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Coinbase Unveils “Base,” A Layer-2 Network for Building Decentralized Applications

Cryptocurrency exchange Coinbase has launched a new Ethereum layer-2 network called "Base" designed to offer a low-cost, secure, and developer-friendly environment for building decentralized apps (dApps) on the blockchain. The network aims to bridge users into the crypto economy and be interoperable with other chains. Coinbase has stated that it has no plans to issue a new network token, and Base will be built on the "OP Stack" used by Optimism. Despite Base's initial centralized nature, Coinbase has released plans for decentralization over time. Read more here.

Japan Tech Giants Unveil Open Metaverse Infrastructure

Fujitsu and Mitsubishi are among several Japanese technology companies partnering to launch the Japan Metaverse Economic Zone and create an open metaverse infrastructure named Ryugukoku. The initiative aims to create interoperable tools for users and developers across different platforms. It will also serve as a social infrastructure for enterprise digital transformation. The participating companies plan to integrate their technologies and services, including gamification, fintech, information, and communication technologies, to build Ryugukoku. Ultimately, the initiative aims to establish an ecosystem resulting from the interoperability of different metaverse services and platforms available to Japanese consumers.

IMF Prefers Crypto Regulation Over Ban, Says Managing Director

IMF Managing Director Kristalina Georgieva said the agency prefers to regulate cryptocurrency assets rather than ban them outright; however, the latter remains an option. Differentiating between central bank digital currencies and publicly issued crypto assets is a top priority for the IMF, and regulatory framework guidelines will be released in the second half of this year through the collaborative efforts of the IMF, the Financial Stability Board (FSB), and the Bank for International Settlements (BIS). Georgieva added that fully backed stablecoins create a “reasonably good space for the economy,” but non-backed crypto assets are high risk and speculative.

Web3 in Africa: “Innovating out of Necessity”

By Alex Tapscott

I am in Johannesburg this week for the Blockchain Research Institute Africa’s summit, where I am speaking and meeting with business and government leaders from across the continent. Our arrival was met with great interest and in a busy schedule, we sat down for a lengthy interview with CNBC Africa.

Africa is a continent troubled by many seemingly intractable challenges, including government corruption, climate change, conflict, and chronic underinvestment in traditional infrastructure. Young Africans are often underemployed. Many people lack access to basic financial services and other necessities we take for granted.

Some of these challenges were on full display here. The most industrialized country on the continent has an electrical grid in the nation’s capital that is on the verge of collapse with frequent “load shedding” where large swaths of the grid are simply turned off. Our interview took place at CNBC’s TV studio, which was powered by a generator, and offered a faint beacon of light in an otherwise darkened office complex.

Despite these glaring challenges, I’m leave this country immensely hopeful for its future, and I believe it will play a leading role in Web3 and other digital transformations. For starters, Africa has tremendous demographic tailwinds: Whereas most of the world is getting much older, Africa remains young with half the population under 20. In half a century it will also be the most populous. Overall, the continent has made great strides recently in health, education, and access to technology: Life expectancy has jumped 25% in the last 30 years. In the same period, literacy rates surged by more than a third. The diffusion of technology is equally startling: In 1993 half the world’s population had never made a phone call. Today, 64% of people in Sub-Saharan Africa owns a smartphone. Of course, Africa is a vast, populous, and diverse continent so we should be careful with generalizations, but taken as a whole, these trends are our friends.

This is a continent with a young, digitally native population, where technology tools are widely available, but where existing financial infrastructure is out of reach to most, and where many people are underemployed. Strangely, these weaknesses may prove to be strengths in adapting to and adopting Web3. Something similar has played out in other parts of the world: 20 years ago, there were 30 million landlines in India. Today, the same country has more cellphones than people. Africa has the potential to similarly leapfrog legacy financial infrastructure and tap into Web3 -- the ownership web -- seizing the digital property rights and payment tools that they otherwise lack in the physical world.

One South African executive, Ian Putter of Standard Bank, told me “Africans innovate out of necessity.” More than once, a South African used the word ‘survive’ to describe their livelihood, as in “I drive an Uber, but I also help my brother with his business to survive.” Technology and globalization have helped to flatten the world, but most people still face a steep uphill climb. Web3 will potentially help level the playing field even more. The hustler mentality of underemployed people in places like Africa, borne of necessity, will drive them to experiment with Web3, if there’ an economic incentive. In the long run, this will be their great advantage.

