain Status: This is when the blockchain was last updated

57
Figure 16: Screen capture depicting the NXT asset exchange
Figure 16 shows the NXT asset exchange and an asset called SuperBTCD the pegged asset
for the Bitcoindark crypto-currency we featured earlier in this report. A user can create
and manage assets on this platform using the interface. The NXT asset is renowned for
being fully decentralized. The asset exchange has the following interfaces:
¾¾Trade History: View past transactions on this interface
¾¾Transfer History: View past transfer history of assets to other accounts
¾¾My Assets: View assets in detail
¾¾Open Orders: This interface displays orders that have not been closed
¾¾Issue Asset: A user can pay a fee and issue an asset

58
Figure 17: Screen capture depicting the NXT monetary system exchange interface
Figure 17 shows the NXT monetary system that allows one to create and manage their
own currencies. An organization can choose to issue their own currency for example to
provide loyalty points within their own organization. The monetary system has the follow-
ing interfaces.
¾¾Exchange History: A user’s history of exchange currencies
¾¾Transfer History: A user’s history of transferred currencies
¾¾Issue Currency: A user can issue his own currency for a fee, for example for loyalty points
59
Figure 18: Screen capture depicting the NXT polling system
The NXT platform allows a user to create pools and have people vote using their NXT as
shown in figure 18 above. This polling system is used for governance within the platform
for making key decisions and collecting votes from NXT stakeholders. It is also used by
organizations to conduct elections within the companies i.e. at a board meeting. A user
can create a poll and view the results of any polling exercise. What is interesting about the
NXT polling feature is that it requires the respondents to have NXT to be able to vote. This
essentially minimizes spam as it can become quite expensive to spam the network. The
polling feature has the following interfaces.
¾¾Active Polls: A user can view the active polls using this interface
¾¾Followed Polls: A user can view polls they are following using this interface
¾¾My Votes: A user can view their votes using this interface
¾¾My Polls: A user can view the polls they have created using this interface
¾¾Create Poll: A user can create a poll using this interface

60
Figure 19: Screen capture depicting the NXT data cloud interface
NXT has a data cloud feature that allows a user to store files on the blockchain as shown in
figure 19. This will ensure that these files cannot get lost as long as there are nodes hosting
this data. The Data cloud feature has to interfaces namely:
¾¾Search: This allows the user to search for data by textual content or by Account ID
¾¾File upload: This feature allows the user to upload a file on the data cloud
Popular categories on the data cloud include:
¾¾Nxttycoin
¾¾Game
¾¾Gold
61
Figure 20: Screen capture depicting the NXT marketplace interface
As shown in figure 20 above NXT also has a decentralized market that allows for trading of
goods and services using NXT as the base currency. A user can set up their own store an
offer their products without fear of being shut down by any third party. The market place
has the following interfaces and functions:
¾¾Purchased Products: This shows a user’s purchased products.
¾¾My Store: This allows a user to set up their store.
¾¾My Products for Sale: This interface shows a user’s product catalog.
¾¾My Pending Orders: This interface shows a user’s pending orders.
¾¾My Completed Orders: This shows a user’s completed orders.
¾¾List Product for Sale: This interface allows a user to list a product for sale.
The marketplace most popular categories are digital products like Wordpress, marketing,
movies and domains.
62
Figure 21: Screen capture depicting the NXT coin-shuffling interface
As shown in figure 21 above NXT allows for shuffling of a user’s coins to allow for anon-
ymous and private transactions this is similar to the mixing and Privatesend protocol in
Dash. It involves creating a shuffling and waiting for ones coins to be mixed with other
coins being shuffled from another account. The goal is to prevent any third party from dis-
cerning the source of coins on the network. The disadvantage is that the user has to wait
to have coins shuffled before he can use them. The shuffling features include:
¾¾Active shufflings: A user can view shuffling request initiated
¾¾My shufflings: A user can view status of shuffled coins
¾¾Create shuffling: A user can initiate coin shuffles

63
Figure 22: Screen capture depicting the NXT messaging interface
As shown in figure 22 above NXT allows for sending messages on their blockchain, these
messages can be encrypted and the user can pay an additional fee for this.
3.3.5 Limitations of NXT

The platform has had challenges scaling with radical changes being made as the platform
evolves from NXT 1.0 to NXT 2.0. Essentially old users of the 1.X chain like James from Su-
pernet have complained changes have resulted in their apps being broken. Asset holders
in particular have complained that they are being penalized for having invested in assets
on the NXT asset exchange, given that they will not be awarded NXT 2.0 tokens unlike
users how hold NXT 1.0 tokens.
This resulted in an exodus of users who proceeded to set up the Waves platform. In fact, it
is interesting to note that NXT has been a sort of incubator for many blockchain platforms
like NEM, IOTA, LISK and Waves.
NXT has also been constrained by lack of funds unlike many similar platforms that have
high market caps or have raised millions of dollars in initial coin offerings (ICOs).
64
3.3.6 Target Market

According to the new NXT roadmap essentially turns the platform into to a Wordpress
of blockchains. With NXT 2.0 users will be able to create their own child chains, without
depending on the Nxt core development team. This new platform called Ardor, which will
include some features from Nxt 1.0 crypto-currency and blockchain. Soon, anyone will be
able to create their own solutions using the blockchain technology with the Ardor child
chains. This will make the blockchain platform open to everyone, from individuals to Fin-
Tech startups and governments allowing them to create their own child chains and utilize
blockchain services easily.
3.3.7 Potential
NXT has been significantly ahead of other platforms we have studied but there is now a
real danger of the project getting totally side tracked if NXT 2.0 does not build on NXT 1.0
and if the community does not align its interests accordingly. Here are some of the new
features listed for these targeted markets in the new Ardor platform:
3.3.7.1 Offering Blockchain as a Service

Organizations and individuals globally can deploy Ardor to meet their specific needs.
3.3.7.2 Manageable Blockchain Size

Ardor will separate the security aspects from transactions by allowing for child chains un-
like the current NXT 1.0 architecture where all transactions are on one blockchain. This will
in turn allow for management of blockchain bloat as transactions on the child-chains can
be pruned.
3.3.7.3 Decentralized Asset Exchange

Ardor will exchange the asset-trading feature from NXT 1.0 into child-chains allowing for
decentralized exchange of value and ownership for each project child-chain.
3.3.7.4 Decentralized Voting and Governance Systems

Ardor will allow for secure and anonymous voting across all child chains and therefore
allow for decentralized consensus.
3.3.7.5 Phased Transactions

Ardor like NXT 1.0 will facilitate smart transactions where users can set multiple condi-
tions that trigger transaction execution. The example given is where a minimum number
65
of votes and a set amount of time. This feature is fully decentralized unlike in Ethereum’s
oracle, which is a centralized application. To quote core developer Riker;
“Rather than providing smart contracts, NXT is focused on implementing the important use
cases and functions directly into the core of both Nxt and Ardor. This approach has proven to
be scalable and secure and will become more so when Ardor is released” – Riker
The features above have great potential of being used for asset creation and manage-
ment, for example the tokenization of land access can help spur new economic models
within the African context like land leasing by owners to farmers and crowd-investing in
large scale farming projects by Africans in the diaspora. It remains to be observed how this
will actualized with the coming launch of the Ardor platform in 2017.
3.3.8 Comparison Of Waves & Nxt Platforms.

The waves platform is a new platform that was founded by Sasha a Russian engineer who
was also behind the Coinomat NXT asset which was a platform that allowed for the ex-
change purchase of crypto-currencies using fiat currencies like the U.S. dollar. Waves has
been created as a semi decentralized platform that allows for the trading of fiat currencies
like the U.S. dollar, Euro and Chinese Yuan with assets that are decentralized on its block-
chain. The unit of currency is called Wave. The goal here is to provide a clearinghouse for
digitized fiat currencies and blockchain based assets thereby creating a bridge between
the decentralized world and centralized economy using blockchain technology. Waves
therefore differs from NXT in that it is directly trying to integrate into the mainstream
economy while providing benefits of blockchain technology to its users whereas NXT is
trying to offer a blockchain 2.0 toolkit similar to how Wordpress is a Web 2.0 toolkit. This
could be particularly useful platform for the tokenization of African currencies, similar to
what is happening in Senegal with the digitization of the CFA Franc into the eCFA (IAfrikan
2016). This digital currency based on blockchain technology is a partnership between the
Banque Régionale de Marchés (BRM) and eCurrency Mint Limited, where BRM will issue
The currency is issued in compliance with e-money regulations of the Banque Centrale des
Etats de l’Afrique de l’Ouest (BCEAO) which is the Central Bank of the West African Economic
and Monetary Union (WAEMU).
It is interesting that many NXT users and investors joined the Waves platform due to chal-
lenges within the NXT ecosystem. It will be interesting to see which approach gains trac-
tion and develops a sustainable model.
66
Figure 23: Image depicting the Waves Chrome wallet dashboard interface
Figure 23 shows the main dashboard interface of the Waves platform. The dashboard al-
lows the user to view various balances of fiat currency as well as wave balance. The Waves
wallet is accessible on chrome with a native version still under development.
NXT References:
¾¾NXT Github: https://bitbucket.org/JeanLucPicard/Nxt/src
¾¾NXT Website: http://Nxt.org
¾¾NXT Facebook: https://www.facebook.com/Nxtcrypto
¾¾NXT Twitter: https://twitter.com/Nxtcommunity
¾¾NXT Slack: https://Nxtchat.herokuapp.com
¾¾Nxt Forum: http://Nxtforum.org

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CHAPTER 4
Decentralized Privacy
4.1 Transaction Privacy

Privacy has become critical with numerous data leaks over the years it is now apparent
that no data is safe within the current centralized client server architecture. Many block-
chain projects are attempting to develop robust privacy solutions using innovative cryp-
tographic encryption and obfuscation methods. Such activity has been driven in part by
recent events such as the Panama paper leaks, where millions of pages of data regarding
offshore companies registered in the tax haven were leaked on the internet. While some of
these leaks contained data on illegitimate dealings, some of the leaks touched on estab-
lished companies that were setting up offshore accounts to store wealth or move funds
internationally. Some blockchain projects are seeking to make transactions much more
private while still maintaining public blockchains that are still accessible but obfuscate
both the sender’s and the recipient’s identities during transactions. The Bitcoin block-
chain is currently pseudo anonymous, which means that a third party can track the source
of Bitcoin transactions easily on the blockchain. Bitcoin wallets are not associated with
real world identities unless the wallet is on an online exchange that requires your identity
for use, under know your customer (KYC) and anti-money laundering (AML) regulations.
There are also projects that seek to completely anonymize Bitcoin transactions and they
use the following methods:
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4.1.1 Coin Mixing

This is a service typically offered by centralized services that have a reservoir of Bitcoins,
which they use as float during mixing. It works by sending payments to the intended re-
cipient from wallets not associated with the sender. The goal being making it difficult for a
third party to link actual transactions with the senders and recipients because the mixing
service acts as an intermediary transfer. This method is not fool proof as a third party with
substantial resources can be able to guesstimate with a high probability mixed transac-
tions with their sender and respective recipients. Another challenge is that the mixing
service must have sufficient float or reserves of Bitcoin to be able to offer the service reli-
ably. In addition, there have been cases where mixing services disappear with their clients
bitcoins. Hence, there has been a push for mixing services to become more decentralized.
Reference: https://en.wikipedia.org/wiki/CoinJoin
4.1.2 Zero Knowledge proof and SNARKS(ZKP-SNARKS)4

In cryptography, a zero-knowledge proof or zero-knowledge protocol is a method by
which one party (the prover) can prove to another party (the verifier) that a given state-
ment is true, without conveying any information apart from the fact that the statement
is indeed true. In crypto-currencies, this protocol has been adopted to ensure privacy of
transactions between sender and recipients. This is a cryptographic method of obscuring
transactions between senders and recipients by using inputs that are already encrypt-
ed hence difficult to determine their source of origin. This method has been used by the
Zcash and Shadowcash projects.
4.1.3 Coin-join
Coin-join is an anonymization method for Bitcoin transactions proposed by Gregory Max-
well (Gregory 2013). The premise behind Coin-join is when you want to make a payment
the algorithm finds someone else who also wants to make a payment and combines the
payments together. In case of such a joint payment, it is theorized that there will be no
way to relate input and outputs in one Bitcoin transaction, and thus the exact direction
of money movement will remain unknown to any third party observing the transactions.
Coin-join has been used in multiple crypto-currency projects including Dash.

4
Readmore: https://en.wikipedia.org/wiki/Zero-knowledge_proof
69
4.1.4 Dash
Dash formerly known as Darkcoin is a crypto-currency based platform that seeks to em-
ulate cash in that it is untraceable, instant and also does not require third parties in funds
transfer. It is a real world application in that it uses its cash like qualities to allow users to
send near instant anonymous transactions.

