- Algorand is keen to tap into the African market, which has shown high adoption of blockchain technology.
- The second country in the world to adopt Bitcoin as legal tender is the Central African Republic in Africa.
Algorand (ALGO) is one of the ever-increasing numbers of blockchains that are beginning to show great interest in Africa. Other than the network’s goals of spreading its roots globally, the continent particularly presents a myriad of opportunities for most blockchains.
For Algorand, the network specifically touts itself as the place “where the world transforms.” In Africa, Algorand brings this transformation in the way of increasing financial independence and access to financial services, supporting innovation, and contributing to blockchain education.
Diving deeper into the specifics, Algorand most recently awarded a grant to the African lending service provider, Fidelis. The latter’s goal is to disrupt the continent’s informal lending sector, which comes in the way of loan sharks.
We would like to give a big welcome to Fidelis Loans to the ecosystem as our latest grant recipient. Fidelis provides fast non-collateralized loans by staking of Trust Points from trusted backers to disrupt the informal lending economy in Africa. #ShapeTheFuture #GreenCrypto pic.twitter.com/H7UJ6qV1m4
— Algorand Nordic (@AlgoFamNordic) May 4, 2022
Differently, Fidelis, a product of the African Code Academy (ACA), utilizes a Trust Point system with lower interest rates (9 percent and below) compared to local lenders. Backers stake Trust Points, while borrowers use them to prove their loan reliability. Upon loan repayment, backers are awarded a certain percentage of the yield. The Algorand blockchain will now ease the lending process via fully automated smart contracts. This will improve time and cost factors to parties of a loan, as Fidelis becomes more scalable.
Algorand projects in Africa
The Africa Blockchain Institute is another recipient of last month’s Algorand Foundation grant program. The blockchain education platform, or Africa’s blockchain “Think-Tank,” is now tasked with exploring different blockchain activities across the continent. The institute’s report will be useful in enlightening the African public, governments, and regulators on different aspects of the technology. Among them are: “blockchain use cases, success stories, and future patterns and opportunities for additional technical development.”
More so, the study aims at alleviating the low blockchain awareness on the continent. According to a Sept. 2021 report by Luno lending firm, 55 percent of Nigerians don’t understand cryptocurrency, and hence, blockchain tech. On the same revelation, the figures for South Africa and Kenya were 56 percent, and 64 percent, respectively.
Another beneficiary of the Algorand Foundation is the Decentralized Umoja Bounty Hack II. In partnership with blockchain development platform Reach, and the Africa Block Alliance, the foundation sought to improve blockchain development education in Africa through a guided hackathon. At the end of the six-week program, participants emerged with DApp development skills, and the best team took home a $3,000 prize.
A more long-term project is the decade-lasting Algorand-UCT Financial Innovation Hub. Launched in October 2021, the program is supported by both the Algorand Foundation and the Financial Innovation Hub. The hub entails financial technologies research and innovation, all based at the University of Cape Town (UCT).
Importantly, the project is making use of the tech corridor spanning between Cape Town and Stellenbosch, or what is known as Africa’s “Silicon Valley.” It will also utilize the universities’ departments of Economics, Computer Science, and Information Systems.
The Algorand Foundation, through the Algorand Centre of Excellence (ACE), is funding the project with 100 million ALGO tokens spread over 10 years.
The above projects are contributing to what Algorand calls “the next generation of financial products.” The network portrays itself as one to conquer the blockchain space, not only because of its aggressiveness but also several core attributes.
Why Algorand has a chance at conquering Africa
For one, the network utilizes the Pure-Proof-of-Stake (PPoS) consensus mechanism – the first of its kind in the crypto world. This algorithm is highly democratized since it provides a low minimum staking requirement – just one ALGO token. This increases the likelihood of a high number of stakers. PPoS randomly chooses these stakers to mine the network’s blocks.
Differently, the traditional Proof-of-Stake (PoS) gives block mining priority to stakers with more tokens. PoS sort of grants more advantage to ‘richer’ token holders. In this respect, PPoS solves the blockchain trilemma aspects of decentralization and security.
Additionally, the network boasts of speedy transactions at the rate of 1,000 transactions per second (TPS). Comparatively, Ethereum, which leads in terms of DeFi and NFTs, has a speed of 10-30 TPS, while Bitcoin has 7 TPS. Furthermore, Algorand’s transactions are quite cost-effective at just $0.001/transaction.
Just recently, the network implemented new smart contract capabilities, channeling a portion of its transaction fees to purchasing carbon credits.
Algorand’s international undertakings
Outside Africa, Algorand has not shied away from bold moves. Late last year, the network launched a blockchain education program in Australia. However, the latest iconic development is Algorand’s partnership with FIFA. Algorand will provide a blockchain strategy to FIFA as it benefits from advertisements on the very popular FIFA events.
Venture capitalists, such as Borderless Capital, have contributed to Algorand’s success through millions of dollars in funding. Presently, the blockchain is home to over 25 million user accounts, AlgoExplorer shows. It also has over $159 million in total value locked (TVL), ranking it at 34th space among all blockchains according to DeFiLlama.