While here, I gave half a dozen speeches to various audiences from bankers to NGO’s working to use next generation technology to build a more prosperous and dynamic Africa. I confess to be delightfully surprised by the initiatives underway. I was also struck by the depth of knowledge among business leaders and some government officials I met, which exceed that in more so-called ‘developed’ regions.

Of course, there are many other reasons to pause before declaring the whole continent of Africa heir apparent to Web3. Today, most African governments are cautious or even hostile to cryptoassets, the native asset class of Web3 (see quantitative section). Adoption is high in certain parts of Africa, such as Nigeria, Kenya and Morocco all of which rank in the Top 20 of a recent survey by analytics firm Chainalysis, but it is extremely uneven (see quantitative section again). African countries do far more trade with far off markets in Europe, the U.S. and China than with each other, which is unusual in a world where proximity usually counts for a lot. The continent is fragmented into regional blocs with some stable nations abutting unstable ones. Reaching consensus at the government level has been a challenge. Sure, at the grassroots level, people are enthusiastic about Web3, and while there are some corporate leaders like Standard Bank blazing a trail, big companies and governments must do more to enable this transformation. Are these obstacles reason enough that Web3 will fail to take hold in Africa, or are they implementation challenges to be overcome? I am only a Canadian visitor, and this is not for me to decide.

Whatever happens in Africa, it is likely that Web3 will be shaped globally, with many new regions emerging as centres of innovation. The peculiar species of founder who evolved in the tech Galapagos of Silicon Valley can now emerge in any environment. Some countries are actively vying for investment. Gulf nations are using their financial heft to draw in Web3 entrepreneurs. They are acting as model users of the technology, which sends a strong signal to the market and these efforts should be applauded. But Gulf countries face headwinds: they do not have an ingrained legacy or culture of entrepreneurship and their more conservative values may give progressive-minded tech entrepreneurs pause. African governments lack the resources to subsidize foreigners to set up shop. Fortunately, they can take another tack, by embracing this young and dynamic continent’s innate desire for a better life and its deeply ingrained entrepreneurial spirit. The 21st Century will belong to Africa if those in position of power help to will it.
Exploring the Potential of Web3 in Africa Description
Join Alex Tapscott and Andrew Young as they decode the world of DeFi. Listen in as Alex shares his thoughts and observations on his recent trip to South Africa, where he helped roll out the Blockchain Research Institute (BRI) in Africa and met with business leaders, financial executives, and investors. Africa is a young and digitally native population, with 50% of citizens under 20 years old and over 64% of people in Sub-Saharan Africa owning a smartphone. By leveraging these demographic and technological tailwinds, Africa can overcome its challenges and achieve greater economic prosperity through Web3 and other digital technologies.
Source: chainalysis
Three African Nations Place in Top 20 Crypto Adoption Rankings
Chainalysis has ranked 146 countries according to grassroots cryptocurrency adoption in its 2022 Global Crypto Adoption Index, with emerging markets dominating the index. Nigeria, Kenya, and Morocco were the African countries featured in the top 20, with remittances and preserving savings during fiat currency volatility cited as key drivers of crypto adoption. Despite the potential for growth, regulatory clarity and infrastructure still need to be improved for adoption in African countries. Nevertheless, the report suggests ample opportunity for the industry to build solutions that cater to these markets and drive adoption based on the unique financial needs of African economies.
Source: chainalysis
Sub-Saharan Africa: Leading the Way in Small Retail Crypto Transactions
Sub-Saharan Africa is a leader in small retail crypto transactions and peer-to-peer (P2P) exchanges, according to Chainalysis. Retail transfers account for 95% of all cryptocurrency-related transactions in the region, with small retail transfers of less than $1,000 making up 80.1% between July 2021 and June 2022. This is more than any other region globally, with North America at 70.5%. P2P exchanges account for 6% of all crypto transactions in the region, with P2P trading becoming increasingly popular due to anti-crypto regulations and fluctuating fiat currencies.
Source: IMF
Breaking Barriers: African Countries Embrace Crypto Amidst Regulatory Restrictions
Africa's crypto market is on the rise, with transactions peaking at $20 billion per month in mid-2021; it remains the smallest market in volume yet one of the fastest-growing globally, with Kenya, Nigeria, and South Africa leading in user count. However, only 25% of sub-Saharan African countries have formal crypto regulations, with 66% imposing restrictions, and six countries having banned it entirely. Despite these challenges, the potential benefits of decentralized wealth control, almost-free transactions, and cross-border payments are driving more Africans to adopt crypto.