There are about 6,462,909 issued coins with the symbol as DASH.
4.1.6 Team
Dash is founded by Evans Duffield any has a large team of experts with the core team being:
• Evan Duffield: Lead Developer

• Holger Schinzel: Quality Assurance, Automation, Testing
• UdjinM6: Core Developer
• Crowning: Core Development / Testing
Dash has been acclaimed in the crypto-currency circles for its governance model. Accord-
ing to Evan he is satisfied with Dash’s two tiers of governance model. This is because re-
search shows that communication starts to break down when there is more than 8-10
people reporting to one individual, after that he thinks that people do a really poor job.
Eventually this model won’t be big enough. At that point Dash will move to the next phase
of the system which will be some sort of elected board, which is responsible for hiring the
managers and directing the project. Centralized control, but the network again will have
control over the elected board. So control in this way always comes back to the network.
4.1.7 Innovation
Dash claims it has developed various features that it claims give it distinct advantage
against other crypto-currency projects. These features include:
• Privatesend: According to the developers at Dash it is better than Bitcoin because

of its privacy feature namely Privatesend. Privatesend is used to scramble transac-
tions where a user can send or receive payments anonymously. This is important in
keeping transaction private Dash claims.
• Masternodes: In Dash, there are no third parties entities involved in processing
transactions, instead this is done by special computing nodes called masternodes.
Any user can own and operate a masternode provided the user has 1,000 Dash.
70
This amount acts as collateral, which essentially prevents bad actors from gaining
control of 51% of the masternodes. The masternode also has an additional function
of mixing up and making payments via the Privatesend feature. The masternodes
receive rewards in return for resolving those blocks. In turn, the hosts earn divi-
dends on every block resolved by the masternode. The 1,000 dash required to be
a masternode are not spent and are only needed to keep the masternode running.
• InstantX: The goal of this feature is to offer very fast transactions over the internet
including peer-to-peer transactions and also consumer to merchant transactions in
a few seconds. Such payments can take up to a few hours on the Bitcoin blockchain.
4.1.8 Advantages of Dash over Bitcoin:

• Unlike in Bitcoin where there are negotiated agreements before a consensus, which
a vast majority of the miners should accept, governance in Dash is hard coded into
its networks. This ensures that any host having 1,000 Dash gets an instant vote on
the future of the network.
• Confirmation times within Dash are near instant as compared to 10 minutes or even
more in Bitcoin. This makes it superior for peer-to-peer commerce. Dash captures
the first trusted miner confirmation therefore avoiding double spending. This is an
improvement over Bitcoin where many more confirmations are required.
• Dash is created through an original mining protocol developed by Evan Duffield to
make it difficult to create ASIC chips for mining Dash at scale. This eliminates pros-
pects of massive mining hence creating a fair opportunity for miners.
4.1.8.1 DAO specifications for dash:
• Decentralized system for payments
• Miners and masternodes are essentially the employees with the Dash ecosystem
• The owners of Dash are its shareholders
• Dash users are its customers
• Revenues are generated from fees charged from InstantX and Privatesend transac-
tions
• Masternodes have the right to govern the protocol through voting rights
4.1.8.2 Benefits of Dash:
• Payments of 11% dividends to investors
• Investors have voting rights
• Development is directly funded and monitored on its blockchain
• The system has a two-tiered network that makes service offering more efficient
71
• There is capped and limited supply and therefore known monetary policy
4.1.8.3 Drawbacks of the platform:
• It has little liquidity compared to Bitcoin and Ethereum
• It is experimental technology still under development

The Dash wallet synchronizes quite quickly compared to other wallets. It took us about 3
hours on a 5mbps shared internet connection to download the blockchain and get in sync
with the masternodes. This in our opinion was fast given the fact that Dash is one of the
more heavily used crypto-currency platforms.
Figure 24: Image depicting the Dash QT wallet
Figure 29 shows the main interface of the Dash QT wallet. The interface allows for viewing
in summary recent transactions and also allows the user to see the available and pending
balance. The DarkSend feature is also accessible on this interface with the user being al-
lowed to indicate how much dash he wants mixed before being sent to the recipient.
72
Figure 25: Screen capture depicting the Dash send payment interface
Figure 25 shows the send interface for the dash wallet. In order to send dash you need to
have a receipient address and amount, you can choose to label and address and add it to
the address book for easy access and use.
The user has the option to use the Privatesend and InstantX features by selecting them
on the user interface. The user can also set the transaction fee with higher fees guaranting
quicker transactions.
73
Figure 26: Image depicting the Dash receive payment interface
Figure 26 depicts the user to request for dash payment from a certain dash address similar
to how invoices work during billing. It is possible to use a new dash address for every new
payment, which makes it easier to separate and track payments. The user can also check
their payment history on the same interface.
4.1.10 Target Market

Dash aims to be an alternative to cash, anonymous, fast and secure. Dash targets indi-
viduals who would like to make anonymous and private transactions. It is currently the
second most valued crypto-currency that lays a claim to anonymous transactions after
the Monero crypto-currency.
4.1.11 Potential
Dash features probably the first digital economy built on a decentralized incubator. It also
has decentralized governance, decentralized funding, instant transactions and privacy.
This platform offers great promise for use within the African context especially if it is de-
signed as an easy to use digital currency platform that allows the user to send value to
other users in seamless manner without the need for user registration or intermediaries
through its upcoming Dash Evolution platform. This will be particularly useful for people
in rural areas who may lack easy access to financial institutions like banks, credit and sav-
ing societies but have access to mobile technology and the Internet. However, despite its
74
growth in dominance amongst anonymous crypto-currencies Dash also faces huge chal-
lenges in adoption because of its significant premine and its previous association with
dark markets.
Dash References:
¾¾Dash GitHub: https://github.com/dashpay/dash
¾¾Dash Website: http://Dash.org
¾¾Dash Facebook: http://facebook.com/dashpay
¾¾Dash Twitter: http://twitter.com/dashpay
¾¾Dash Slack: https://digitalcash.signup.team
¾¾Dash Bitcointalk: https://Bitcointalk.org/index.php?topic=421615.0
4.2 Bitcoindark/Komodo
Bitcoindark is described on its website as a crypto-currency that was formed with an aim
of paving way for everyone in matters relating financial inclusion. It seeks to overcome nu-
merous limitations faced in the current world of finance. Bitcoindark plans to allow people
to transact freely without incurring any cost imposed by traditional gatekeepers of global
currency and market. Bitcoindark is a complete financial system where revenues generat-
ed are distributed to all the stakeholders as a reward for protecting and maintaining the
system. Any potential customer can buy Bitcoindark coins and run the client. Bitcoindark
like many other crypto-currencies featured here pays out revenues to nodes that provide
services. These revenue streams are typically generated by the Supernet (featured later)
platform together with several other businesses and initiatives.
4.2.1 Team
Bitcoindark has a team of two developers who go by the aliases BTCDDev and JL777 also
the core developer for the Supernet platform.

There are 1,269,605 units of Bitcoindark with the symbol as BTCD.
4.2.3 Innovation
According to the team, Bitcoindark will allow users to run a client and earn revenues from
a suite of third party services built on the Supernet network. These services include:
75
¾¾Bitcoindark manifesto: The clients in the system use an integrated instant decen-
tralized exchange known as Instantdex. This allows near real time trading of a wide
range crypto-currency and assets. It is also important in building up composite order
books from various sources which in return gives the best possible trading depths and
narrowest spreads hence enabling settlements of trades in a peer to peer basis.
¾¾Pegged asset exchange (PAX): PAX enables users to buy and sell pegged assets.
Examples of the pegged assets traded include; gold, silver, copper, ETFs, stock and
currency such as USD, EURO, CNY and CBP. You can trade these pegged assets without
impediment of commission fees and KYC revenues. The system is decentralized which
means that it has no single point of failure. It is very secure and cannot be closed or get
interfered with by the government or other third parties.
¾¾Blockchain features: This include Instantdex, PAX, and Bitcoindark, which can all be
stored in a personal computer. In other words, it means that you can always have ac-
cess to your assets. There is no need for brokers or banks as middlemen. You can access
these assets from your home or place of work. You are your own bank and responsible
for anything that takes place.
According to Bitcoindark documentation, it is a disruptive crypto-currency platform seeks

to overcome many of the disadvantages inherent to the current financial system. This shall
be accomplished using the following features:
• P2P Instant Exchange (Instantdex): The Bitcoindark client will include an inte-
grated instant Decentralized exchange (Instantdex), which will allow near-real-
time trading of a wide range of crypto-currencies and assets. Instantdex builds up
composite orderbooks from many sources including online exchanges like Bittrex
and Poloniex. Instantdex can also potential trade the pegged assets, giving you
access to the world’s major currencies, securities and share indices – without the
usual impediments of commission fees and KYC requirements.
4.2.3.1 Blockchain Features
Both Instantdex, PAX and also Bitcoindark can be stored and accessed on a user’s personal
machine. This means that the user always has access to their assets eliminating the need
for brokers and/or banks as transaction intermediaries.
76

Bitcoindark has a simple user interface with basic wallet features as it is currently building
its core technology platform and application interface. Figure 27 shows the Bitcoindark QT
wallet it currently has basic wallet functions send, receive tokens and view transactions.
Figure 27: Screen capture depicting the Bitcoindark send payment interface
4.2.5 Target Market & Potential

The target market for Bitcoindark and Komodo platform is currently asset traders and
speculators. According to Bitcoindark its Pegged Asset Exchange (PAX) will enable users
to buy and sell pegged assets, including major currencies (USD, EUR, GBP, CNY), commod-
ities (gold, silver, copper), electronic traded funds (ETFs), and stocks. This will be quite
useful within the African context as it will provide a platform for the digitization of as-
sets and commodities. A farmer can represent the value his crop as a digital token which
would then allow for insuring the produce and reducing risk through crowd-investing
from many stakeholders. These investors would then be able to get a return on their in-
vestment once the farmer has successfully sold his produce through exchange of his to-
kens for a digital form of cash. The platform promises to allow new business models to
emerge and be utilized particularly in the developing markets. Indeed, Grewal Satinder a
developer from Supernet stated that he thought Bitcoindark was a promising technology
because of Iguana tech which is cutting edge technology that is efficient, light, robust,
scalable, and secure. In recent times there has been a transition from using the Bitcoindark
wallet to a Komodo wallet built on the Iguana core software within the Supernet project.
77
There still needs to be more documentation to make the intended benefits clear to poten-
tial users of the platform.
Bitcoindark References:
¾¾Bitcoindark GitHub: https://github.com/jl777/btcd
¾¾Bitcoindark Website: http://Bitcoindark.com/
¾¾Bitcoindark Facebook: https://www.facebook.com/Bitcoindark
¾¾Bitcoindark Twitter: https://twitter.com/Bitcoindark
¾¾Bitcoindark Slack: https://Bitcoindark.slack.com/
¾¾Bitcoindark Bitcointalk: https://Bitcointalk.org/index.php?topic=684090.0

