In order to accelerate bottom-up grassroots adoption, new user-friendly tools like wallets ought to be built that will make it possible to onboard as many people as possible, particularly in areas where financial exclusion is the norm. An example of such a tool is Machankura , which is an unstructured supplementary service data (USSD )-based custodial wallet that runs on-top of the Lightning Network and doesn’t require an internet connection. While being a custodial service has its disadvantages, the team at Machankura are currently exploring the idea of a non-custodial service that uses SIM cards as a signing device for signing and broadcasting transactions to the rest of the network. Should they manage to pull it off, it would be a significant breakthrough of monumental proportions.
Despite USSD being old technology, 90% of all mobile transactions in Africa today are powered by USSD. This is mainly due to the dominance of feature phones, which constitute 58.3% of Africa’s cellphone market. Given these dynamics, Machankura’s solution of developing a USSD-powered bitcoin wallet is a perfect fit. Presently, Machankura has a footprint in nine African countries, namely South Africa, Zambia, Namibia, Kenya, Tanzania, Uganda, Nigeria, Ghana and Malawi.
The main goal behind the project is to drive financial inclusion through the Bitcoin ecosystem in places with underdeveloped internet infrastructure and/or low smartphone penetration, as is the case in a lot of African countries as well as in most of the Global South. However, despite the low smartphone penetration in Africa, 70% of the $1 trillion worth of mobile money transactions globally were conducted by users in Africa. While research has shown the positive impact of mobile money on developing a savings culture in low income households, the users of these services aren’t shielded from the effects of monetary inflation as their savings will still be denominated in a fiat currency that gradually loses value. Furthemore, mobile money services could potentially be obsoleted once a CBDC is rolled out, or the service providers could be co-opted into being CBDC distributors. As a bitcoin-focused service, Machankura is immune to all of the above.
According to the International Labour Organization’s (ILO) estimates , at least two billion people globally are informally employed. In Africa, where at least 57% of adults are unbanked , the informal sector accounts for over 85% of all employment and contributes at least 55% to the continent’s $1.95 trillion GDP according to studies conducted by the UN and the African Development Bank . With the majority of these informal workers being unbanked, cash becomes the default option for transacting, thus making them easy targets for CBDCs, which will be marketed to them as a path to financial inclusion. Even the Bank of International Settlements (BIS) identified financial inclusion as a key driver of CBDC adoption in emerging markets. As a low-tech solution that is already operational, Machankura is a vital tool that is useful in not only banking the unbanked but in facilitating free trade and thus driving Bitcoin adoption before the majority of CBDCs have been formally rolled out. With the informal economy already existing outside of The State’s permissioned “formal economy,” embedding sound money into it via Machankura is a no-brainer.
In the words of Heritage Falodun , a Nigerian-based software engineer and Bitcoin analyst:
“Bitcoin adoption in Africa will not be spurred on by legislation alone, but by developing less complex payment rails that lower the barriers to entry into the Bitcoin ecosystem, and Machankura is a great example of this.”
I couldn’t agree more. For example, Paco de la India , a Bitcoin educator traveling the world solely on Bitcoin on a tour dubbed “Run With Bitcoin,” was greatly impressed by Machankura’s ease of use when he used the service in Nigeria. While the service is relatively new in Nigeria, de la India and a local Nigerian Bitcoiner, Apata Johnson, were not only able to talk about the power of bitcoin but to demonstrate it by sending sats to some of the locals via Machankura. Bitcoin Ekasi in South Africa have also incorporated Machankura into their orange pilling toolkit and are using it for sending sats on a weekly basis to their beneficiaries.
Link to embedded tweet.
During an interview I had with Kgothatso Ngako , the founder of Machankura, stablecoins came up and I asked him if they had any intention of incorporating stablecoin payments into Machankura, to which he responded, “No we are just focused only on bitcoin.” An impressive response, given that many of bitcoin’s critics are quick to point to bitcoin’s price volatility as one of the reasons why it’s unsuitable as a means of exchange. Stablecoins are then presented as the answer to the medium of exchange function. While stablecoins do offer “price stability” in the short term, making them an important intermediate step towards hyperbitcoinization, being tokenized fiat currencies they are not immune to debasement over the long term. In short, inflation is the price for fiat “stability” that a stablecoin offers. Bitcoin on the other hand is a deflationary currency with a stable monetary policy that increases in value over time. This is a point that Austrian economist, Hans-Hermann Hoppe, brilliantly laid out in “How Is Fiat Money Possible?” when he wrote:
“Moreover, what is so great about ‘stable’ purchasing power anyway (however that term may be arbitrarily defined)? To be sure, it is obviously preferable to have a ‘stable’ money rather than an ‘inflationary’ one. Yet surely a money whose purchasing power per unit increased — ’deflationary’ money — would be preferable to a ‘stable’ one.”
Machankura’s bitcoin focus cements its position as a vital part of the global hyperbitcoinization infrastructure for hundreds of millions of people in Africa and around the world who do not have access to reliable internet, but still need sound money. The fiat monetary system was never designed to work for everybody as the developing world has for decades had inflation exported to it by the developed world. In addition to that, the fiat system’s misaligned incentives ensure that the unproductive are rewarded at the expense of the productive. The advent of Bitcoin changed all of this by redesigning a better form of money from the ground up. Tools like Machankura are essential for driving adoption and making Bitcoin accessible to everyone, everywhere. Furthermore Machankura is an extension of Satoshi Nakamoto ’s vision of a peer-to-peer monetary system, one that reduces reliance on fiat intermediaries while powering Bitcoin circular economies.
This is a guest post by Kudzai Kutukwa. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.