Limited internet access: How this affects crypto adoption in emerging economies

Terence Zimwara

Crypto-currencies might be the next big thing if this nagging problem of limited internet access is addressed. It would appear this is one area where crypto entrepreneurs are floundering, particularly those from developed economies. These entrepreneurs are busy rolling out new tokens, which are usually targeted at potential users in emerging markets where unfortunately internet accessibility remains a challenge.

In many African states, a majority of the population resides in rural areas where provision of essential services, including internet is at best negligible. Yet it is in such rural areas where a big chunk of potential users of crypto-currencies reside. There are fewer or no regular banking services in rural areas when compared with those in urban settings. 

Given this background, it is then easy to see why some cryptos that are designed in Europe but destined for the African market are failing. One has to have a clear understanding of the urban/rural dynamics on the continent—among many other issues— before expecting a crypto to be successful.

Network accessibility and cost remains a challenge in many emerging economies yet availability of the same is vital if greater adoption is to be achieved. Generally, network coverage particularly 3G or 4G is heavily skewed in favour of the affluent, those with access to banking services already (and might not be attracted to alternative forms of banking.)

In other words, Mobile Network Operators (MNO) as well as internet service providers (ISP) will only target remote rural areas if there is a big profit to be made there. On the other hand, rural communities are likely to embrace peer to peer currencies if these become easily accessible.

So an opportunity does exist for both the internet providers and the crypto start-ups, the question is; how can this be exploited for the benefit of both parties?

Indeed some studies show that data usage is increasing in emerging economies. However, a closer look will reveal that tailor made social media data packages are responsible for the general increase in the usage of the internet.

For instance, MNOs offer special data plans for popular social media sites like Facebook, Twitter, Whatsapp or Telegram. Data rates for such packages appear to be cheaper than regular internet browsing costs. In fact, data consumed using these popular social media sites is much higher than data consumed via regular internet browsing.

Perhaps it is with this in mind that many are predicting the Facebook Libra token to potentially be the game changer in as far as crypto mass adoption is concerned. Facebook and Whatsapp are already widely supported by many MNOs because of the sheer number of people using these services. 

Facebook and Whatsapp are popular in both urban and rural settings, which is a major plus.

So unlike Bitcoin, which has faced a myriad of challenges, the Libra token will face far few problems as it is backed by companies with a ‘track record’. There may be no need to invest heavily in education or advocacy as would be the case with many other cryptos, it is simply a question of adding another service to the platform that has more than a billion users. To a Facebook user, it is just a matter of exploring this new service without worrying about data cost. So on that score, Libra may have a head-start in emerging economies

However, there is a downside to the Libra coin, this crypto may not be as permissionless as Bitcoin nor will it be as decentralized. Libra is a hybrid and may not come with everything promised by a crypto-currency like Ethereum for instance. Therefore pioneering cryptos-currencies will still be able to compete well with Libra only if crypto entrepreneurs can solve the internet accessibility challenge. This is a daunting but achievable task.

Perhaps, one way to circumvent this challenge would be to cooperate and coordinate with MNOs in designing data packages and applications for crypto-currencies that are affordable and user friendly. This way, interested/potential crypto users will feel empowered to explore different crypto platforms or to experiment without worrying about data cost. For an MNO, the more users get hooked on a particular application, the better the revenues generated. It is potentially a win-win scenario.

Moreover, crypto businesses should be able to convince MNOs or those managing cellular infrastructure, to deploy in areas where the unbanked are concentrated. Currently crypto-currencies require good internet access for one to perform transactions yet that kind of access is normally available in areas where banking services are widely obtainable i.e. the urban areas.

Meanwhile a prospect of high usage of cellular infrastructure is a tantalizing opportunity enough to encourage an MNO to invest. Perhaps an MNO could be convinced further— to build such infrastructure—if a crypto start-up actually helps or shares the cost burden!

It has happened before, a few years ago, Facebook’s Mark Zuckerberg proposed the idea of giant floating Wi Fi balloons and drones as way that would complement net accessibility in remote areas. Facebook realized that it had to do something to increase the number of its subscribers in remote places. So instead of waiting for an MNO— which might have other priorities—to build the infrastructure, the social media giant came with this proposal.

Crypto players could also take a leaf from this and play their part in building the necessary infrastructure to facilitate a greater adoption of this innovation.

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