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CHAPTER 5
Decentralized
Blockchain Applications
Developers especially in Africa have struggled to monetize their applications due to a
lack of an open and accessible global payment network, until Bitcoin. Current systems like
Paypal and even M-Pesa have huge restrictions and barriers to entries for young develop-
ers who do not have the resources to comply with necessary regulations or interface with
these platforms technologically due to the prohibitive costs.
While Bitcoin does offer some reprieve as an open payment protocol its current character-
istics as being a slow payment platform does not allow for applications that need instant
payments or even micropayments without relying on additional protocol layers like the
lightning and thunder network.
Others blockchain based platforms like Ethereum and Dash have sought to address the
issue of micropayments by allowing for faster confirmation of payments and also building
on programming languages that are turing enabled. These newer platforms seem to com-
pensate for faster transactions by not focusing on offering security to the extent that the
Bitcoin blockchain offers security due to it being secured by proof-of-work as discussed in
earlier chapters.
More so, these platform allow for the building of both web and native applications that
can be ostensibly installed quickly and operate on mobile platforms which do not have
much resources and can therefore not run the traditionally bulky blockchain platforms, for
example applications that run on full Bitcoin nodes. We look at two platforms that have
taken two different approaches i.e. the Supernet platform which is building an applica-
79
tion layer on top of the Bitcoin protocol, and Lisk which has built its own Javascript based
blockchain application platform.
5.1 Ethereum
Ethereum is a decentralized blockchain platform that runs smart contracts, which are pro-
grammable transactions, executed on a public virtual machine. It uses a programming
language called solidity, which makes it possible for developers to build and publish next
generation distributed applications. Ethereum used a crypto asset known as Ether that
is used to fuel the peer-to-peer contracts. Ethereum seeks to become the world virtual
computer.
5.1.1 Innovation
Ethereum has a wallet that allows users to hold, manage and secure ether and other
crypto assets built on Ethereum. The wallet is also useful for developers interested
in writing, deploying smart contracts. Ethereum runs full time without possibility of
downtime as the blockchain ensures that the contracts are executed as programmed
while being kept secure by the nodes. Developers can disintermediate traditional mid-
dlemen using this platform for example creating decentralized markets with smart
escrow functionality. Currently applications run on centralized servers and any failure
is catastrophic as there is a single point of failure. In Ethereum such applications will
be distributed over several nodes and if one node fails the code can still execute on
other nodes.
According to Ethereum, a user can create a tradable digital token that can be used as a
currency, a representation of an asset, a virtual share, a proof of membership or anything
at all. These tokens use a standard coin API, so your contract will be automatically compat-
ible with any wallet, other contract or exchange also using this standard.
The total amount of tokens in circulation can be set to a simple fixed amount or fluctuate
based on any programmed rule set.
The user can then create a contract that will hold a contributor’s money until any given
date or goal is reached. Depending on the outcome, the funds will either be released to
the project owners or safely returned back to the contributors. All of this is possible with-
out requiring a centralized arbitrator, clearing house or having to trust anyone.
You can even use the token you created earlier to keep track of the distribution of rewards.
80
Decentralized Blockchain Applications
Ethereum also claimed that one can create a democratic autonomous organization (DAO)
where traditional corporate activities like hiring, accounting, voting can be done with an
Ethereum contract which collects proposals from your backers and submit them through
a completely transparent voting process.
These assertions have been tested during an incident called “The Dao Attack” that we cov-
er in detail in the next few pages.
5.1.2 Comparison of Ethereum with Bitcoin

Bitcoin has morphed into a currency best suited for storage and settlement of value
whereas, Ethereum can offer programmable solutions in situations where parties need to
meet certain conditions that are set out in a smart contract.
Bitcoin nodes agree on transaction according to the transmission and storage of the Bitcoin
value token. In Ethereum agreement is ascertained via the use of the Ether token which
processes software programs on a distributed virtual machine powered by the Ethereum
computing nodes. Both Bitcoin and Ethereum use encryption and time stamping.

There will be a cap of about 77,000,000 units of Ethereum with the symbol as ETH.
5.1.4 Team
Ethereum was founded by the following individuals:
• Vitalik Buterin • Joseph Lubin

• Amir Chetrit • Jeffrey Wilcke
• Gavin Wood • Anthony Di Lorio
5.1.5 Potential
Ethereum is geared towards building decentralized applications that need to execute cer-
tain actions based on rules that are coded into a smart contract. These applications need
to be secured by an immutable ledger to protect the integrity of the result of the execu-
tion. They can include escrows for buyer and seller markets where a seller has to meet
certain conditions such as delivery before the funds are released.
This smart contracting system has many potential applications, which could range from
smart escrow services to automated payment solutions that ease interactions between
players in existing marketplaces. An example of an application would be a smart insur-
ance solution that reduces risk for farmers by providing a marketplace of insurance con-
81
tract buyers. These buyers could be individuals in the diaspora willing to invest back in
their countries of origin as a way to contribute to development.
5.1.6 Challenges facing Ethereum

• The Ethereum platform is new, untested and therefore it has not undergone the
severe stress tests that Bitcoin has gone through.
• Applications on the platform could be expensive to run especially if the applica-
tions have bugs. For example, the DAO attack incident, which happened in June
2016, showed some inherent vulnerability within the Ethereum platform.

For developers they can develop Ethereum using solidity a language written from scratch
for the Ethereum ecosystem. Ethereum can be developed and code written on standard
IDE’s like Eclipse making it easy to deploy for most developers. Ethereum has a standard wal-
let called Mist that a user can use to keep his ether. Many exchanges now accept Ethereum.
Figure 28 on the next page depicts an Ethereum client which is very similar to a Bitcoin
client. The client allows a user to do the following:
• View Balance in Ether and USD dollars

• View Smart Contracts and Tokens
• Send and Receive Ether
• Secure wallet with MultiSig controls
82
Figure 28: Screen capture depicting Ethereum wallet Overview
Figure 29: Ethereum developer Brian at Moringa School in Nairobi shows his Solidity script
83
5.1.8 Target Market

Ethereum is built to be the World’s distributed computer where code can be executed on
the blockchain. Since it is a turing complete platform then applications beyond payments
can be written. As an illustration, Slock.it, an Ethereum based startup is developing locks
that can be controlled using Ethereum. There are many applications, for example access
to driverless cars, hotel rooms and even factories can be facilitated by the Ethereum key-
chain. These are possible applications for the Ethereum platform:
• Domain names solutions

• Financial exchanges
• Crowdfunding applications
• Corporate governance solutions
• Codifying contracts and agreement
Ethereum has the potential to be used to develop a wide variety of applications targeted
for the African. They could include:
• Smart banking applications that provide banking services through the mobile
phone including previously underserved populations.
• Smart Insurance applications that provide insurance services to manage risk of loss
for farmers and other previously underdeveloped markets.
• Smart lending applications that provide access to credit, which has largely been
unavailable in many developing countries.
• Smart investing and crowdfunding applications that provide access to capital for
budding entrepreneurs within the African context.
Ethereum References:
¾¾Ethereum GitHub: https://github.com/ethereum/
¾¾Ethereum Website: https://www.ethereum.org/
¾¾Ethereum Facebook: https://www.facebook.com/ethereumproject

¾¾Ethereum Twitter: http://twitter.com/ethereumproject
¾¾Ethereum Forum: https://forum.ethereum.org/

84
5.2 The DAO Project

The Ethereum project has also hosted the most funded Distributed Autonomous Or-
ganization known as “The DAO” which raised over 150 million dollars in May 2016. The
DAO was described as a distributed hedge fund that will invest in projects using a set of
rules encoded in the Ethereum blockchain to govern performance and reward investors
through dividends.
5.2.1 The DAO Attack

On 17th June 2016 the DAO was attacked by a hacker who managed to siphon using a
recursive program millions of dollars’ worth of ether from the DAO contract into a new
child contract created by the hacker. As a result, the Ethereum team lead by Vitalik issued
a statement indicating that there would be a soft and hardfork to prevent the hacker from
accessing the funds. This resulted in a huge plummet in value of both Ethereum and The
DAO within a few hours as shown in Figures 30 and 31.
Figure 30: Graph depicting a sharp drop in The DAO market cap due to “The DAO Attack”
85
Figure 31: Graph depicting a sharp fall of Ethereum due to the “The DAO Attack”
5.2.2 The DAO Attack Resolution

Some challenges had been identified in the DAO with security flaws being identified and
a paper called “a Call for a Temporary Moratorium on The DAO” being written.
The SlockIt team lead by Stephan Tual advised through Twitter that the DAO contract would
be closed and rewritten to allow holders to withdraw their ether without any losses. Some
pundits like Emin Gün Sirer have asserted that writing a robust, secure smart contract, requires
extreme amounts of diligence and is more like writing code for a nuclear power reactor, than
to writing loose web code (Emin 2016). He states that solidity language is unclear on many
code structures and states that govern actions of the contracts under certain conditions.
He concludes that it is unknown how the Ethereum community should react as the current
option of rolling back the blockchain or freezing and allowing DAO investors to withdraw
their coins will not please everyone, a challenge in moving the Ethereum project exper-
iment forward. Ethereum should learn from this incident and fine-tune its core platform
and scripting languages before moving ahead.
The Ethereum community on 20th July 2016 successfully completed a hard fork to deny
the DAO attacker an opportunity to access the ether siphoned during the attack. The
hard fork occurred on block 1,920,000 which contained the execution of an irregular state
86
change which transferred the roughly 12 million ether from the “Dark DAO” and “Whitehat
DAO” contracts into the Withdraw DAO recovery contract. The fork itself was supported by
roughly 85% of miners mining on the fork.
Interestingly, the hardfork resulted in a group of miners and developers who adopted
a purist stance against the hard fork, refusing to leave the old chain, which has been
dubbed Ethereum Classic trading in major exchanges under the new symbol ETC. This
happenstance emphasizes the experimental nature of crypto-currencies where different
scenarios can emerge based on different opinions within a community of an established
crypto-currency like Ethereum.
It remains to be seen which blockchain will prevail in the end as both Ethereum and Ethe-
reum market continue to have significant market power behind them.
The DAO experience has clearly shown that blockchain technology and innovations do
present new risks and challenges especially where investments are involved. It is also im-
portant to note that blockchain technology also provides mechanisms for audit and res-
olution of these challenges. More education is needed to develop the ecosystem within
African markets where such risks of loss of funds could be devastating within emerging
societies where capitalization of resources is still at its infancy. A loss of a farmers society
funds in an Ethereum smart contract could be devastating to that community’s livelihood.
5.3 Supernet
Supernet is a blockchain based application that seeks to bring together crypto-curren-
cies together to offer shared services on a single platform. The goal here is for a user to
benefit from unique services provided by different crypto-currencies without having to
download multiple blockchains which can be a tedious process. This will be achieved in
the following ways:
• Hosting a browser based multi-wallet that stores various crypto-currencies on dis-

tributed network of servers.
• Providing a marketplace for exchanging these currencies using a decentralized ex-
change known as Instantdex, which will be powered by the Bitcoindark/Komodo
crypto-currency.
• Providing and building services and applications such as poker, prediction markets,
lending and banking services on a decentralized platform that does not require a
user’s personal information.
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5.3.1 Token Specification

Supernet has issued 816,061 Unity tokens issued as an asset on the Nxt asset exchange.
5.3.2 Team
The core developer for the Supernet platform is anonymous and goes by the names James
Lee also known as JL777. He is also the core developer for Bitcoindark/Komodo, which is
a part of Supernet and is also featured in this publication. Supernet has had dozens of de-
velopers who have worked part time or are involved in other projects. Supernet currently
employs graphic user interface (GUI) developers as well as test users who are working on
bringing the project to reality. James Lee says the goal of Supernet is to make crypto-cur-
rencies easy to use as apple products.
5.3.3 Innovation
The Supernet platform enhances Bitcoin functionality through the iguana platform to
provide the following benefits:
• Faster transactions by compressing and indexing the Bitcoin blockchain with ram-
chain technology
• Allowing for decentralized applications like poker and betting built on the API
• Facilitating mainstream adoption through use of easily accessible applications like
Google Chrome apps
• Allowing for asset passports, which allows cross transfer of assets across different
blockchains and therefore reducing reliance on any one blockchain
Iguana is the core of the Supernet platform it implements a lot of the features of the Bit-
coin blockchain and intends to integrate smart contracts.
Iguana is fast as it makes the Bitcoin blockchain lighter. Iguana is programmed in C language
and does not use databases making it process transactions quickly with fewer overheads.
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Figure 32: Image depicting the Supernet layered protocol and architecture

Supernet is building a wide variety of applications on top of the Bitcoin protocol. We tested their
current multi-wallet Supernet litewallet version 3.0 which is also build on the NXT 1.0 blockchain.
Figure 33: Screenshot capture depicting the Supernet Lite wallet dashboard interface
89
Figure 33 depicts the Supernet browser multi-wallet that allows a user to access his cryp-
to-currencies from a single interface. The user can be able to send and receive multiple
crypto-currencies by creating wallet addresses within this single interface. The wallet
shows his balance of the supported currencies. The wallet is able to host multiple cur-
rencies by using the NXT Asset exchange to created pegged assets that represent the
supported crypto-currencies. For example, SuperBTC represents Bitcoin while NXT is rep-
resented by SuperNXT.
The actual crypto-currencies are stored on multiple servers using the Multi-Gateway
(MGW) protocol that uses multisig to secure the user deposits. All user deposits are se-
cured in these servers using encryption to ensure there is no single point of failure.
Supernet is using a distributed approach in securing crypto-currencies without having to

physically secure wallets on paper wallets or storage devices. This represents an advance
in asset protection using blockchain technology.
There are currently plans to make the asset exchange service not dependent on the NXT
blockchain or indeed any one particular blockchain. This will be done by creating what
James calls an asset passport protocol, which is blockchain agnostic.
Figure 34: Screenshot capture depicting the Supernet coin operations popup interface
90
Figure 34 shows how a user can send funds in this case NXT tokens from a particular user
using the Supernet multi-wallet.
5.3.5 Target Market

Supernet platform is targeting the consumer market with a wide variety of applications
such as:
• Crypto-currency management through its multi-wallet

• Pangea: Decentralized poker application
• Skynet: Decentralized prediction markets
• Tradebots: Automated trading scripted algorithms
5.3.6 Potential
The Supernet platform has huge potential in becoming the first suite of widely used decen-
tralized applications. However, due to a number of setbacks during the past couple of years
progress has been slow despite of a lot of efforts from the core developer James and his team.
The Supernet platform provides new opportunities for development of market driven applica-
tions such as prediction markets that can help manage risk in various commodity markets. For
example, many farmers markets for produce like maize, tomatoes, mangoes and onions suffer
from a lack of information. Prediction markets could be utilized to increase market efficiencies
in important socio-economic markets within the African context.
Supernet References:
¾¾Supernet GitHub: https://github.com/jl777/Supernet
¾¾Supernet Website: http://www.Supernet.org
¾¾Supernet Facebook: https://www.facebook.com/Supernetorg
¾¾Supernet Twitter: https://twitter.com/Supernetorg
¾¾Supernet Slack: http://slackinvite.Supernet.org
¾¾Supernet Bitcointalk: https://Bitcointalk.org/index.php?topic=762346.0
5.4 Lisk
Lisk is a decentralized blockchain application platform and crypto-currency that allows
Node.js and JavaScript developers to deploy their own blockchain applications on a single
solution.
91

There are 100,000,000 issued units of Lisk with the symbol as LSK.
5.4.2 Team
Lisk is founded by Max Kordek (C.E.O) and Oliver Beddows (C.T.O). The Lisk team was previ-
ously involved with the Crypti when they branched out to start Lisk raising 14,000 Bitcoin
for the project.
5.4.3 Innovation
According to the Lisk team, it is the first decentralized application solution written entirely
in Node.js. This opens up the Lisk ecosystem to thousands of current developers with no
additional skills necessary. Through Lisk, developers can build, publish, distribute, and mon-
etize their applications within a custom built crypto-currency powered system that utilizes
custom blockchains, smart contracts, cloud storage, and computing nodes, all from within
one industry solution. Any web developer who is already familiar with JavaScript and Node.
js can immediately jump in and begin building decentralized applications from day one.
The core goal of Lisk was to create an entire plug and play system that would allow devel-
opers to do everything from design, development, publication, and monetization, all from
within one platform. By utilizing the Lisk ecosystem, developers can quickly deploy their
JavaScript apps to Lisk Hosting and Storage nodes, to gain listing in the Lisk Dapp Store,
and have immediate access to Lisk compute nodes for execution of the code. All while
being backed by the integrity and security of the Lisk sidechain consensus functionality.
To top it all off, all of these cloud functions are run by the users and Lisk delegates who are
paid through a built in invoice system (or by the network itself in the case of delegates)
and paid in LISK (Lisk’s own crypto-currency) or BTC.
Lisk blockchain applications are built in pure Javascript and access blockchain services
using the Lisk API. These applications run their own sidechain to ensure that the Lisk main-
chain is itself safe. These applications will in the future run on the Lisk virtual machine to
ensure each node can support these applications.

Lisk has a simple and easy to use web interface at Lisk.io that can be accessed from any
popular web browser. The platform allows for the development of blockchain applications
and listing on its app store as depicted in the screenshots.
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Figure 35: Screenshot capture depicting the Lisk passphrase generation interface
Figure 35 above depicts how a user can generate a passphrase which must be no fewer
than 12 words to ensure the wallet is safe. This interface is accessible on a web browser
and runs off node.js.
Figure 36: Screenshot capture depicting the Lisk dashboard interface

93
Figure 36 depicts the Lisk dashboard that contains a menu on the left that allows you to
access the Lisk services, which include the blockchain application interface. A user can be
able to send Lisk to another Lisk account as well as view the balance and transaction his-
tory. A user can view his transactions on the blockchain, which currently need about 300
confirmations to be confirmed.
Figure 37: Screenshot capture depicting the Lisk appstore dashboard interface
Figure 37 above depicts the Lisk blockchain application store where javascript developers
can deploy their applications. These applications are then show cased on the store where
a user can install them on the blockchain.
5.5 Target Market

Lisk seems to be targeting mainstream developers as they are leveraging off this popular
scripting languages like node.js and javascript unlike other eco-systems like Ethereum
which have developed their own programming languages from scratch.
5.5.1 Potential
Lisk by offering an API will allow other developers to deploy blockchain services into their
native applications. This allows Lisk based applications to be deployed on popular app
stores like Google Play. This has the potential of making blockchain technology go main-
94
stream. However, the challenge with Lisk would be how feasible would it be traditional
scripting languages to process blockchain transaction, for instance debugging applica-
tions could become a costly affair as it would involve spending Lisk tokens unnecessarily.
African developers could develop a variety of applications on the Lisk blockchain and
monetize them with the Lisk tokens. This presents new opportunities for these develop-
ers to earn income from their own applications, which is not easily achievable using tradi-
tional scripting languages and payment platforms. There is a lot of talent especially on the
gaming and entertainment sector within the African tech community.
Lisk References:
¾¾Lisk GitHub: https://github.com/LiskHQ
¾¾Lisk Website: http://Lisk.io

¾¾Lisk Facebook: https://www.facebook.com/Lisk-1118720888180640/
¾¾Lisk Twitter: https://twitter.com/LiskHQ
¾¾Lisk Chat: http://chat.Lisk.io
¾¾Lisk Bitcointalk: https://Bitcointalk.org/index.php?topic=1346646.0

95
CHAPTER 6
Decentralized
E-Commerce
Commerce has been happening on the African continent for millennia, from the riverboats
on the Nile trading merchandise with the nearest civilizations to barter trade between
different ethnic groupings within the heart of the continent. In modern times trade in
much of Africa has been made difficult in part due to the existence of numerous artificial-
ly set national borders as set up by the Europeans at the Berlin Conference in 1884-1885.
These borders in numerous cases divided homogenous ethnic groups into separate states
for example the famous Maasai ethnic group were divided between Kenya and Tanzania.
Likewise, the Somali were divided into Kenya and the country of Somalia. These divisions
have led to a myriad of social issues including strife that has continued to affect the eco-
nomic well-being of countries on the continent today.
Trade is key for any society to survive indeed without it there is little chance for individuals
to escape poverty. Much of Africa has been subject to a trade deficit due to lack of infra-
structure as well as political instability leaving many countries reliant on aid, which in itself
further exacerbates and complicates issues. We have seen that a country’s Gross Domestic
Product (GDP) is more likely to increase with access to the internet infrastructure case in
point Kenya which has its own Silicon Savannah blossoming due the arrival of fibre optic
cable in the year 2009.
According to an exploratory study of ecommerce in Kenya, Uganda and Tanzania (Ihub

Research 2014), preliminary results show that 720 million people have access to mobile
phones with 167 million having internet access in 2013. According to the same statistics
96
Decentralized E-Commerce
31% of urbanites have access to smartphones. This people usually purchase digital prod-
ucts, which include airtime, mobile phone accessories/electronics, bill payment, clothing,
and food. Interestingly, according to the study social media platforms act as source of
information for goods purchased.
Popular payment platforms are:
• M-Pesa at 61% of transactions

• Online payments at 19% of transactions
• Credit cards at 13% of transactions
• E-vouchers at 3% of transactions
Challenges faced by online shoppers include:
• Difficult to make payments

• Fraud is a growing phenomenon
• Delayed delivery of goods
• Security Issues
• Transaction Costs
It is also important to note that citizens in major towns buy goods that are delivered wire-
lessly. Airtime is the most popular good bought and purchased directly on mobile phones.
Mobile money is the most popular transaction mode for payments received by businesses
on the other hand credit cards are more popular for large transactions.
Blockchain technology and crypto-currencies have the potential to create a new disrup-
tive economy based on decentralized and peer-to-peer markets. These markets facilitate
the exchange of goods and services directly between buyers and sellers with the block-
chain acting as the ledger storing and transacting tokens using algorithms that set the
rules of trade. Already, blockchain is already heavily used for speculative trade of cryp-
to-currencies and assets and now we are beginning to see decentralized markets evolve
and allow for the trade of physical goods and services.
The obstacles created by the costs of trade have driven the need for a decentralized mar-
ket place. This has been driven because access to existing Web 2.0 ecommerce platforms
is expensive due to high transaction fees. Additionally, the mode of payment could be
prohibitive to either buyer or seller. Take for instance Amazon.com a popular ecommerce
platform based in the United States that has numerous products from a wide variety of
categories is inaccessible to persons outside the jurisdictions it operates yet there is huge
potential for the platform is urban African markets. The platform is encumbered by chal-
97
lenges in collecting payments or trusting the authenticity of the purchase requests made
from African countries. Even if Amazon was to open up its platform to the continent and
for instance accept Bitcoin as a payment it would still have challenges with delivery of
product or supporting relevant products unique to these markets.
Consequently, the last four years has seen the arrival on African web based ecommerce
platforms. They include platforms like Konga, Jumia and KiliMall (a subsidiary of Alibaba)
which have entered the African markets notably Nigeria and Kenya with substantial fund-
ing and traction yet have been faced with challenges with stocking relevant local prod-
ucts as well as timely delivery of products to the intended recipient or buyers. This could
be because of external factors such as luck of a proper addressing system regarding deliv-
ery or lack of ubiquitous and interoperable payment platforms locally. This issue is crucial
as the lack of a proper address system that is based on location as opposed to postal box-
es which many credit card companies like VISA and Mastercard do not accept to process
payments. This is crucial to support E-Commerce and the delivery of goods and services.
If the local authorities or even startups succeeded in creating such a postal system then i
believe it would increase the GDP dramatically because it would open up more markets
and reduce strain on transportation and security costs.
It would also open up new industries where local e-commerce enterprises such as Mama-
Mikes.com would have incentives to enter the warehousing and distribution industries.
Together with mobile banking, such postal systems would mean the expansion of African
economies within a very short time. In the meantime, peer-to-peer or decentralized mar-
ketplace solutions could solve some of these problems because they would allow:
• Localized trade with markets setup for specific locations like a village
• Peer-to-peer markets or decentralized marketplace solutions can leverage of cryp-
to-currencies that are easy to use for payments
• Peer-to-peer markets or decentralized marketplace solutions do not require per-
sonal identification yet provide methods for ensuring secure payments upon deliv-
ery of goods through innovative escrow systems
We undertook to study two of the pioneering peer-to-peer and decentralized ecommerce
systems namely Openbazaar and Syscoin.
6.1 Openbazaar
Openbazaar started in November 2014 is an open source project that has developed a pro-
tocol for e-commerce transactions for a fully decentralized marketplace. Unlike traditional
98
ecommerce platforms where you visit a website on a web browser, with Openbazaar you
just download and install a program in your computer that connects you to other traders
willing to buy and sell goods and services with you. Openbazaar leverages on the Bitcoin
crypto-currency. The system is based on code forked from a project known as Darkmarket.
6.1.1 Team
The Openbazaar team has the following founders:
• Brian Hoffman: Founder

• Samuel Patterson: Founder
• Washington Sanchez: Founder
• Dionysis Zindros: Founder
6.1.2 Innovation
The Openbazaar project was developed with a mission to make trade free for everyone
everywhere in the world. The goal of Openbazaar is to become a commerce 2.0 platform
with a permissionless and censorship resistant protocol for global trade using Bitcoin.
Openbazaar upon completion will have the ability to power trade across global markets
with the initial focus is on traditional e-commerce for physical and digital goods and ser-
vices. The latest version 1.1.5 provides a peer to peer market with e-mail notifications, CSV
data export, easy server switching and improved listing information.
6.1.2.1 Features of Openbazaar Version 1.1.5 Include:

• Multiple server management in the client, e-mail notification, export to CSV and
improved information listings
• E-mail notifications can be sent via SMTP, which is used to send orders are submit-
ted to the store
• Easier for users to switch between different servers hosting the stores
• Easier exporting of data for stores with large amounts of listings and transaction to
a CSV file
• Easier to import this data in third party programs like the Microsoft excel or the
QuickBooks
• Improved information for listings, with a tag showing type of listing e.g. Digital or
physical goods
Unlike other e-commerce platform, Openbazaar has no intrinsic fees built into the plat-
form. It is open source and there is no cost incurred in downloading and installing. The
users need to pay for third party services e.g. moderation during disputes. However, mod-
99
erators are not forced to charge and the users on the other side are not forced to use these
moderators.
Openbazaar has no fee structure because there is no individual, company, or organization that
runs the platform, which essentially means that there is no intermediary extracting value from
the network. Similarly, no one records your registration of account and only the buyer and
seller set their terms and conditions. In this way, it is very similar to buying and selling with
someone in person only that it is done online. This is made possible with multisig technology.
According to Openbazaar the main challenge is in addressing disputes when things go

wrong like shipping of goods is not delivered or the goods get damaged. This is where the
third party comes in using multisig where two of three to agree in order to move the Bit-
coin payment and solve the dispute. The third-party controls the third key to the multisig.
This essentially means in Openbazaar the funds cannot move to the seller until the buyer
and the seller come into an agreement or the third party agrees with either the buyer or
the seller on how to deal with the transaction and the money on multisig. Therefore, in
case there is no agreement, the funds can be refunded to the buyer.
6.1.3 User experience

According to the various comments found on social media it is clear that Openbazaar has
been quite helpful to users. Numerous users regard this platform as an excellent buying
and selling forum. One user says that it has been a great experience as they have had so
many orders. However, Openbazaar current version does have a few bugs here and there,
which are regularly patched. Another issue is privacy and the developers are being urged
to work on developing the privacy for the site. In conclusion, Openbazaar is a very exciting
platform for buyers and sellers. There are no costs incurred in joining and installing it in
one’s computer. The Openbazaar developers claim they are not stopping until they ensure
that all of us can trade for free. Here is a review of our own user experience.
The Openbazaar interface is clean and easy to install and use and a user on opening the
Openbazaar application can do the following:
• Choose a language
• Register his location
• Choose if he/she wants to view NFWS content
• Setup an Avatar
• Choose a theme
100
Figure 38: Screenshot capture depicting the products listings available on Openbazaar
Figure 38 above shows a number on listings from already existing stores on the Openba-
zaar platform. Most of the products on offer are digital downloads such as themes to style
up a user’s Openbazaar store. There is functionality to search for more products as well as
view random listings, which makes the interface user friendly.
Figure 39: Screenshot capture depicting the product page on Openbazaar

101
The figure 39 above depicts a product page for a premium them download. The product
page is very similar to product pages on traditional online ecommerce platforms like Am-
azon.com. The page contains the following features:
• User menu • About information

• Buy using Bitcoin • Product image
• User reviews • Product tags
• Product followers
Figure 40: Screenshot capture depicting escrow and payment options on payment page
Figure 40 above shows the different payment nodes when the buy button is clicked. The
user has the option to setup an escrow for purchase where the merchant is not trusted
or direct payment for trusted merchants. The user should review the merchant’s reviews
before making any purchase.
6.1.4 Target Market

Openbazaar is targeting merchants and shoppers who would like to use Bitcoin and other
crypto-currencies for online shopping. The platform works best for localized ecommerce
as Openbazaar is not involved in running the stores or providing shipping services. There-
fore the merchant has to find ways to ship the goods to the shopper.
102
6.1.5 Potential
The Openbazaar platform has huge potential of adoption by buyers and sellers because it
offers an opportunity to buy and sell their goods and services for free. There are a number
of possible improvements that will enhance the service. The following features are already
under development:
• A reputation system for moderators

• A page to display moderator policies e.g. terms of service
• Search function for moderators
• Merchants and buyers can switch moderators
• Accept or reject the moderator’s terms of service
• Reputation pledges e.g. proof of burn and surety bonds
Openbazaar presents new amazing opportunities for individuals looking to sell products
while leveraging on the Internet and Bitcoin as a payment gateway. Openbazaar is being
used by local communities to create their own markets to display their produce. African
producers could accept payments in Bitcoin for their produce from international clients
as well. This could especially be useful in niche markets like artisan workers who can sell
their art pieces globally,
Openbazaar References:
¾¾Openbazaar GitHub: https://github.com/Openbazaar
¾¾Openbazaar Website: https://Openbazaar.org
¾¾Openbazaar Twitter: https://twitter.com/Openbazaar
¾¾Openbazaar Slack: https://Openbazaar-slackin-drwasho.herokuapp.com/
6.2 Syscoin
Syscoin is a revolutionary crypto-currency that provides businesses with decentralized
infrastructure to trade goods, digital certificates, assets and data in a secure manner. It is
both a crypto-currency and a business platform and just like Bitcoin that is characterized
low transaction costs.

There are 480,559,228 units of Syscoin issued with the symbol as SYS. Syscoin trades un-
der trade symbol SYS on virtual currency exchanges, including Bittrex and Poloniex.
103
6.2.2 Team
Syscoin has a significantly large number of team members ranging from marketers and
developers and has been quite active developing promoting their platform. Their team is
lead by Dan Wasyluk and has been has been creating innovative crypto-currency projects
since December 2013. Syscoin is designed by an open-source development team of five.
The Syscoin development team has been creating innovative crypto-currency projects
since December 2013. Experienced in various software languages, the team is equipped
to ensure Syscoin’s future development and ease of use of its services. The team members
are as follows:
• Dan Wasyluk: Team Manager & Developer

• Jag Sidhu: Core Developer
• Brad Hammerstron: Marketing
• Sebastien Dimichele: PR & Community Manager
• Willy Ko: China Community Manager and Developer
6.2.3 Innovation
Syscoin has a decentralized marketplace built into the blockchain, it’s wallet GUI provides
not only a standard wallet to send and receive, but also full access to the marketplace
and many additional features including escrow, aliases, encrypted messaging, certificates,
price pegging, Bitcoin as a payment option and much more.
Syscoin ensures that it’s network, data storage and marketplace cannot be taken down by a
single point of failure, by allowing its network to be secured via the most powerful mining
network in existence. Being merge-mined with all other SHA-256 coins, allows all Bitcoin
miners to also mine Syscoin simultaneously, providing existing miners with a small bonus.
Syscoin offers the following services that are decentralized and secured using Bitcoin and
blockchain technology:
• Decentralized data storage: Syscoin sends and receive data, which is secured
through encryption on the blockchain.
• Decentralized market on blockchain: This feature allows business to be conduct-
ed on a peer to peer platform without any third party mediating where users can
sell anything they want on the blockchain.
• Digital certificates and asset: Syscoin can issue, authorize and trade certificates
on the great blockchain for example stocks, bonds, assets and ownership certif-
icates. This has huge potential in creating efficiencies in the brokerage business.
104
• Miners and Fees: Miners collect fees from transactions on Syscoin as a reward for se-
curing the network. The system had a merged mining which was a unique fee and coin
recycling feature that ensures miners are paid even after all coins had been created.
Syscoin ensures that the data storage or market place cannot be taken down by a single
point of failure by allowing its network to be secured through merge mined with all the
other scrypt coins.
Syscoin is currently working on solving its blockchain bloat problem as well as testing to
improve scalability of the platform. New features include:
• Safe search/item moderation (optional, on by default in team-provided wallet)

• Search pagination
• Default alias
• Message ordering, escrow ordering
• Special pruning mechanism for reducing blockchain bloat
• Themeing option
• Easy unlock for encrypted Wallets
• Archive sold out items
• Item geolocation
• Suggested categories
• Category search
• Hiding expired and completed escrows
• Rating system
• Item wishlist
Syscoin 2.0 has the following features:
• Sending and receiving Syscoin between wallet addresses

• Keeping track of your transaction history
• Buying and selling items on the marketplace
• Sending encrypted messages and reselling items

Syscoin has already developed a number of features on the standard QT wallet. Here is our
experience using the Syscoin platform.
105
Figure 41: Screenshot capture Image depicting the Syscoin dashboard
Figure 41 depicts the Syscoin Qt wallet dashboard which shows a user his available bal-
ance in Syscoins as well as pending transactions. The Syscoin team has extended the wal-
let to include additional features other than sending, receiving, and viewing transactions.
Figure 42: Screenshot capture depicting the Syscoin escrow feature

106
Figure 42 above depicts the Syscoin escrow feature that protects buyers from sellers who
fail to deliver the products. This interface contains the following parameters.
Escrow Operations such as:
¾¾Registered escrows
¾¾Manage escrows
¾¾Send message to buyers
¾¾Send message to seller
¾¾Send message to arbiter
The user can also search for escrows in this interface.
Figure 43: Screenshot capture depicting the Syscoin Marketplace
Figure 43 above depicts the marketplace interface where products are sold or bought. The
interface has the following options:
¾¾Selling tab: This tab will allow the user to add new offers as well as manage affiliates
¾¾Sold tab: This tab is dedicated to an interface that lists sold items
¾¾My purchases tab: This interface will show purchases made by the buyer
¾¾Search tab: This interface allows the user to search for sold listings
¾¾Buy tab: This interface allows the users to lookup offers

107
Figure 44: Screenshot capture depicting a product offer on the Syscoin wallet
Figure 44 above shows the product offer interface that will display information about an
offer. The user has to look up for the offer by entering the ID, which is not as user friendly
as a user would like. The buy interface has the following parameters:
¾¾Merchant rating
¾¾Title
¾¾Category
¾¾Price
¾¾Currencies
¾¾Quantity remaining and sold
6.2.5 Target Market

Syscoin targets individuals and businesses that would like to trade on a secured block-
chain benefiting from low costs and secure transactions.
6.2.6 Potential
Syscoin recently became a Microsoft Azure partner for its cloud-based blockchain as a ser-
vice (BaaS) platform. Future enhancements will include full featured mobile applications;
import/export filters for Ebay, Etsy and other centralized marketplaces, plus web plugins
108
for Prestashop, Magneto and Shopify. Similar to Openbazaar, Syscoin like Openbazaar
could provide huge access to markets to previously underserved markets of buyers and
sellers with the African context.
Syscoin References:
¾¾Syscoin GitHub: https://github.com/syscoin
¾¾Syscoin Website: http://syscoin.org/
¾¾Syscoin Facebook: http://twitter.com/syscoin
¾¾Syscoin Twitter: http://twitter.com/syscoin
¾¾Syscoin Forum: https://Bitcointalk.org/index.php?topic=1466445.0
¾¾Syscoin Slack: http://join.syscoin.org

109
CHAPTER 7
Decentralized Storage
Solutions
Existing cloud solutions are expensive and remain out of reach of many in the developing
World especially in Africa where the lack of infrastructure makes it difficult and expensive
to store data. Furthermore, most of this data storage infrastructure is hosted outside Africa
making the access of data reliant on internet connections to those locations, which adds
significant cost to the data consumer. With the new internet infrastructure in most African
countries, and few fibre optic cables connecting the continent issues such as fiber cuts or
power facts greatly affect the accessibility of data hosted elsewhere.
Additionally the fact that most cloud solutions are priced in foreign currencies like the
United States Dollar (USD) which makes it challenging for developers to pay for these ser-
vices with local fiat currencies as described in earlier chapters.
According to a study on cloud computing adoption in Africa (Omwansa, Waema, Omwen-

ga 2013), South Africa, Kenya and Nigeria are leading adoption of cloud computing. The
study found that 50% of South Africa’s medium and large businesses were using cloud
services, compared to 48% in Kenya and 36% in Nigeria.
At the level of the mobile network operators, cloud computing technology was already
used by 33% of the African country operators surveyed, while 23% of those operators had
embarked upon its implementation. In the study, over 50% of the economic operators
such as big companies had already adopted cloud computing.
The study identifies the countries that have operational data centers Tanzania, Gabon,
Burkina Faso, Rwanda, Zimbabwe, Kenya, Senegal, Cape Verde and Cameroon. A number
110
Decentralized Storage Solutions
of governments had taken specific initiatives to promote cloud computing in their coun-
tries. These countries were Benin, Burkina Faso, Burundi, Cape Verde, Gabon, Mali, Rwan-
da, Tanzania and Togo. About half of the countries had no legislation on data protection.
This analysis only covers large organizations and company’s i.e. MNOs where less than half
had adopted cloud computing by 2013. This leaves a huge untapped market in the enter-
prise sector as well as informal, small and medium businesses which form the bulk of the
economy in most of the countries mentioned in the study.
Decentralized storage solutions offer a solution, as they allow for payments on a pay per
use model using digital currencies like Bitcoin. Local storage nodes can also be hosted to
ensure that data is accessible even if for some reason there is a lack of connectivity with
global networks. Blockchain can be used to index and store data by allowing for individ-
uals or businesses to provide underutilized storage space on their computers or servers
to the decentralized network and consequently earn revenue in the form of tokens for
hosting this data. Three notable projects are building blockchain solutions based on this
premise they are namely:
• Maidsafe
• StorJ
• SIACoin
We take a close look at SIA as it has a solution in Beta that we were able to access and analyze.
7.3 Sia
Sia is built to be a decentralized cloud storage partner, which does not compete with
currently existing cloud storage services like Box or Dropbox. In Sia users form nodes that
create a decentralized network of storage that utilizes available storage space. These us-
ers are paid according to the storage rented from their computer provided they keep the
files for the entire duration of the contract. Its main competition is filecoin and StorJ. Sia
features both a graphical client and a stable API with long term support. According to the
Sia team version 1 allows greater stability, greater scale, supports large files greater than
50 gigabytes (GB), and has an API that third party developers can use to integrate Sia into
their own applications.

There are 14,084,625,189 SC units of SIA.
111
7.3.2 Team
The SIA team is led by David (Taek) a developer who features prominently on their social
media platforms and gives frequent updates. He also has been known to respond to critics
which has led to confidence in his leadership at Sia. The team members include:
• David: /u/Taek42
• Jordan: /u/voidingwarranties
• John: /u/fighterjet-biceps
• Luke: /u/sia_nemo
7.3.3 Innovation
Sia creates a fault tolerant, trustless, file storage service using a combination of smart con-
tracts, coding and encryption. This ensures that there is a secure, private and reliable stor-
age system for data.
The data is kept safe from hosts who can snoop the contents or even doing guess work by
using of erasure codes like the reed Solomon codes which ensures a high file uptime even
when most of the hosts have outages or are unreliable.
After the data is received, it is encrypted client side and then padded. This ensures the
platform is capable of storing personal and user data across multiple nodes which are
then tracked using automated smart contracts.
How it works: According to Sia data files are stored through a multiple stage process and
encrypted with a simple algorithm known as Twofish. This method relies on reed Solomon
file distribution which strengthens the system. Data is split into pieces which leaves a few
fractures necessary to recover the data. These pieces are then padded to 4 megabytes for
privacy purposes and then encrypted using unique keys on the client side. This prevents
hackers from seizing user data of the platform. The hosts receive these encrypted files but
do not get information on location of other pieces of files. In case they found the locations
of these files, they will need to crack several encryption keys in order to recover the files. In
case the hosts attempt to tamper with the documents, the owner of the files is alerted by
cryptographic checksums. These checksums are controlled and maintained by the Sia client.
The Sia blockchain maintains storage contracts using a new model of algorithm known
as blake2b. This platform is also supports multisig wallets and p2pool. When a file is up-
loaded into the system, a storage contract which contains merkle root file is created. Then,
the host confirms that the file is still available by providing a merkle market proof upon
agreement on duration of storage. Should the proof be valid the host gets a reward oth-
112
erwise, the host is penalized. Sia transactions are usually instant and final without any risk
of double spend.

Sia has developed once of the more comprehensive user clients in the blockchain eco-
system. The platform has released its Version 1 beta client that is currently going tests. We
were able to install the Sia client on a personal computer with Windows operating system.
Figure 45: Screenshot capture depicting wallet creation on Sia
Figure 45 shows how to create a new Sia wallet in order to access the Sia features. The
features on the Sia menu include:
¾¾Lock Wallet: A user can lock the Sia wallet with a password which ensures unautho-
rized parties cannot access the user’s Sia coins or hosted files
¾¾Send: This function allows the user to send Sia coins to another account
113
Figure 46: Screenshot capture depicting passphrase generation on Sia
Figure 46 depicts the account creation process where a seed and passphares are generat-
ed. If a user forgets their password, they will not be able to access their Sia account. This
type of password system is known as brain wallet.
Figure 47: Screenshot capture depicting storage purchasing on Sia

114
Figure 47 shows the buy storage interface where a user can purchase storage on Sia. The
tier levels available for purchase are as follows:
¾¾10 Gigabytes.
¾¾100 Gigabytes.
¾¾250 Gigabytes.
Figure 48: Screenshot capture depicting Hosting configuration interface
A user can also offer to host files on behalf of the network as shown in figure 48 above.
The user must have at least 50,000 Siacoin to host on the network. Once users offer to host
files they get into a contract that governs the payment they will receive.
A user can set their own configurations for file hosting which could be:
¾¾Maximum duration for file hosting

¾¾Collateral space per month in terabytes
¾¾Price per terabyte
¾¾Bandwidth price in Sia coin per terabyte

115
Figure 49: Screenshot capture depicting file upload and management interface
Figure 49 above depicts the file upload features on the Sia client a user can upload, trans-
fer and search for files using this interface.
7.3.5 Target Market

Sia wants to be the backbone layer for storage on the Internet and will support long-term
storage strategies for both individual nodes and organizations that want to utilize the proto-
col to offer value added services. According to the Sia team it enables streaming of content
including images, music and movies and can compete with applications such as amazon
glacier, Bittorrent, Amazon S3, Microsoft OneDrive and all other existing backend cloud stor-
age devices. Sia hopes to allow content providers to benefit from their content. Sia already
provides an application interface (API) that developers can use in their beta client.
7.3.6 Potential
In the future the Sia team hope to have a decentralized network of small data centers that
comprise the fastest, cheapest and more secure cloud storage in the world. Becoming
a serious competitor in the market is an aim of the platform. Services such as YouTube,
Netflix and others will be able to use Sia to deliver the best user experience to its clients.
We provide a cloud storage platform that leverages machines all over the world to build a
unique network that is faster, more secure, and 10% the price of traditional cloud storage.
116
Sia provides huge opportunities for access to affordable storage with the African context
where creative, developers, entrepreneurs do not have easy access to cloud storage ser-
vices mainly due to difficulties in paying with Credit cards and payment services like Payp-
al. Using the Sia crypto-currency provides a mechanism to earn extra income by providing
storage and making payments for storage space.
Sia References:
¾¾Sia GitHub: https://github.com/NebulousLabs/Sia
¾¾Sia Website: http://sia.tech/
¾¾Sia Facebook: https://www.facebook.com/nebulouslabs/
¾¾Sia Twitter: https://twitter.com/SiaTechHQ
¾¾Sia Slack: https://slackin.sia.tech/
¾¾Sia Bitcointalk: https://Bitcointalk.org/index.php?topic=1060294.0

117
CHAPTER 8
Decentralized Identity
Management
Identity management has always been difficult, how does one track a human from birth
to death while consistently keeping his records updated, secure in a format that is usable
for offering crucial services. This is especially difficult when there is little or even no infra-
structure to keep manual records of people. Even in the developed world where record
keeping has been the norm for centuries there have been many instances of loss of data
from both national and private databases.
Africa has a rapidly growing population with an average fertility rate of 4.8 many countries
adding millions of people into the birth registries every year. Much of these birth regis-
trations are done manually which is a costly, insecure, and inefficient exercise where data
gets lost corrupted quite easily. There has been a huge push for e-governance across with
a country like India successfully registering its citizens on a biometric register. The Kenyan
government has also been somewhat successful in integrating its identification systems for
passports, identity cards and even driving licenses on its e-governance Web 2.0 platform.
The challenge that remains is how can more African countries make use of blockchain
technology ensure identification systems become more secure and reliable. Are these sys-
tems more reliable than current database systems and if so what are the advantages of
blockchain of recording and securing identity data.
Blockchain identity systems can create an interoperable platform for sharing of identity de-
tails with other entities in a transparent and accountable manner. Citizens will be able to give
permission to third party applications to use their data and therefore protecting their privacy.
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Decentralized Identity Management
This can ensure that costs of compliance with current know your customer (KYC) regula-
tions will be heavily reduced. Governments will be able to easily audit and track transac-
tions and also create for efficient birth, death, land and tax registries.
8.4 Factom
According to Factom documentation, it is a networked system records entries into a list
that appears unique. This list is then distributed to every node in the network in such a
manner that each node can add some necessary details at will but cannot edit or delete
any entered entries. As such, the motto of the platform is “introducing honesty to record
keeping”. As the motto suggests, the system ensures that there is honesty in record keep-
ing in that there is no omissions once the entries have been entered.

There are 8,753,219 units of Factom with the symbol as FCT.
8.4.2 Team
Factom has a large executive team in their corporate structure:
• Peter Kirby: Chief Executive Officer (CEO)

• Tiana Laurence: Chief Executive Officer (CMO)
• Paul Snow: Chief Architect
• Brian Deery: Chief Scientist
• Jack Lu: Chief Technology Officer (CTO)
• Zachary Lynde: Chief Finance Officer (CFO)
8.4.3 Innovation
Factom is a protocol designed to address speed and bloat cost constraints in Bitcoin. Fac-
tom moves beyond currency transactions by creating a protocol, which is a standard, ef-
fective, and secure foundation for applications.
Factom splits Bitcoin miners roles into two tasks which are described in their technical
documentation as follows:
• Recording entries in a final order: The Factom servers accept and assemble entries into
blocks fixing their order by inserting an anchor into the Bitcoin blockchain after 10 min-
utes, the entry ordering is made irreversible. Factom does this by creating a hash of the
data collected over the 10 minutes, then recording the hash into the blockchain.
119
• Auditing entries for validity: The auditing of Entries is a separate process which
can be done either with or without trust. Auditing is critical as Factom is not able to
validate entries before they are included in the Factom dataset.
With trust-based auditing, a thin client could trust a competent auditor they choose. After
an entry was entered into the system, an auditor would verify the entry was valid. Auditors
would submit their own cryptographically signed entry. The signature would show that
the entry passed all the checks the auditor deemed was required. The audit requirements
could in fact be part of a Factom chain as well. In the real estate example from earlier, the
auditor would double check the transfer conformed to local standards. The auditor would
publicly attest that the transfer was valid.
Trustless auditing would be similar to Bitcoin. If a system is internally consistent with a

mathematical definition of validity like Bitcoin, it can be audited programmatically. If the
rules for transfer were able to be audited by a computer, then an Application could down-
load the relevant data and run the audit itself. The application would build an awareness
of the system state as it downloaded, verified, and decided which Entries were valid or not.
Mastercoin, Counterparty, and other colored coins have a similar trust model. These are
all client side validated protocols, meaning transactions are embedded into the Bitcoin
blockchain. Bitcoin miners do not audit them for validity; therefore, invalid transactions
designed to look like transactions on these protocols can be inserted into the blockchain.
Clients that support one of these protocols scan through the blockchain and find poten-
tial transactions, check them for validity, and build an interpretation of where the control
of these assets lie (usually a Bitcoin address). It is up to the clients to do their own auditing
under these protocols.
Moving any of these client-side validated protocols under Factom would be a matter of
defining a transaction per the protocol and establishing a Chain to hold the transactions.
The transaction protocols wouldn’t be much different under Factom than under Bitcoin,
except where Factom allows an easy expression of the information needed instead of hav-
ing to encode it in some special way into a Bitcoin transaction.
The records are kept in the blockchain in a single hash that allows building of application
tools that can be used in the system at no cost and with no size limitations. These tools are
based on Bitcoin technology and are built using the application program interface (API).
This done in a manner that security and trust and therefore data integrity is maintained.
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Decentralized Identity Management
8.4.3.1 Factom Features Include:

• Hashing data into the blockchain
• Transactions happen off-chain
Both these features ensure that blockchain bloat is manageable.
Factom is a disruptive solution for storage and securing data because:
• It is immutable by creating an unchangeable audit trail

• It communicates changes in a system
• No central server is necessary for data storage
This is however very possible due to the fact that in Factom there is:
• proof of existence where the documents stored are assured that they exist in the
original form at any particular time
• proof of audit, verification of documents that are updated is possible under certain
conditions
• proof of process, documents can be linked to this new updated document
Factom is an open source project and is therefore not controlled by any one particular
entity. In addition, it is a protocol that is decentralized and distributed. Anybody can use it
to achieve their own set of goals. This business system uses the crypto-currency or the fac-
toids to make purchases on credit entries in every transaction. Each entry key is assigned
a public key.
Factom system secures records by enhancing the trust that they cannot be tampered with
in the first place. The Factom blockchain using strict regulations such as locking data and
making it immutable minimizes failure.
8.4.3.2 Advantages of Factom over other data storage techniques:

• It is an Innovative protocol and models new ways of data storage
• Security is enhanced by making data stored immutable
• It is efficient as searches are made easier with hashes
• It is applicable in the creative industries and to secure land titles
• It does not reinvent the wheel keeping data honest
8.4.4 Target Market

Businesses and other enterprises should use Factom as a means of storing their records
safely and securely. Indeed stored documents and data cannot be changed, altered, or
121
deleted. Institutions such as land and governmental registries could be the main benefi-
ciaries of the Factom blockchain technology.
8.4.5 Potential
The Factom team gives an example where land transfer is recorded in a governmental reg-
istry and where the legal system is set up so that unrecorded transfers are assumed invalid
(sans litigation). An individual would need to check a centralized governmental registry to
see if the land title in question is clear and available for purchase. The said individual using
the records found could prove the negative i.e. the land isn’t owned by a third party. The
governmental registry would not be aware of any private transfer that might have hap-
pened and invalidates the understanding of the registry. This provides huge opportunity
to solve one of the biggest challenges in Africa which is the management of critical assets
of land. Similarly the technology can also be used together with biometric technology to
provide identification for a countries citizens which will then allow them to access other
key services.
With Factom technology, using a chain to record such registries could safely ignore other
entries in another chain. Should a governmental agency such as a court seek to change
the land registration, only the relevant chain would be updated to reflect the ruling. In
such a scenario the history of land transactions would not be lost, and invalid third party
transactions would not be considered nor recorded on the blockchain.
Factom References:
¾¾Factom GitHub: https://github.com/factomproject
¾¾Factom Website: http://factom.org
¾¾Factom Facebook: https://www.face-book.com/factomproject
¾¾Factom Twitter: https://twitter.com/factomproject
¾¾Factom Bitcointalk: https://Bitcointalk.org/index.php?topic=850070.0

122
CHAPTER 9
Decentralized
Communication Apps
Communication has been an essential part of human existence and has taken many forms
from the beginning of time. From the evolution from oral traditions to written word to the
arrival of the printing press, which created unprecedented, explosion of information and
knowledge that helped fuel the renaissance in Europe and consequently development
of the modern world. The computer and mobile phone have played a huge part in com-
munication with the arrival of text messaging popularly known as short message service
(SMS) as well as multimedia message service (MMS) helped drive the adoption of use of
the mobile phone for communication. Mobile network operators (MNOs) since the late
nineties have paid a huge role in the adoption of Voice, SMS and Internet data.
According to a study done by Twinpine and Ihub research in 2013 (Twinpine 2012), ever
since the arrival of international fiber optic cables on the coast of West Africa called West
African Cable System (WACS) there is has been an exponential growth of both mobile and
fixed internet. This is also partly driven by the growth of mobile adoption 9% per quarter
with 180 million subscribers. It is predicted that this figure will have reach 310 million sub-
scribers by 2017 reflecting at least half of the population in the region. Just like in other
parts of Africa SMS and gaming have been the traditional use of mobile telephony with
social networking growing rapidly through the use of social media platforms like Twitter.
Use of mobile for value addition services such as mobile commerce, mobile learning and
mobile payments that are in early stages. Mobile advertising is huge business in West Af-
rica with 3 billion ad impressions being served in Nigeria alone and another 800 and 300
million ads being served in Ghana and Ivory Coast respectively.
123
Today, across Africa these operators have millions of subscribers generating billions of
dollars in revenue and have become in many countries the biggest blue chip companies
contributing immensely to the tax coffers of national governments.
While MNOs have helped the improve the socio-economic profile of African countries they
are also starting to face immense competition from social media platforms like Facebook,
Twitter and Whatsapp forcing them to change their business models and offer value add-
ed services. The Internet has made the world a global village that is digitally connected
where information flows from one corner of the globe to the other in real time. Unfortu-
nately, for Africa it accounts for only one percent of the world’s internet activity. The good
news is that this is changing fast, due to implementation of far-reaching programs by
African Governments such as Kenya’s Vision 2030 plan, which has already led to the arrival
of fibre optic connectivity to our shores in June 2010.
This new connectivity to the global internet networks has resulted in an unprecedented explo-
sion in broadband availability and development of local applications to service the digital needs
of Kenyans. Unknown to many Kenyans, the popular and ubiquitous service known as M-Pesa
was transferred from a “cloud” service based in Europe and is now connected and hosted in Ken-
ya. This has allowed for the rapid expansion in mobile money use as well as other applications.
The social media revolution is underway with Facebook having over 4 Million users (Mark
Kaigwa 2014) and even more users being on boarded through the Whatsapp acquisition.
The adoption of applications like Whatsapp is creating new possibilities for businesses and
companies to monetize their applications. Traditionally monetization has been achieved
using ads but with advent of crypto-currencies, it has become possible to monetize these
applications through in-app social tipping. In this report, we look at Steem a decentralized
social media platform that is using crypto-currencies to monetize content sharing.
9.1 Steem
Steem is a social media platform similar to Reddit or Tumblr that leverages blockchain and
rewards content contributors. Steem is accessible online at Steemit.com.
9.1.1 Coin Specification

There are 99,832,718 units of Steem with the symbol STEEM.
9.1.2 Innovation
Steem has identified a niche market where traditionally social media companies, such as Red-
dit, Facebook, and Twitter earn billions of dollars in revenue from content generated by its
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Decentralized Communication Apps
users. These users do not benefit from these earnings despite spending time and effort in cu-
rating their content. Steem supports social media and online communities by returning much
of its value to the people who provide contributions by rewarding them with virtual currency.
Other existing crypto-currency tipping platforms require users to send Bitcoin as a reward
to content providers. With Steem, rewards are sent out for activities such as upvoting a post.
The Steem blockchain distributes payouts in two ways which are 50% Steem power for
voting and 50% Steem Dollars. These rewards are distributed within 24 hours of content
being posted on the platform.

Steem has a very simple to use online platform that allows users to post their content on-
line and earn Steem dollars and power.
According to Eeks (Eeks 2016) a user on the Steemit Web2.0 platform is flexible and is what
each person makes of it. It is also easy to use whereby a user signs up and writes a blog or
share news like on Reddit or posts photos or disseminates white papers or tags a recipe or
a hotel review. That’s why it’s able to onboard so many new, different people.
Figure 50: Screenshot capture depicting the SteemIt.com homepage with posts
125
As shown in Figure 50 above Steemit.com web application is very similar to Wordpress a

Web 2.0 blogging tool that is behind about 60% of websites on the internet today. The main
difference is that users of Steemit as shown in the image above are able to earn steem dol-
lars for their posted content. Furthermore, there seems to be a correlation with how many
followers and comments a post has and the number of Steem dollars earned for the post.
Figure 51: Image depicting a post on SteemIt.com
Figure 51 above depicts a blog post on the SteemIt.com platform. The reader is able to
earn Steem dollars from following the author and posting comments. This particular ar-
ticle (Eeks 2016) stated that Steemit is Bitcoin’s killer application because it brings fresh
and new people into the crypto-currency space as they are already familiar with blogging.
Indeed Steemit has been able to enroll people from diverse backgrounds who are now
posting a wide range of content (see figure 54) ranging from academic papers to artistic
content. As Eeks states in his article, most of this people have never bought Bitcoin before
but are now earning crypto-currency for their work.
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Decentralized Communication Apps
Figure 52: Screenshot capture depicting how to submit a post on SteemIt.com
Target Market and Potential

Steem is a well thought crypto-currency project that is successfully merging the Web 2.0
with the use of blockchain. Steem is currently adding 600 users a day and has the poten-
tial to grow to millions of users with the current momentum.
Should Steem be successful it will have introduced thousands of people into the World
of crypto-currencies. Steem lists the following benefits to identified markets segments,
which includes:
¾¾Entrepreneurs who can use the Steem platform to empower people around the World
¾¾Content creators can reach more people and get appreciation for their efforts in
content creation
¾¾Readers can identify the best content by rewarding the content creators and cura-
tors with Steem dollars and power
¾¾Market makers can generate liquidity while earning Steem and Steem dollars trad-
ing on the inbuilt blockchain-based exchange incentives
¾¾Social media sites can integrate Steem to empower their users to earn for their posts
and their time on your site
127
The blogging community in many African communities has been growing leaps and
bounds. Steemit blockchain technology provides an opportunity for writers, journalists,
authors and storytellers to monetize their content. Steemit also has great potential of in-
troducing more Africans to the crypto-currency space. However, it remains to be seen
how scalable and secure the Steem blockchain is vis a vis the growing need to store con-
tent and authenticate transactions on a rapidly growing blockchain.
Steem References:
¾¾Steem GitHub: http://github.com/steemit
¾¾Steem Website: http://SteemIt.com
¾¾Steem Facebook: https://www.facebook.com/steemit
¾¾Steem Twitter: https://twitter.com/steemchain

¾¾Steem Slack: https://steem.slack.com
¾¾Steem Bitcointalk: https://Bitcointalk.org/index.php?topic=1410943.0

128
Conclusion
This publication has looked at the past and current evolution of crypto-currencies and
blockchain technology starting with Bitcoin, which has achieved the largest network ef-
fects since it was created in 2007. These technologies continue to progress at a rapid pace
aided by the already existing internet platform that provides the bedrock for blockchains
to be secured through mostly proof-of-work or proof-of-stake methodologies. The best
crypto-currencies from our research are the ones that build a strong community of users
who in turn secure the network by either mining or hosting nodes.
While this criteria is not enough to justify any of these platforms as solid platforms for use
or even speculative investment just yet, the reader may have discerned certain charac-
teristics these platforms require to build sustainable blockchain projects. Firstly, they aim
to solve a problem and meet a huge need. Secondly, they need to assemble experienced
engineering teams coupled with a dedicated community that helps drive user adoption
forward. What remains to be seen is which of these platforms will figure out the right user
experience needed to scale these applications within more mainstream markets especial-
ly in Africa where the opportunity to solve problems and meet challenges is huge. While it
abundantly clear the blockchain platforms and crypto-currencies do not have to be used
by the average layman to succeed, it is important that they target markets where huge
inefficiencies can be addressed by replacing traditional intermediaries and bottlenecks.
129
A. Challenges to Blockchain Technology Adoption in Africa.

Though blockchain technology development has been progressing rapidly a few chal-
lenges remain if these technologies are to be adopted by the intended users. Key chal-
lenges we have identified affecting crypto-currencies and blockchain Technologies across
the board include:
I. User friendliness
Installing, using and securing many of these wallets can be a huge hassle and sometimes
do require the user to be technically savvy. Furthermore, many of these wallets do not
work on mobile devices that are the most commonly used devices especially in Africa. As
such, these technologies currently exclude majority of the world’s users who are mobile
first. As identified in this report some platforms like Supernet and Parkbyte are trying to
solve this problem but no usable technologies are yet to materialize for the average user
with the exception of Steem. This is a huge challenge and opportunity for African devel-
opers to adopt user friendly mobile tools that work for and within the local context.
II. Regulation
Many crypto-currencies and blockchain projects such as Bitcoin are facing substantial
push back from regulators across the World. This perhaps because these regulators feel
threatened by these technologies or as is more often the case do not understand the
inherent benefits of these new technologies. While crypto-currencies are self-regulat-
ing, there is a need for localized frameworks that guide startups and organizations using
blockchain technology to solve local problems. At BitHub Africa we believe that this is
the best way to enhance adoption of relevant blockchain technologies even within the
Government sector.
III. Crime
The adoption of crypto-currencies has been linked to criminals who are engaged in ille-
gal activities. However, because of the more transparent nature of public blockchains, it
generally makes it easier for illegal activities to be identified and the actors involved to
be caught and prosecuted accordingly. In Kenya, we have already seen criminal cases in
Court where hackers have tried to seek ransom in Bitcoin from holding organizations data
ransom. These hackers were caught because of their activities were transparent on the
Bitcoin blockchain.
130
CONCLUSION
Furthermore, it is important for lead developers of crypto-currency projects that are de-
veloping privacy tools to develop ethical frameworks and tools such as moderation, con-
tent curation and inbuilt mechanisms such as rating systems that are used by their com-
munities for protect vulnerable individuals like Children from negative exposure.
Figure 53: Screenshot capture depicting ransom hack at a Kenyan university
In conclusion, though these challenges seem to be slowing down the adoption of cryp-
to-currencies and blockchain technology the future of decentralized models of trust re-
mains bright. Indeed, the blockchain opportunity is not a panacea to solve all problems
so we must continue to identify areas this disruptive technology will be most helpful. In
this way, we will ensure that we continue to reap the benefits of this most promising and
disruptive technology across Africa.
131
References
¾¾ Amanda B. Johnson, “Bitshares 101: Basics of the World’s 4th Most Popular Crypto-
currency”, 21 Apr 2014, http://www.cointelegraph.com/news/Bitshares-101-basics-
of-the-worlds-4th-most-popular-cryptocurrency/
¾¾ Andrew Poelstra, “On Stake and Consensus”, 22 Mar 2015, https://download.wpsoft-

ware.net/bitcoin/pos.pdf
¾¾ Carter Graydon, “Bitcoin’s Future: proof-of-stake vs proof-of-work”, 30 Aug 2014,

https://www.cryptocoinsnews.com/bitcoins-future-proof-of-stake-vs-proof-of-work/
¾¾ Central Bank of Kenya, “Public notice caution to the public on virtual currencies
such as bitcoin”, Dec 2015, https://www.centralbank.go.ke/images/docs/media/
Public_Notice_on_virtual_currencies_such_as_Bitcoin.pdf
¾¾ Daniel Cawrey, “The Promise and Pitfalls of crypto crowd funding”, 2 Aug 2014,
http://www.coindesk.com/promise-pitfalls-crypto-crowdfunding/
¾¾ Eeks, “Steemit is Bitcoin’s Killer App Evidence, Numbers, & Analysis”, https://steemit.
com/bitcoin/@eeks/steemit-is-bitcoin-s-killer-app-or-evidence-numbers-and-anal-
ysis/
¾¾ Emin Gün Sirer, “Thoughts on The DAO Hack”, 17 Jun 2016, http://hackingdistribut-
ed.com/2016/06/17/thoughts-on-the-dao-hack/
¾¾ Gregory Maxwell, “CoinJoin: Bitcoin privacy for the real world”, 22 Aug 2013, https://
Bitcointalk.org/index.php?topic=279249.0.
132
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Sep 2016, http://www.businessdailyafrica.com/No-clarity-on-mobile-and-small-
loan-rates-in-new-lending-caps/539552-3366406-e21xn3/
¾¾ Sandra Chao-Blast, “Payment firm that took Lipa Na M-Pesa to small traders”, http://
www.businessdailyafrica.com/1248928-2440178-hifs56z/index.html
¾¾ Satoshi Nakamoto, “Bitcoin: A Peer-to-Peer Electronic Cash System”, https://bitcoin.

org/bitcoin.pdf
¾¾ Tonny Omwansa, Timothy Waema, Brian Omwenga, “Cloud computing in Ken-

ya, a 2013 Baseline Survey”, Apr 2014, http://www.c4dlab.ac.ke/wp-content/up-
loads/2014/04/CC-study-report-April-2014.pdf
¾¾ Twinpine, Ihub Research, “An Analysis of Mobile Technology in West Africa”, Oct
2012, http://research.ihub.co.ke/uploads/2012/october/1351001605_819_249.pdf
¾¾ Yessi Bello Perez, “Meet the 25 Banks Working With Distributed Ledger Startup R3”, 7
Nov 2015, http://www.coindesk.com/meet-the-25-banks-working-with-distributed-
ledger-startup-r3/
133
Table of Figures
¾¾ Figure 1: Pie chart depicting distribution of African countries surveyed
¾¾ Figure 2: Pie chart depicting gender distribution between male and female categories
¾¾ Figure 3: Bar chart depicting interests of surveyed enthusiasts
¾¾ Figure 4: Bar chart depicting interests of surveyed blockchain project leads
¾¾ Figure 5: Screenshot capture depicting a Kenyan user’s Android Bitcoin wallet Figure 6:

Image depicting a generated Bitcoin paper wallet with a public and private Key
¾¾ Figure 7: Bar chart depicting growth of Bitcoin trading in Kenya on Localbitcoins.com
¾¾ Figure 8: Bar chart depicting growth of Bitcoin trading in South Africa on Localbitcoins.com
¾¾ Figure 9: A screenshot of the Localbitcoins.com Website
¾¾ Figure 10: Image by Parkbyte depicting the Android application process flow
¾¾ Figure 11: Screen capture depicting the Bitshares Openledger wallet dashboard
¾¾ Figure 12: Screen capture depicting how to send Bitshares tokens to another account
¾¾ Figure 13: Screen capture depicting the Bitshares trading platform
¾¾ Figure 14: Screen capture depicting the Bitshares transfer interface and options
¾¾ Figure 15: Screen capture depicting the NXT version 1.0 dashboard interface
¾¾ Figure 16: Screen capture depicting the NXT asset exchange

134
TABLE OF FIGURES
¾¾ Figure 17: Screen capture depicting the NXT monetary system exchange interface
¾¾ Figure 18: Screen capture depicting the NXT polling system
¾¾ Figure 19: Screen capture depicting the NXT data cloud interface
¾¾ Figure 20: Screen capture depicting the NXT marketplace interface
¾¾ Figure 21: Screen capture depicting the NXT coin-shuffling interface
¾¾ Figure 22: Screen capture depicting the NXT messaging interface
¾¾ Figure 23: Image depicting the Waves Chrome wallet dashboard interface
¾¾ Figure 24: Image depicting the Dash QT wallet
¾¾ Figure 25: Screen capture depicting the Dash send payment interface
¾¾ Figure 26: Image depicting the Dash receive payment interface

¾¾ Figure 27: Screen capture depicting the Bitcoindark send payment interface
¾¾ Figure 28: Screen capture depicting Ethereum wallet Overview
¾¾ Figure 29: Ethereum developer Brian at Moringa School in Nairobi shows his Solidity script
¾¾ Figure 30: Graph depicting a sharp drop in The DAO market cap due to “The DAO Attack”
¾¾ Figure 31: Graph depicting a sharp fall of Ethereum due to the “The DAO Attack”
¾¾ Figure 32: Image depicting the Supernet layered protocol and architecture
¾¾ Figure 33: Screenshot capture depicting the Supernet Lite wallet dashboard interface
¾¾ Figure 34: Screenshot capture depicting the Supernet coin operations popup interface
¾¾ Figure 35: Screenshot capture depicting the Lisk passphrase generation interface
¾¾ Figure 36: Screenshot capture depicting the Lisk dashboard interface
¾¾ Figure 37: Screenshot capture depicting the Lisk appstore dashboard interface
¾¾ Figure 38: Screenshot capture depicting the products listings available on Openbazaar
¾¾ Figure 39: Screenshot capture depicting the product page on Openbazaar
¾¾ Figure 40: Screenshot capture depicting escrow and payment options on payment page
¾¾ Figure 41: Screenshot capture Image depicting the Syscoin dashboard
¾¾ Figure 42: Screenshot capture depicting the Syscoin escrow feature
¾¾ Figure 43: Screenshot capture depicting the Syscoin Marketplace

135
¾¾ Figure 44: Screenshot capture depicting a product offer on the Syscoin wallet
¾¾ Figure 45: Screenshot capture depicting wallet creation on Sia
¾¾ Figure 46: Screenshot capture depicting passphrase generation on Sia
¾¾ Figure 47: Screenshot capture depicting storage purchasing on Sia
¾¾ Figure 48: Screenshot capture depicting Hosting configuration interface
¾¾ Figure 49: Screenshot capture depicting file upload and management interface
¾¾ Figure 50: Screenshot capture depicting the SteemIt.com homepage with posts
¾¾ Figure 51: Image depicting a post on SteemIt.com
¾¾ Figure 52: Screenshot capture depicting how to submit a post on SteemIt.com
¾¾ Figure 53: Screenshot capture depicting ransom hack at a Kenyan university

136
Glossary of Terms
¾¾IOT: Internet of Things
¾¾ICO: Initial Coin Offering
¾¾API: Application Interface
¾¾DAO: Distributed Autonomous organization
¾¾USSD: Unstructured Supplementary Service
¾¾SMS: Short Message Service
¾¾DAPP: Decentralized application
¾¾Token: A unit of transaction used in a blockchain or crypto-currency
¾¾ICT: Internet Communication Technology
¾¾MultiSig: A wallet or Keychain that requires multiple private keys for access to coins.
¾¾POW: proofproof-of-work
¾¾POS: proofproof-of-stake
¾¾VM: Virtual Machine
¾¾DAO: Distributed Autonomous Organisation
¾¾IDE: Integrated Development Environment
¾¾PIN: Personal Identification Number

137
¾¾FINTECH: Financial Technology
¾¾MNO: Mobile Network Operator
¾¾GDP: Gross Domestic Product
¾¾USD: United States Dollar
¾¾ETFs: Exchange traded funds
¾¾OTC: Over the counter
¾¾CBK: Central Bank of Kenya
¾¾GUI: Graphic User Interface
¾¾Qt Wallet: A standard wallet program designed to hold crypto-currency public and
private keys.
BLOCK OPPORTUNITY REPORT SUMMARY
REPORT SUMMARY
Africa is leapfrogging traditional banking and paymentspayments systems in in use
use in
in
developed World
much of the developed World through
through adoption
adoption ofof mobile
mobile money
money payment
payment
platforms like M-Pesa. Cutting edge Digital && Crypto Crypto Currencies
Currencies such
such asas
disrupting key
Bitcoin have great potential in disrupting key sectors
sectors like
like Finance,
Finance, Energy,
Energy,
Governance. However
Commerce, Agribusiness, and even Governance. However huge huge challeng-
challeng-
es remain and are are creating
creating bottlenecks
bottlenecks inin adoption
adoption ofof these
these technologies
technologies
across Africa and rethinking
rethinking our
our approach
approachisisimportant.
important.
report we
In this report we comprehensively
comprehensively examine
examine from
from an
an African
African perspective
perspective
how specific Crypto Currencies and Tokens Tokens will
will Disrupt
Disrupt existing
existing Incum-
Incum-
sectors like
bents across key sectors like Finance,
Finance, Technology,
Technology, Energy
Energy and
and Commerce.
Commerce.
this The
We call this The Blockchain
Blockchain Opportunity.
Opportunity. Pre-Order
Pre-Order this
this Commercial
Commercial Paper
Paper
at aa discounted
discountedprice
priceofof
$29.99
$49.99today andand
today get ahead of theofcurve
get ahead as a Block-
the curve as a
chain Entrepreneur,
Blockchain Investor,
Entrepreneur, Researcher
Investor, and Enthusiast.
Researcher and Enthusiast.
Visit
http://opportunity.bithubafrica.com
http://opportunity.bithubafrica.com
$29.99 to this QR Code below.
Or Pay $49.99
Email Transaction Details to orders@BitHub.co.ke
CONTACT US
Website: http://BitHubAfrica.com
Facebook: http://facebook.com/bithubafrica
Twitter: http://twitter.com/bithubafrica
LinkedIn: https://www.linkedin.com/company/bithubafrica
Android: http://android.bithubafrica.com
Slack: http://slack.bithubafrica.com
GTalk: bithubafrica@gmail.com
Skype: jskenya
Company: BitHub Africa - Space Kenya Networks Ltd
Location: 2nd Floor, Timau Plaza, Argwings Kodhek Road
Tel: (+254) 0725 274191, 020 2023351

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THE BLOCKCHAIN

The Blockchain Opportunity, revised edition of a report by BitHub Africa,

© 2016-2017, BitHub Africa and John Wainaina Samson Karanja.

Tel: +254 725 274191

You can follow Alakanani on the following platforms:

Kristine Stone, Head of Partnerships Coinbase

Max Kordek, Founder and C.E.O Lisk

Sean Moroney, Chairman AITEC Africa

Sinclair Skinner, Founder BitMari

PAYMENT & ROADMAP

1. Connecting as many innovators and developers to mentors and investors through

2. Implementing local blockchain research and development.

3. Hosting nodes for the most relevant blockchain projects.

Read more here http://BitHub.co.ke/roadmap.

Payment & Roadmap.................................................................................................................................... 4

BitHub Africa Profile...................................................................................................................................... 7

Literature Review & Research Methodology......................................................................................12

Chapter 1: A Brief History Of Bitcoin & Blockchain.........................................................................19

Chapter 2: Micro-Payments Myth or Reality......................................................................................36

Chapter 3: Decentralized Asset Management..................................................................................46

Chapter 5: Decentralized Blockchain Applications........................................................................78

Chapter 6: Decentralized E-Commerce...............................................................................................95

Chapter 7: Decentralized Storage Solutions.................................................................................. 109

Chapter 8: Decentralized Identity Management.......................................................................... 117

Chapter 9: Decentralized Communication Apps.......................................................................... 122

Table of Figures.......................................................................................................................................... 133

Glossary of Terms....................................................................................................................................... 136

BITHUB AFRICA PROFILE

1. Legal and Governance services

3. Data Management and Storage

5. Internet of Things (IoT)

We provide analytical, development, maintenance and support services for organizations

You can reach John directly through the contacts below:

Digital currencies and in particular crypto-currencies in general, have evolved rapidly

Literature Review &

III. Coin/Token Specifications

IV. User Experience

II. Non-Blockchain Case Studies

III. Non-Blockchain Mentions

C. Blockchain Opportunity Feasibility Study 2016

Country (96 responses)

Figure 1: Pie chart depicting distribution of African countries surveyed.

• Democratic Republic of Congo • Tanzania

Gender (95 responses)

Interests (96 responses)

Figure 3: Bar chart depicting interests of surveyed enthusiasts

Here are some of the comments on Bitcoin by the respondents.

• Disruptive technology • Simply awesome

D. Blockchain Opportunity Survey

Areas of Concern for your Project (14 responses)

Figure 4: Bar chart depicting interests of surveyed blockchain project leads

A Brief History Of Bitcoin

Blockchain technology offers distinct advantages over database technology as it provides

1.1 Key Blockchain Concepts

puting power to solve complex mathematical problems. A hashcash algorithm to solve

1.1.2 Proof-of-stake (POS)

• Delegated proof-of-stake used by Lisk and Bitshares featured in this publication.

1.1.3 Proof-of-work vs proof-of-stake

However, proof-of-stake systems without mining find it difficult to create a communi-

1.1.4 Smart Contracts

Blockchain offers unique opportunities to provide new structural frameworks to provide

1.1.5 Dissecting Bitcoin

Figure 5: Screenshot capture depicting a Kenyan user’s Android Bitcoin wallet